Mining could become Colombia’s economic growth engine with investments of at least $1.5 billion a year over the next five years if the government guarantees legal certainty to businesses, the industry’s top representative said on Tuesday.
Major mining companies are urging the government to better regulate public consultations and votes on mining projects, arguing that legal uncertainty is the industry’s biggest challenge.
“If we get the investment conditions we want, as an association and as an industry, we could again bring in between $1.5 billion and $1.7 billion a year, for a five-year investment of $7.5 billion,” Santiago Angel, head of the Colombian Mining Association, told Reuters.
“This is an industry that in its best years brought between $2.5 billion and $3 billion a year. Unfortunately 2015 and especially 2016 were very bad years for attracting investment — we fell to close to zero,” he said.
Colombia’s biggest mining sectors are in coal and gold. Angel said that copper is showing enormous potential and could become a viable new product in the coming years.
AngloGold and EcoOro are big players in Colombia’s gold sector. The biggest coal companies are Drummond Co, Glencore Plc, Murray Energy’s, Colombia Natural Resources, and Cerrejon, which is jointly owned by BHP Billiton, Anglo American Plc and Glencore.
The economy grew 2 percent in 2016, a slowdown from the previous year, and the mining sector fell the most with a contraction of 6.5 percent, according to the government’s statistics department.
Even with improved security following a peace accord with the Revolutionary Armed Forces (FARC), which ended its part in a half century guerrilla war that killed more than 220,000, companies want legal security and clear investment rules.
Companies in the mining sector complain about a lack of clarity during required meetings with communities over mining projects, as well as the slow pace of environmental licensing. There have also been frequent protests that block exploration operations and production.
“Legal certainty is the main challenge that the industry faces, it’s what provides guarantees to investors and keeps mining production going forward,” said Angel, who described Colombia as the Latin American nation with the best mining potential after Peru.
“There are mining companies that have quite advanced exploration phases, we believe that in the next few years we could have a working copper project,” he said.
(Reporting by Luis Jaime Acosta and Helen Murphy; Editing by Sandra Maler)