December 5, 2024
General News

Antioquia Mining Applications Declining in Number, but Environmental/Social Quality Rising: CGS 2019 Highlights

In a November 12 keynote presentation to the fourth annual Colombia Gold Symposium (CGS) here in Medellin, CGS founder Paul Harris pointed to a recent study showing a drastic decline in mining concession contract applications in Antioquia – the heartland of Colombia gold mining.

According to the study by Colombia-based consultant Portex, the number of mining applications being signed into concession contracts in Antioquia fell from 669 in the 2004-to-2007 period, to 243 in 2008-2011, then 35 in the 2012-to-2015 period, and finally none at all in the 2015-to-2018 period.

Antioquia is the only department in all Colombia that has its own mining authority, Harris noted.

But the Portex study “has shown the delegated authority the regional government enjoys for contracting and supervision is not achieving the goals of decongestion, efficiency, efficacy and fomenting the development of mining and exploration,” as Harris explained in his recent column in the Colombia Gold Letter magazine.

The Portex study found that Antioquia state missed-out on COP$24 billion pesos (US$6.9 million) in government revenues as a result of concession applications not being advanced to signed contracts.

What’s more, another US$173 million per year in capex was lost here because mining companies – lacking concession contracts – didn’t invest in exploration here, Harris noted.

“Unfortunately, the amount of territory which is effectively frozen because concession applications were neither granted nor rejected grew 22.7% annually from 2001 to 2018 from a total of 8,399 hectares to 1,772,948 hectares,” Harris concluded in his report.

The Upside: Higher Quality Mining

On the other hand, positive mining developments are emerging in Antioquia specifically, Colombia generally and also in next-door neighbor Ecuador, Harris noted in his CGS presentation.

Two of these developments include the relatively huge Continental Gold project at Buritica, Antioquia (due for start-up in 2020), and the potential for a giant copper-gold mining project by AngloGold Ashanti in Jerico, Antioquia (see related reports in Medellin Herald, November 18, 2019).

Big new projects for gold and copper mining here are partly a commercial response to a global rebound in metals prices. But the new projects also are gathering strength because governments see metals-mining as a new source of tax-and-royalty revenues — in the wake of sharp declines in global oil prices and the resulting drop-off in oil-tax revenues, he noted.

In Colombia alone, gold discoveries in recent years could represent a US$94 billion bonanza for government tax-and-royalty revenues, he said.

While some local communities have blocked mining because of environmental concerns — and Colombian courts sometimes have intervened to hinder some projects — mining companies also share some of the blame for relatively slow progress in moving projects to commercial operation, he said.

“There have been clumsy community relations efforts by mining companies,” Harris noted here. “People fear mining and don’t understand the benefits. Mining is particularly unloved.”

Some leading global mining execs echo that sentiment, as for example Barrick Gold’s CEO, who recently stated that the “social license” for mining is more pressing than most other issues.

In a related CGS presentation here, Silvana Habib, president of Colombia’s Agencia Nacional de Mineria (ANM, the national mining agency), cited an urgent need for environmentally and socially responsible mining, which she dubbed “Mineria 4.0.”

Excessive government bureaucracy also has been partly to blame for slowing project development here, Habib conceded. Which is why ANM recently developed a “single application platform” for mining applications, employing a computerized system developed in Canada, one of the world’s top mining giants.

The new platform – incorporating both environmental and technical requirements — can cut the former 325-days-long applications process to 90 days, a 72% reduction, she said.

Asociacion Colombiana de Mineria (ACM) trade-association president Juan Camilo Nariño added here in a separate presentation that mining is the single-largest contributor to health, education and infrastructure funding in Colombia.

While environmental advocates frequently assert that mining is a big threat, Colombia’s legal mining companies (as opposed to the criminal miners) are big spenders on environmental controls, much of which is required by government regulations, Nariño explained.

Future gold-and-copper mining projects could bring billions of dollars of investment and revenues for Colombia — potentially boosting mining’s contribution to gross national product (“PIB” in Spanish initials) from 1.9% currently to 2.7% over the next decade, he added.

Consultant Warnings

While potential exists for more responsible mining development in Antioquia and Colombia, national elections last month also raise cautionary flags, as Bogota-based consultant Raul Gallegos of Control Risks warned here.

A recent rise of populist governments in Latin America is having a knock-on impact on Colombia as well, even though moderate conservative Ivan Duque handily won last year’s presidential election here.

In addition, Antioquia just elected a relatively mining-friendly governor (Anibal Gaviria) — and recent Antioquian court rulings indicate relative tolerance to mining projects here, he added.

Still, some mining projects in Colombia likely will continue to face several legal challenges, protests and (sometimes) violent clashes — with many politicians “deferring to [anti-mining] activists,” he warned.

Any company that attempts to steer-around such opposition by allying with corrupt politicians could face disastrous damage to corporate reputation, he added.

In a related presentation here, Colombia Risk Analysis consultant Sergio Guzman pointed to recent violent citizen protests in Chile, Ecuador and Bolivia – along with a leftward political U-turn in Argentina – as a possible opportunity for Colombia to attract investors fleeing from chaos elsewhere.

Colombia’s recent elections indicate that more voters are moving away from left- or right-leaning parties, in favor of more-centrist leaders focused upon concrete results rather than political posturing.

As a result, President Duque “needs to reach out to independents and other parties” in order to ensure that socially and environmentally responsible projects, reforms and policies will indeed move forward.

If political stability and moderation indeed gather steam, then “mining will be key driver of the Colombia economy over the next few years,” Guzman added.

Concluding the CGS agenda, Colombia’s top environmental scientist Brigitte Baptiste (former director of Instituto Humboldt) recounted the many social, political and environmental challenges facing miners not only here in Colombia but world-wide.

But even with those challenges, Baptiste added that “mining can be part of many sustainable activities” — and it has vastly less negative global impact than deforestation for cattle ranching and agriculture.

To respond to criticism from environmentalists and other concerned citizens, “you have to be more detailed with your answers today,” in an era cluttered with sensationalist fake news and purely ideological opposition to mining, she explained.

While many environmental groups find the idea of negotiating with mining developers and government regulators “not acceptable,” such dialogue is the “only way to achieve a balance of interests and economic development for the country,” she said.

Combining new mining projects with environmental offsets such as bioparks, private reserves, municipal and regional planning initiatives, new ecotourism reserves and better mining practices are among the options for achieving such balance, she said.

“We need to legalize [responsible] mining and get rid of illegal mining,” Baptiste concluded.

Related Posts