Mining Lawyer: Why Is the Colombian Mining Industry a Good Investment?

In a recent Biz Latin Hub article, we reported on the economic recovery predicted for the Latin American region in 2018 and how it is largely being driven by an uptick in the commodities market. Colombia is no exception and commodities are an important part of the national economy; growth in its mining industry has been particularly beneficial to the country. In the past years, foreign investment has multiplied in the sector amidst business-friendly reforms and Colombia consistently ranks highly in tables for the best mining destinations around the world. In this article, we take a closer look at the mining opportunities in Colombia and how foreign investors can get involved.

Colombian Mining – What mining resources does Colombia offer?

Because of its geographic location at the top of the Andean mountain range, Colombia possesses a territory rich in mineral resources. Its geological diversity means it contains a variety of minerals and presents an exciting opportunity for investors looking to get involved in mining development in the region.

Out of all of Colombia’s resources, the three main commodity groups of gold, emeralds and coal provide particularly interesting opportunities for foreign investors. Colombia has a well known gold mining sector and it is also the world’s largest producer of emeralds. As for coal, the country contains large reserves along with the infrastructure required to support the sector including access to both the Caribbean and Pacific coasts.

In a previous Biz Latin Hub post, we explored these commodities in more detail to understand what opportunities are available to foreign investors.

Some notable companies operating within the sector include Cerrejon (owned by Anglo America, BHP and Xstrata), Prodecco (owned by Glencore), Drummond Company, Continental Gold, Red Eagle Mining and Minesa SA.

Can foreign companies invest in Colombia?

Foreign companies can invest and, in fact, Colombia actively encourages foreign investment and allows 100% foreign ownership of mining titles and companies.

Whereby in recent years, the Colombian government has taken a very proactive approach to encouraging foreign investment through streamlining and improving local regulations, improving security, helping with managing local communities and in general with becoming more business friendly.

Some recent success stories within the sector include, Red Eagle Mining and Minesa SA, both are foreign mining companies that have been successful in navigating local complexity to achieve advanced gold projects.

Coupling the geographic location with the attractive Andean geology presents a great opportunity for investors and mining companies to take advantage of the Colombian mining offering. Opportunities include:

• Both Greenfield and Advanced Exploration
• Mine Purchase and/or Operation
• Investment (Direct investment, Purchase, Offtake agreement, etc.)

All mining activities in Colombia are Governed by the Colombian Ministry of Mines and Energy and by the National Agency of Mining. These bodies collectively interpret the laws and regulations, and their application to the sector covering the mine permit application through to mine operations, and post mine reclamation.

With that in mind, it is important to be aware that foreign companies interested in investing within the sector need to do so through the incorporation of a Colombian legal entity. With this entity, the investor can apply for a mining concession, and or take an investment and/or purchase decision on existing mining asset/concession.

To learn further about how to incorporate a Colombian Legal Entity, please click here.

Where can you find more information about mining in Colombia?

Given the favorable conditions in the country and the region as well as the economic growth, Biz Latin Hub through its company Colombian Business Services offers the experience and support necessary for investors to have a successful market entry in Colombia. Feel free to contact us now.

Watch our video to learn about the different mining opportunities across Latin American and how best to take advantage of them!