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The Colombian peace accord signed last year to end Latin America's oldest insurgency opens up vast areas of land for mining exploration, an industry official said.
While Colombia lags neighbors Peru and Ecuador in terms of mineral exploration, the country offers considerable potential for copper, nickel and precious metals, Santiago Ángel, head of the country's mining association ACM, told BNamericas.
President Juan Manuel Santos reached a definitive peace deal last November with the FARC, whose 8,000 fighters were finally disarmed in June, ending over half a century of conflict.
The guerrilla movement, financed by extortion, kidnappings, drug trafficking and illegal mining, was once believed to control as much as a third of the country's 1.14Mkm2 territory, including Caquetá, Meta, Guaviare, Putumayo, Huila, Tolima and Nariño departments.
"We believe this represents a great opportunity. There are areas that have not been explored," Ángel said in an interview in the Peruvian city of Arequipa. "However, if we don't create incentives for exploration, it will be difficult."
Less than 4% of Colombia's territory has been subject to geophysical exploration, according to consultancy firm Norton Rose Fulbright. Miners staked out 8,971 claims covering an area of 4.43Mha in 2015.
President Juan Manuel Santos, who met in April with executives from AngloGold Ashanti, Eco Oro Minerals, Red Eagle Mining, Continental Gold, Drummond, Cerrejón and Prodeco, agreed to work on legislation regulating mining certification, infrastructure tax swaps and prior consultation with communities, according to Ángel.
Colombia, where the mining industry is largely centered around coal, needs more competitive conditions to attract foreign investment due to social conflicts and adverse legal rulings, he said. Miners in Colombia invested on average US$1.492bn/y over the past five years, compared with US$2.147bn/y in Mexico and US$7.815bn in Peru, according to ACM.
AngloGold suspended its US$2bn La Colosa gold project in April after a local community voted to ban mining in the area due to environmental concerns, while the government last year prohibited mining operations in ecosystems known as páramos, delaying Eco Oro's Angostura gold-silver project.
Strikes and violence against mining operations are also common. Last year there were 338 incidents in Colombia, mostly attacks on the country's mining railway lines, according to ACM. Attacks have cost the mining industry 1tn pesos (US$340mn) in lost production over the past three years.
However, miners are looking to spend US$1.5bn in 2017, part of a US$7.6bn, five-year investment program in gold, silver and copper projects, according to the industry group.
Red Eagle is ramping up output at its US$55mn San Ramón gold mine in Antioquia department, while Cerro Matoso, controlled by BHP Billiton spin-off South32, is working on an expansion of its La Esmeralda mine. Canada's Continental also plans to start construction at the US$389mn Buriticá gold-silver project in Antioquia this year after forming a JV with Newmont Mining.
"Without a doubt not just San Ramón marked a milestone. There's also a mine built by Peruvian investors, Antioquia Gold, which is finishing construction," Ángel said. "We're starting to see new mines in the country. There's enormous potential, and we believe copper will be next on the list."
Colombia produced 90.5Mt coal, 81.8Mlb (37,100t) nickel, 1.99Moz gold, 335,248oz silver, 29,481oz platinum, 2.03mn carats of emeralds and 715,692t iron ore in 2016, according to ANM.
The mining industry is also working with the government in an effort to formalize the country's small-scale mining sector known as barequeo, while also pushing for tougher sentences for illegal miners found guilty of money laundering, deforestation and pollution of the Amazon jungle, Ángel said.
Colombia's estimated 180,000 informal miners, now believed to be operating in 25 of the country's 32 departments, generated an estimated 7tn pesos (US$2.3bn) in revenue last year, according to the defense ministry.
The government has identified 7,000 mining operations, which account for 70% of the operations in the country, according to the energy and mines ministry. A 10-day protest by illegal miners halted operations at Gran Colombia Gold last year.