Mining in Colombia: an essential and promising sector

Colombia

Juan Camilo Nariño Alcocer, president of the Colombian Mining Association (ACM), talks to The Energy Year about prospects and dynamics in Colombia’s mining sector. The ACM is an association of companies involved in the mining sector that aims to promote sustainable mining in Colombia.

How prospective is Colombia’s mining sector?
Colombia has a strong mining tradition, and the industry is critical to our economy and development as a nation. We have enormous potential in the minerals needed for the energy transition, such as nickel and copper. Considering that we have only explored 2.7% of our territory, this minerals potential is immense. We need to boost exploration and extraction activities to capitalise on this potential.
Coal is also vital to the country’s economy. Colombian coal exports are fundamental to the development of many Colombian regions. The quality of our coal has been key to ensuring the energy security of other countries that continue to demand this mineral.
Resource exploration is a key issue, which is why the association has made several calls to the national government to allow investors to set their sights on Colombia. The country has complex and inflexible procedures for granting mining titles. The sector needs the government’s support in this regard, in order to achieve greater exploration of projects that go on to production and extraction.

What legal changes is the sector facing?
This year has been marked by a complex regulatory debate for the sector. The government has introduced a number of very ambitious rules and regulations that could affect the mining industry and raise some doubts among international investors.
The first is the intention to create Ecominerales, a state-owned mining company. The second is a new mining law that aims to change the current mining landscape and the third is the Ministry of Environment’s Decree 044, which defines areas excluded from mining throughout the national territory.
This is striking because, although the projects claim to serve the energy transition, they are somewhat out of step with global trends in public policies and incentives for private investment to meet the demand for minerals.
Today, the world is in a race to meet the growing demand for cleaner technologies. The use of minerals must therefore become more efficient and less impactful.

To what extent are mining activities an engine of economic development on a macro and regional level?
Mining in Colombia today is essential to the wellbeing of the country, accounting for 3% of its GDP. In 2023, the mining sector contributed close to COP 20 trillion [USD 4.83 billion] to public finances. It also represents 30% of national exports and 15% of the country’s direct investment. When it comes to regions like Cesar, La Guajira, Córdoba and Santander, mining activities represent up to 40% of their GDP, being an important engine of growth and development for these areas.
On top of this, social investments coming from these activities amounted to COP 367 billion [USD 88.6 million] in 2023 while environmental investments reflected COP 670 billion [USD 161.7 million]. From this amount, 75-85% of investments came from coal activities and their corresponding companies. The coal sector is therefore critical for the social and environmental development of these areas, serving as an important social stabiliser and enabler. It creates employment and generates revenue and, thus, local consumption and added value.

What efforts are being made to formalise Colombia’s gold mining sector?
The most effective method for formalising mining operations is undoubtedly that of coexistence. The various models of formalisation, which encompass both large-scale mining operations and small-scale or artisanal miners in the area, have facilitated the implementation of best practices in a manner that is harmonious with local communities and the environment. In 2022 alone, the companies associated with ACM – in exploration and production – contributed to the formalisation of 4,785 miners in Antioquia, Santander, Caldas, Córdoba and the centre of the country.
For gold mining, it is essential to promote formalisation processes that encourage the development of good practices that reduce environmental pollution and promote institutionalisation in the territories, thus avoiding illegality and conflict.

How seriously is the country’s mining industry approaching sustainability principles?
Sustainability is a critical subject nowadays and it is being embraced by the mining industry. The production of minerals is essential for our economy but should not come at any price. Minerals must be produced where there are no environmental determinants or natural parks for instance. Environmental principles must be respected as there has to be a coexistence between mining and environmental protection.
For the last couple of years, the association has been leading a process of adopting the highest standards of mining. For instance, the Colombian mining sector is the only one in the country to jointly and publicly commit to adopting international standards reviewed by third parties.
Mining companies in this country must pass an evaluation on critical processes: water management, biodiversity management, climate change, mine closure, tailings management (for those companies that have them, particularly gold companies), as well as communication with communities and ethnic groups. Another point we are also trying to push is gender parity.
Lastly, in 2023 the ACM signed a public commitment to create a clear roadmap on climate change. Companies are adhering to it today. As a consequence, coal companies are installing solar parks and investing in more sustainable ways to operate. The same goes for mining suppliers and smaller companies. We invite other economic sectors to take such strong, public and reviewable steps as the Colombian mining industry is taking.

What objectives does the ACM have for incentivising investment in the Colombian mining sector?
We have three fundamental objectives. The first objective is to adopt the best practices worldwide and apply them to the Colombian mining industry. Together, with the sector, we want to build a single global standard for mining – applicable to small-scale mining. What’s more, the association has created a chamber of small-scale mining which includes those firms that are in the process of formalisation to bring these good practices to them.
The second objective is to generate an adequate platform for communication about the need to strengthen our sector. There is a dire need to inform people about the importance mining has for our economy and the benefits it brings to our society and country as a whole. To an extent, mining activities have been demonised and there is a need to change this perception.
The last objective is to generate an adequate regulatory environment. In this case, it is essential to bring together the Presidency, the Ministry of Mines and Energy and the Ministry of Environment to come up with clear, unified and favourable regulations that incentivise and promote the sector.

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