MICLA

McGill Research Group Investigating
Canadian Mining in Latin America

Colombia

Key Data

Population:46,000,000 people Area:1,141,748 km2 Density:40 people / km2 Demographics:Mestizo (58)
White (20%)
Mulatto (14%)
Afro-Colombian (4%)
Indigenous (1%)
Other (3%)
Mineral Resources: GDP:$472.0 billion GDP per capita:$10,260 GINI:58.5

History

Gold has been mined in Colombia by indigenous peoples for thousands of years. During the pre-Colonial period, however, the metal was not used as a commodity, but was rather given important symbolic and cultural values. The Muiscas of the central plateau, for example, considered gold, Chiminigagua, to be the force of creation [1] (Correa Rubio, 202). The Gold Museum in Bogotá gathers together one of the world’s most impressive collection of pre-Colonial gold objects, one that showcases the technical skill and imaginative prowess of indigenous gold-workers. Indigenous uses of and understandings of gold are likewise at the source of one of the most famous myths about gold in the Americas, the myth of El Dorado which is based on stories of a Muisca chief who riturally covered himself in gold dust and bathed himself in a lake as an offering to the gods. [2]

Small-scale mining is still widely practiced today and continues to be an important part of rural livelihoods for hundreds of communities across Colombia. According to Peace Brigades International, there are 6,000 small- and medium-scale mines in Colombia, from which five million people earn a living, including many people of indigenous and African origin [3] . While many communities have been involved in mining for generations, other Colombians have turned to mining more recently, driven by the prospects offered by rising gold prices. Farmers displaced by the civil war and narco-violence have likewiseturned to small-scale mining, as have farmers affected by the crash of the agriculture sector brought on by neoliberal policies of the 1990s [3].

In contrast to artisanal mining are the industrial-scaled projects developed by transnational companies with the support of the Colombian state. In the 1970s, Latin America’s most significant coal reserves were discovered in La Guajira department in northern Colombia. Cerrejon Mine, one of the world’s largest open pit mines, was under construction by the end of decade. Cerrejon Mine marked a split in the mining sector: small-scale subsistence mining as part of the informal rural economy continues while large-scale, open pit mines operated by transnational companies become increasingly prevalent, especially since the Colombian national government of Juan Manuel Santos has declared mining as one of the “locomotives” of national economic development.

Small-scale mining and the more recent mega-projects, however, do not simply exist side by side. They often find themselves in direct competition. For transnational mining corporations, who need to consolidate their control over the large tracts of land required for an open pit mine, the small-scale miners are an obstacle. To small-scale miners, mega-mining projects undermine their livelihoods, threaten displacement and possible paramilitary violence.

The interplay between these two scales of mining are best exemplified in the case of Marmato. For centuries the miners of Marmato has extracted gold from El Burro, the mountain upon which the town of ten thousand is situated. In the 1950s when large-scale mines opened, a horizontal division was created: the base of the mountain was reserved for larger projects while the upper portion was preserved for traditional small-scale miners. In 2001, however, a new mining code Law 635 of 2001, (whose elaboration was supported by the Canadian International Development Agency (CIDA), began requiring that small-scale mining be formalized.[4] The new policy put small-scale miners in direct competition with transnational mining companies, which, with more resources and better knowledge of the permitting process, were able to consolidate large concessions. Medoro Resources (now merged with Gran Colombia Gold) has proposed an open pit mine for Marmato that would extract the estimated 9.8 million ounces of gold and 59 million ounces of silver from El Burro within 20 years, thus ending a centuries-old tradition of mining.

Mining Characteristics

According to Infomines (2011), there are 118 mining properties in Colombia, though this figure does not include the more than 6,000 informal small- and medium-scale mines mentioned earlier. While the majority of mega-projects are open pit mines, small-scale operations are usually underground, or involve panning in rivers.
Colombia’s various geological regions support a diversity of mineral resources. Coal in mined primarily in the north, in César and La Guajira departments. These bituminous coal reserves, discovered in the 1970s, are the largest in Latin America. Colombia has become one of the top coal exporters, with a total of 68Mt exported in 2010 (Coal stats website). Coal production has continued to the expand in the 2000s; between 2004 and 2008, production grew by 38% to 73,500 tonnes (yearbook).
Despite the use of gold since pre-Columbian times, it has only recently become significant to Colombia’s GDP. Gold is primarily extracted in western Colombia, in Antioquia, Bolívar, Córdoba, and Caldas. Favourable international prices for gold have led to increased interest from both national and international companies. In 2008, Colombia produced 34,000 kilograms (yearbook).
Silver is produced primarily in Antioquia, Caldas, and Chocó. Between 2004 and 2008, an average of nine thousand kilograms of silver were extracted per year. Colombia also claims one of the only platinum deposits in South America. Approximately 1,400 kilograms of platinum is produced per year in mines in Antioquia, Cauca, and Chocó departments. Emeralds, for which Colombia is well-known, are mined in Boyacá, in central Colombia. Production, however, has been decreasing in the past years; in 2008, approximately two million karats were produced, a mere 20% of what was mined in 2004.
The amount of water used by open pit mines and the use of cyanide in the leaching process means that issues of water quantity and quality often accompany this method of extraction. The proposed Angostura project by Greystar Resources Ltd., for example, threatens the Páramo de Santurbán, a a unique ecosystem that absorbs moisture and releases fresh water. If built, the project could jeopardize the water source of the entire region, including Bucaramanga, one of Colombia’s largest cities, with a population of 1.2 million.


Economic Context

 

The development of coal mining in the 1970s expanded the importance of resource extraction to Colombia’s national economy. Mineral exploration in the Guajira Peninsula led to the opening of Cerrejón Mine, the largest mine in Colombia and one of the biggest open-pit mines in the world. In 2009, 33 million tons of coal (about half of the national total) were produced at Cerrejón, with the labour of 10,000 people.

