Mining in Colombia has ‘lost competitiveness’ and will not hit government targets for 2012, said the director of Colombia mining industry body Wednesday.
The industry is in part suffering from a 19% drop in coal prices, according to Claudia Jimenez of the Large-Scale Mining Association (SGME). While production has risen in the last year, the government’s goal for 2012 of 93 million tons of coal will now be missed by several million tons.
The drop in global prices is a big factor but Jimenez said the mining sector in Colombia also has a ‘competitiveness’ problem. Citing a report by Canada’s Fraser Institute she said that Colombia has become less attractive in the last year compared to other Latin American countries. While Colombia demands less in royalties than many surrounding countries it suffers from gaps in industry regulation and poor coordination between government bodies.
The director of the SMGE called for “clear regulations that specifically delineate the areas that can be explored,” perhaps referring to controversies over whether environmentally sensitive areas and indigenous reserves are open to exploration. She suggested that the industry needs to work harder to convince the country that responsible mining can drive economic development.
President Juan Manuel Santos, continuing the policies of his predecessor Alvaro Uribe, has pursued policies to make mining one of the drivers of Colombia’s economic development. However many economists warn that natural resources can offer a rocky road to development, partly due to the fluctuations in global prices.