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Colombia: More Copper Potential
Colombia has potential for more copper mining with proper regulations.
BY LATIN AMERICA ADVISOR
Inter-American Dialogue
Colombia wants to produce more copper within the next few years, the head of the national mining agency, Silvana Habib, said last month. Initial estimates show measured or indicated copper resources of some three million metric tons and more than one million metric tons of potential reserves in Colombia’s northern and western coasts, she said. By comparison, neighboring Peru has about 83 million metric tons of copper reserves. What steps does Colombia need to take to become a more prominent copper producer? How big of an effect could increases in copper production have on the Andean country’s economy? To what extent could environmental concerns or local opposition derail the expansion of Colombia’s copper production in the coming years?
Tomás González, consultant and former Colombian mines and energy minister: Colombia needs to take full advantage of its mineral potential. So far, the focus has been on coal, nickel and gold, but there seems to be a large potential for copper. The government is rightly putting an emphasis on it: First, because the country shares many of the geological conditions of Chile and Peru—the world’s two largest producers; Second, as World Bank estimates show, because the transition to a renewable future will, by 2050, require more minerals than the ones produced in the past 100 years—with copper being one of the most important; And finally, because we need mineral rents to accelerate the spending required for poverty reduction and inclusive growth. To materialize copper’s potential, the emphasis must be twofold: ensuring the exploration required to determine the real extent of the country’s reserves and making sure there are success stories showing that the type of projects required can happen. Copper thus shares many of the challenges common to other types of mining—uncertainty in licensing, government-take levels and flexibility, social acceptance and availability of support infrastructure. But it has distinctive features, too, such as the fact that it doesn’t have the environmental footprint of coal, that it can’t be exploited by criminal groups the way gold is and regional examples—such as Chile’s—of how to use copper wealth for development. In a way, copper can be thought of as a blank slate for Colombia. The government’s leadership will be critical in ensuring it can flourish.
Marianna Boza, director of Brigard Urrutia in Bogotá: Colombia seems to have a high prospect for copper deposits in Chocó, Santander, Cesar and Serranía del Perijá. However, only one project is producing copper. In order for Colombia to become a more prominent copper producer, it must take actions to procure increasing exploratory activities in order to obtain more information regarding copper reservoirs in Colombia’s territory. At the same time, it needs to foster and promote the country’s copper potential to the same extent as gold and coal in order to attract experienced mining companies. Royalties derived from the increase in copper production will most certainly have a direct impact in the development of several regions that usually struggle from an economic standpoint. In addition, an increase in copper production may be interesting to foster foreign direct investment from Chinese companies in Colombia and the increase of exports to China, the world’s biggest buyer of copper. Notwithstanding the Constitutional Court decision on the lack of binding force of popular consultations to ban the development of mining projects and the outstanding efforts of the National Mining Agency (ANM) to raise awareness of the benefits of mining activities and to reach agreements with local governments—which are mitigating this risk—local opposition is still a concern for companies with interest in mining activities of any kind. Thus, the relationship with local communities must always be a priority for mining companies that intend to operate in Colombia. Regarding environmental concerns, in our experience, performing a due diligence on the territory’s environmental limitations and possible declarations of protected areas by environmental authorities largely mitigates any unforeseen risk.
Luis Álvaro Pardo, economist and mining and energy sector analyst: Mining exploration in Colombia has led to the discovery of new copper reserves, a mineral that until recently was not part of the country’s extractive basket. However, the announcement of copper development projects in several regions prompted a wave of rejection by local communities and social organizations, no different to the opposition against the mining sector in general. Some minerals are necessary, but that’s not the topic under discussion. What communities and NGOs reject is the mining model that allows: exploitation without considering biodiversity and the ecosystem’s fragility; exploitation while ignoring the rights of communities to participate in decisions that the government imposes; exploitation while ignoring fundamental rights enshrined in the Constitution, such as the right to a healthy environment, food security, a decent life and, by extension, water; exploitation under a concession contract system, which strongly favors mining companies’ interests; and exploitation without regard to the many needs of a nation with more than 2.4 million people in extreme poverty and great social inequality, while mining companies enjoy enormous privileges that allow them to minimize their effective tax rates. The national government’s refusal to create mechanisms for agreement between the central state and territorial entities to define the exploitation of minerals, as the Constitutional Court orders, increases and generates greater resistance by citizens, some mayors and municipal councils against allowing mining in their regions.
Republished with permission from the Inter-American Dialogue's daily Latin America Advisor