Since the 1990s, a number a factors have helped expand the importance of the mining sector (and of natural resources in general) to the national economy. Most important is a national government in favour of foreign direct investment in mining and energy. In Colombia, this is embodied by the País Minero policy, whose purpose is to maximize the country’s mining potential, and to market this internationally. One measure taken to attract the attention of international investors has been to expand the geologic, geochemical, and geophysical knowledge of the country. Between 2006 and 2010, for example, with an increased budget, INGEOMINAS was able to expand this knowledge by 100,000, 98,000, and 13,000 square kilometers, respectively (yearbook).

Improved security for foreign companies has a been another impetus for increased investment in mining. The FARC-EP and other guerrilla groups, who believe the Colombian people should have sovereignty over the country’s natural resources, have kidnapped employees of foreign companies as both a political message and a means of raising funds. The perceived risk of investing in Colombia has been reduced by Plan Colombia, a U.S.-led program which aimed to fight the drug trade and left-wing insurgency by increasing military aid to the country, both in the form of financing and training. Furthermore, President Álvaro Uribe’s hard line policies on dealing with the FARC-EP and other guerrilla groups, though controversial, have contributed to a better atmosphere for investment.

Investment-friendly policies, increased geographic knowledge of the country, and improved security have created conditions suitable for investment in mining. Favourable international prices for gold and other commodities have drawn even more attention to Colombia. Investment in exploration, as a result has increased dramatically, from $6,000,000 to $13,000,000 between 2004 and 2008 (yearbook). In the same time period, mining applications have doubled to 8,700, with applications for precious metals alone increasing almost 400%.

More titles are being granted, too. The total acreage of contracted land has increased 350% to almost 4.5 million acres. Investment is coming both from foreign and national companies. National Direct Investment increased from $100,000 to more than 1.2 billion, while Foreign Direct Investment almost doubled to 2.2 billion (between 2004 and 2008). Total mining exports in 2008 were valued at nearly 7.5 billion dollars.

Political Context

Colombia has had a turbulent political history, characterized by a deep divide between Liberals and Conservatives. When Liberal candidate Jorge Eliécer Gaitán was assassinated in 1948, the country was thrown into a civil conflict, La Violencia, during which hundreds of thousands of people were killed. In an attempt to end the brutality, the Frente Nacional, an agreement between the Liberals and Conseratives to alternate governance, was formed. Despite good intentions, the alliance limited political participation to these two parties, and excluded alternative parties such as the Communist Party, which represented the interests of rural Colombians, a group often ignored by the State. The inability work within formal political channels and the increasingly inequitable distribution of land gave rise to a number of guerrilla groups, most notably the Fuerzas Armadas Revolucionarias de Colombia (FARC). Since the 1960s, these groups have challenged the distribution of land and resources and, more recently, the relinquishment of natural resources to multinational corporations. In response to the formation of guerrilla groups, paramilitary organizations have been formed protect ranches, plantations, and oil facilities.

Since the mid-1990s, Colombia has become one of the U.S.’ most important allies in Latin America. Political alignment in key areas such as drug-trafficking and insurgency/terrorism, and mutual economic interests have given strength to this relationship. Under ex-president Álvaro Uribe and current leader Juan Manual Santos, resources extraction has been strongly promoted as important element to the country’s economic development.

The development of resource extraction has been facilitated by an updated mining code. The purpose of the new code, Law 635 of 2001, is to boost economic growth by encouraging exploration and production by transnational companies, and to foster a safe investment environment. Prior to 2001, the country had actually experienced negative growth in the mining sector for two consecutive years. Since then, the sector has grown considerably; between 2004 and 2008, minerals resources represented over 25% of all exports.

An expedited permitting process has worked to encourage more activity in this sector. Since the mining registry was moved online in 2001, the average wait times for mining permits decreased from two years to three months. Similarly, Decreto 266/2000 reduced the time allotted for Environmental Impact Assessments (EIA), further expediting the process.

A simpler permitting process is complimented by strategic investment by the government. INGEOMINAS, the Colombian Institute of Geology and Mining, has received a larger budget to further expand the geological, geochemical, and geophysical knowledge of the country, thus reducing risk for transnational companies. Physical infrastructure to support mining is also being developed, including railroads and port facilities.
Another key feature of the mining code is how it redefines the role of the Government of Colombia within the mining sector. Today, the main purpose of the government is as a regulator and administration. Its main functions include overseeing the permitting process, keeping record of concessions and titles, and designating certain ecologically significant areas as closed to development.

Despite provisions for small-scale miners were included in the new mining code, but they have worked against those they are meant to support. Law 635 of 2001 states that, while small-scale/artisanal mining is not illegal, all activities must be formalized and registered with the municipal body. With fewer resources and less knowledge of the registration process, or in some cases because they were unaware of the changes, many miners missed the opportunity to formalize their land holdings. Transnational companies, with more resources and knowledge of the processes have successful claimed concession on the property small-scale miners have informally worked for centuries, in some cases.

 


Bibliography

[1] Correa Rubio, Francois. “Sociedad y naturaleza en la mitologia muisca.” Tabula Rosa 3 (Winter 2005): 199-222.

[2] Silver, John. “The Myth of El Dorado.” History Workshop 34. (Fall 1992): 1-15.

[3] Vicente, Ana et al. Mining in Colombia: At what cost? Bogota: PBI Colombia.

[4] Étienne Roy-Grégoire, CENSAT-Agua Viva, MiningWatch Canada, Interpares, Land and Conflict. Resource Extraction, Human Rights, and Corporate Social Responsibility: Canadian Companies in Colombia. (September, 2009)


Timeline of Key Events

2001