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  • GDP, US$bn: 282.5
  • GDP per capita, US$: 5,806.9
  • Population, mn: 48.2
  • Inflation, CPI ave: 7.5
  • FX, LCY/US$: 3,053.4
  • Budget Balance, % of GDP: -4.0
  • Mining GVA, US$bn: 15.3
  • Mining Industry Value, US$bn: 5.3
Regulatory Risk Rating
53
0
100
Score: 53
Substantial Risk
The law is in many respects a model civil law mining code that has an approach to regulating the sector somewhat similar to Chile but contains various ambiguous clauses which effectively undermine key principles enshrined in the law. The draftspersons of the legislation were sophisticated, knowledgeable resource lawyers that considered issues such as the ownership of minerals in situ and its implications, provided fiscal stability for royalties, established rules for surface rights compensation that expressly exclude reference to the mineral value underlying the surface, expressly forbade discrimination against foreigners and wrapped mineral rights within the protective embrace of registered concessions. Whilst somewhat unconventional in other parts of the world to use one form of title for all phases of exploration, development and exploitation, the advantage of ensuring the right to mine is a comforting consequence. That said, Colombia is not a third world country by any means and its challenges with respect to environmental groups and native communities are shared with jurisdictions such as the USA, Canada and Australia. One should not underestimate these challenges within Colombia notwithstanding the favourable mining code.

Corruption Potential Index

Score: 60
Moderate Corruption Potential

Corruption Risk Index

Score: 78
Low Corruption Risk

Regulatory Risk Rating

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Mining Overview Commentary plus sign

COLOMBIA MINING REGULATION

GENERAL

Colombia, officially the Republic of Colombia, is a country situated in the northwest corner of South America, bordered to the northwest by Panama, to the east by Venezuela and Brazil, and to the south by Ecuador and Peru. It is a unitary, constitutional republic comprised of thirty-two departments. Colombia has significant mineral and energy deposits, including the largest coal reserves in Latin America. Colombia also has nickel, gold, platinum, silver, copper, bauxite and emerald deposits. Indeed, Colombia produces most of the world's emeralds, which are located mainly in the Boyacá Department.

Colombia ranked 79th of 91 countries in the Fraser Institute 2017 Annual Survey of Mining Companies’ Policy Perception Index. Whilst mine development in Colombia is not without challenges, particularly in relation to environmental legislation, the South American country has held its relative good standing as a place to invest over many of its neighbours, such as Venezuela (91st), Ecuador (82nd) and Bolivia (83rd).

PRINCIPAL LEGISLATION AND REGULATOR

The mining authority is the Ministry of Mines and Energy and mining is regulated by the National Mining Agency (Agencia Nacional Mineria or ANM). The principal legislation governing the mining industry is the Colombian Constitution 1991 and Law 685 of 2001 (Mining Code). Article 332 of the Constitution affirms that non-renewable resources belong exclusively to the State. Several decrees impact on mining regulation including:

  • Decree 935/2013 and 1300/2013: these decrees addresses the requirements in an application for a concession, as well as the bases for the examination and rejection of applications for concessions, including where the proponent lacks the requisite financial capability to conduct the proposed work. Note that these two Decrees were temporarily suspended in 2016 by the Council of State;
  • Decree 943/2013: this decree addresses the basis upon which extensions of time will be considered and granted for exploration and exploitation phases during the currency of a concession; and
  • Decree 1666/2016: that prescribes the parameters for classifying mines as either subsistence, small, medium and large mines.

 

As well, Resolution 428 and 551 were passed in 2013 that provide for the provision of geological information to the national database, the provision of bank statements and other evidence in support of financial competence to conduct works.

It should be noted that Colombia’s attempts to amend the Mining Code in 2010 were subject to constitutional challenge owing to the failure of government to seek the consent of native communities; the court gave the government two years to address the deficiency, but no cure was forthcoming within the time period with the effect that the law reverted back to its status when originally passed.

In 2015 the National Development Plan Law (NDPL) was passed and amends certain sections of the MC. As with the 2010 amendments, certain sections of the NDPL (Art. 20) relating to the reservation of certain areas for mining development were held to be unconstitutional in 2016.

GRANTS AND FORMS OF MINERAL TITLE

Since the Mining Code was enacted, rights to explore and mine can only be granted by means of a mining concession contract, which are generally granted on a first come / first serve basis subject to applicants proving their economic capacity for the exploration, exploitation, development and execution of a mining project (Art. 22, NDPL). Rights granted before the enforcement of the Mining Code maintain their validity. The term of a concession starts from the date of the inscription of the contract in the National Mining Register.

  • Exploration Phase: Exploration may take place for a period of three (3) years, which may be renewed for a period of two (2) years repeatedly up to a total of 11 years. The titleholder may present a mine development plan together with an environmental impact statement in order to develop and exploit any discovery. An environmental license will be necessary in this regard.

 

  • Mining Construction Phase: Mine construction may be carried out over a period of three (3) years. This period may be extended for a further period of up to one (1) year.

 

  • Exploitation Phase: Exploitation may take place for the period remaining in the concession, which equals thirty (30) years less the exploration and mine construction phases. Two (2) years prior to the expiry of the concession, application may be made for renewal of the licence for a period of up to thirty (30) years. The request has to be accompanied by a new technical, environmental and social impact report.

