Contents

Introduction

Colombia has embarked on a new era following the historic peace accord with the FARC guerrilla group, putting an end to a conflict that cost the lives of over 250,000 and displaced close to seven million people. The approved peace deal removed a huge obstacle to mining investment in Colombia as it meant the return of over 7,000 weapons belonging to the rebel fighters, many of whom were in remote areas with mineral potential. However, just as the threat of physical violence has retreated, social conflicts and adverse legal rulings  have risen to prominence with the potential to derail investment plans. 

Latin America's largest coal exporter, Colombia set a new annual coal production record in 2016, while nickel, platinum, gold, silver and emeralds also gained. Coal output rose 5.8% to 90.5 million tonnes (Mt) last year. Coal miners Cerrejón, Drummond, Prodeco and Colombian Natural Resources all helped spur production.

Companies including AngloGold AshantiEco Oro Minerals and Continental Gold have lined up gold projects in the country and last year Vancouver-based Red Eagle Mining began production at its San Ramón  in Antioquia - the epitome of a small-scale, high-return project with capex of US$55 million and an IRR of 53%.

Copper exploration is also taking place and many geologists believe Colombia hosts the same sort of massive porphyries as found up and down the Andes. One project in particular that is drawing attention is Alacrán, where a maiden resource estimate reported in January 2017 showed 53.5Mt grading 0.70% copper and 0.37g/t gold.

Tunnel entrance at Buriticá project. Credit: Continental Gold

Overall in 2016, Colombia's mining sector grew 4.7% as and for 2017 national mining association ACM is forecasting growth of 5%, equivalent to a 20% increase in exports. Mining investment for 2017 is forecast at US$1.5 billion, and for the next five years ACM expects the figure will be over US$7.6 billion.

The investment dollars are mainly focused on increasing production to take advantage of higher metals prices.  Cerro Matoso, owned by BHP spin-off South32, is investing in the expansion of its La Esmeralda deposit where plans are underway to raise ferronickel production by 5,000t/y between 2018 and 2020. And even though South African miner AngloGold Ashanti has had a setback with La Colosa in Tolima department, it is continuing to develop its Gramalote gold project in Antioquia. Investment plans are ongoing at coal miner Cerrejón's La Puente.

However, in order for this investment to be realized, ACM head Santiago Ángel believes Colombia must provide greater clarity for investors. "If we don't have legal certainty, there is not going to be US$1.5 billion (annual investment), there is going to be zero because mining investors have a huge range of options," says Ángel. "We need to do something else to attract that US$1.5 billion."

(Cover photo: Páramo de Sumapaz. Credit: Luis Alejandro Bernal Romero)

Figure: GDP Growth in Colombia
[GRAFICO:FIGURA:ID_826]

BUY THIS REPORT

Portada Intelligence Series

Purchase this Intelligence Series report to gain access to the full analysis.

  • Interviews with top experts in the field
  • Key challenges and trends, forward-looking analysis
  • Read the report online, or download a PDF
Go to Reports Buy now