Mining: Vast resources remain largely untapped
By Adam Thomson
Published: September 23 2009 17:21 | Last updated: September 23 2009 17:21
When Spanish conquistadors first set foot on Colombian soil, they heard tales of how the Zipa, an indigenous king, would cover himself in gold dust and row out to the middle of a sacred lake to offer gold objects to the gods.
Thus was born the legend of El Dorado and Colombia became synonymous with precious metals and other natural riches.
Today, the administration of President Alvaro Uribe seems determined to push that image once again, and has made it clear that it wants mining, together with oil and gas, to be an integral part of economic development.
There are tentative signs this may be happening. Last year, gold production more than doubled on 2007 to about 34.3 tonnes – and gold exports rose from $332m to $891m.
Meanwhile, coal production is forecast to increase to more than 100,000 tons by 2012 compared with 69,000 tons last year.
“What we have today is a dynamic sector covering many different minerals and that is attracting some of the biggest mining companies in the world,” says Arturo Quiróz of Asominas, Colombia’s mining association, which represents the interests of private companies.
Mr Quiróz argues that at least two factors have helped spark the world’s interest in Colombia as a centre of mining activity.
The first is that Mr Uribe’s manifesto of “democratic security”, which has made combating the country’s armed insurgent groups a priority.
This has helped secure and pacify regions that were previously out of bounds – either because they were under the undisputed control of armed groups or because fighting between rebels and the armed forces was too fierce.
As a consequence, Colombia – twice the size of France – remains vastly under-explored even though it has long been considered as a strong source of mineral wealth.
The second reason is that alterations this year to the mining code have made land registration and the granting of concessions much simpler.
Exploration concessions will be for 11 years, compared with just five previously. A complex, sliding-scale system of annual land-use taxes has been simplified: instead of ranging between $8 and $2,000 a hectare, there is now a flat fee of $8.
Finally, an overhaul of the national land registry archives will expedite concessions.
Problems remain, however. Last month, Colombia’s Ministry of the Environment, Housing and Territorial Development denied AngloGold Ashanti, the South African mining company, rights to explore all but six of the 515 hectares for which it had requested permission.
The decision, based on environmental concerns, was applauded by green groups that had protested against the company’s plans. But it put on hold what preliminary exploration suggested might be one of the world’s 10 biggest gold deposits with estimated reserves of $12.3m.
AngloGold Ashanti’s experience illustrates the difficulties of operating in a country where many of the most promising areas for mineral exploration are located either in forestry or indigenous reserves – or both.
According to a study by the National Indigenous Organisation of Colombia, 65 per cent of mining concessions are on ancestral lands or among indigenous communities.
Furthermore, more than two dozen non-governmental organisations and independent environmental agencies have warned that Mr Uribe’s plans to stimulate mining could threaten the natural habitats.
At the immense Cerrejón coal complex in northern Guajira province however, Carbones del Cerrejón, the mine operator owned by BHP Billiton, Anglo American and Xstrata has been busy winning awards for its environmental programme.
León Teicher, the company’s president, says its land-rehabilitation programme has returned more than 2,600 hectares – about 25 per cent of the size of the mine – to its natural state, planting 1.2m trees.
Today, the company exports 32m tonnes of coal a year – almost half of national production – and it does so with a firm commitment to the environment, says Mr Teicher.
However, he admits that not all companies apply the same environmental standards. For example, he explains: “There are mining operations that transport coal over long distances in lorries.”
By contrast, Cerrejón’s coal is transported to the port via a purpose-built railway, and the company does not use open barges, which also pose environmental problems.
If the government manages to reconcile the interests of private business with the concerns of the country’s many indigenous communities and environmental groups, few doubt Colombia could become a world force in mining, and not just in coal.
Until that happens, however, most experts believe that Colombia’s potential will not be realised.
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