 

According to Chapter XII of the Mining Code, a concession may be terminated where the concession holder has breached the concession terms, become financially insolvent or otherwise is incapable of performing its obligations under the concession, has failed to make required payments or complete works or has suspended operations for more than six (6) consecutive months. As a result of an amendment to the law in 2010 a further cause for termination of a mining concession is the unlawful employment of persons under the age of 18.

Approval of the State is required for transfers of concessions (Arts. 22, 112(e) and 332(d)). Under the NDPL, transferees are required to prove their economic capacity for the exploitation, development and execution of a mining project (Art. 22).

DEVELOPMENT CONSIDERATIONS

According to article 201 of Mining Code, an environmental licence is not needed to carry out prospecting activities. Nevertheless, in case of mine development and exploitation activities, a global environmental licence is needed (Art. 4 of Decree 2820/2010). Where exploitation will involve the production (waste and ore) of 800,000 tons / annum for coal projects, 2,000,000 tons / annum for metal ores and precious stones projects or 1,000,000 tons / annum for other mineral projects, the licence must be obtained from the (Federal) Environmental Ministry (Art 8(2) of Decree 2820/2010); otherwise, the licence can be obtained from the regional department (Art. Art 9(1) of Decree 2820/2010). An environmental impact statement must be submitted in order to secure the licence, which must be audited by experts approved by the Environmental Ministry.

Concession agreements do not convey title to surface rights, however, a concession holder is entitled to obtain mining easements or rights of way (servidumbres mineras) and to request the expropriation of real estate which becomes necessary for the infrastructure of the mining project. Compensation to land owners is not to take into account the value of minerals to be exploited (Art. 184 of the Mining Code). Water concessions can be obtained from the relevant regional department, which will have a term of 10 years or less.

The NDPL requires that mining concession holders create and adopt a social management plan that must be assessed and approved by the National Mining Authority (Art. 22, NDPL). Social management plans will be developed in accordance with the scale of the proposed mine and the technical and economic capacity of the owners (Art. 22, NDPL). Under the NDPL, mining activities are classified into subsistence, small, medium and large mines by the national government who will consider the number of hectares and/or the production of the mining units according to the type of mineral (Art. 21, NDPL and see Decree 1666/2016 that prescribes the parameters for classifying mines).

ENVIRONMENTAL REGULATION

See Colombia Environmental Regulation.

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Environmental Overview Commentary plus sign

COLOMBIA ENVIRONMENTAL REGULATION

 GENERAL

The geography of Colombia is characterized by its six main natural regions or zones each with their own unique characteristics, namely, the Andes mountain range region, the Pacific coastal region, the Caribbean coastal region, the Llanos, the Amazon Rainforest region and the insular area. Colombia has four main drainage systems: the Pacific drain, Caribbean drain, Orinoco Basin and Amazon Basin. The main rivers of Colombia are Magdalena, Cauca, Guaviare, Atrato, Meta, Putumayo and Caquetá. The Orinoco and Amazon Rivers serve as borders with Venezuela and Peru, respectively.

Deforestation is a major challenge in Colombia, along with soil and water quality damage from contamination, spillage of crude oil into the local rivers, air pollution (especially in Bogotá) from vehicle emissions and the preservation of wildlife. Colombia has had environmental impact assessments since 1974 as a result of the adoption of an environmental and natural resource code that became the first environmental management law promulgated in Latin America and the Caribbean.

PRINCIPAL LEGISLATION AND REGULATOR

The Environmental Ministry, regional departments and municipalities, and various national authorities are all relevant bodies in the grant of environmental licenses and the regulation of the environment in Colombia. Environmental law in Colombia is founded on its constitution, which establishes the right of Colombians to a healthy environment and the duty of the state to protect the environment (Article 79). Important legislation includes Decree 2811 of 1974 (the Natural Renewable Resources and Protection of the Environment Code), Law 99/1993, which creates the institutional framework for the protection of the environment and the management of natural resources, and Law 3573/2011, which created the National Authority for Environmental Licenses (“ANLA”). 

EIA PROCESS

The Environmental Law (99/1993) makes environmental licenses mandatory for any work or activity involving modification or degradation of the environment, which is further reinforced by the Mining Code (Art. 205). Whilst an environmental licence is not required for prospecting activities (Art. 201 of the Mining Code), it is required for any works or installations intended to be put in place to mine a property. The licence is a “global” licence, which confers authority to carry out all activities pertaining to the construction and operation (Art. 4 of Decree 2820/2010). The licence will remain valid throughout the project life, provided mining activities are performed within a period of five (5) years from the date of being granted.

The developer must present an environmental license application form together with an environmental impact study (Art. 204). Once the information is received, the relevant body will grant or deny the environmental licence within 90 days from the date of submission. This decision is subject to administrative appeal before the same environmental authority that granted the licence. The environmental body may refer the environmental impact statement to an external auditor. (See Art. 282 of the Mining Code.) The holder of the environmental licence may transfer the licence fully or partially, and thus, the rights and obligations arising under it.

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