COLOMBIA MINING REGULATION
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).
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).
See Colombia Environmental Regulation.