“The Colombian mining sector is experiencing improved fortunes and interest on the back of increased government support and increasing commodity prices; there remains a number of attractive and available projects suitable for junior mining companies and ever increasing opportunities for Mining Equipment, Technology and Services (METS) Companies” – Craig Dempsey, CEO of the Biz Latin Hub Group and Former Mining Executive .
Another article of ours gave an overview of the resource sector in Colombia ; this guide will focus on three of those resources in the mining industry. Broadly speaking, the Colombian mining sector consists of three primary commodity groups (Coal, Gold and Emeralds); a short summary of each has been provided below.
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Colombian Mining Opportunties – The Coal Mining Sector In Colombia
The Coal sector in Colombia is characterised by large thermal deposits in the north of the country, where there are large operators such as Cerrejón, Drummond and Prodeco and smaller, thin seamed metallurgical deposits located in both the centre of the country and along the Venezuelan border.
In practise the vast majority of the thermal coal mined is transported to ship loading facilities by train, whereas the metallurgical coal mined is often transported by truck and/or a combination of truck/ barge. Due to the scale, low operating costs and good logistical systems the production cost per tonne for thermal coal is low, whereas due to the smaller scale and logistic difficulties, the cost of producing metallurgical coal in Colombia is above industry norms. Nevertheless recent coal price increases mean that these metallurgical deposits can be exploited well below the sale cost, making for an attractive investment / purchase opportunity for the Junior Mining Sector. Correspondingly it presents an opportunity for the METS sector if they can bring systems, equiptment and/or procedures that improve efficiency, increase recovery and low the production cost.
The Largest World-wide Emerald Producer
The Emerald sector is rarely understood or known in Colombia, even though it has recently grown to become the largest producer of emeralds in the world. Historically the sector (located only a few hundred Kilometres north of Bogota in the province of Boyaca) has had a turbulent past, marred by crime, unsafe working practises and corruption, however the sector is changing and changing fast. In recent years the Government has made significant efforts to promote the region and what it has to offer to foreign mining companies, and they have been successful.
To date three international mining groups have entered the region bringing money, a willingness to bring best practice and increased transparency, a particular example is Mineria Texas Colombia which purchased the the Muzo Mine, the largest emerald mine in Colombia. The affect of these “new comers” has been an effort to formalise the sector and to take a basically hand mined industry to a world class mining region with best practises, procedures and equipment. With this in mind the sector is perfectly positioned for METS companies looking to enter the Colombian market thus offering a range of oppportunities.
Opportunities Gold Mining in Colombia
The Gold Mining sector is one of the most well-known and best understood sectors in Colombia, although there has been a long history (and there remains) of wide spread artisanal gold mining, there has also been a number of foreign mining companies that have entered the sector, such as Red Eagle Mining, AngloGold Ashanti and Continental Gold.
Especially during the mid-2000´s large number of foreign owned junior mining companies were active in Colombia finding and developing a number of prospective projects. However with the GFC and the downturn in commodity prices many of these companies eventually left the market, either selling their projects or returning them to their original owners, meaning a number of exploration projects (some with drilling and resource statements) exist, and some still without an investor or company progressing the project.
This creates opportunity for new mining companies looking for a project in Colombia.
How to Invest in Mining Opportunities
The mining sector in Colombia remains an attractive location for foreign mining companies looking for projects or for METS looking for new clients. Although there are some complexities and a lot to learn and understand for new companies entering the market, the opportunities exist and the potential is huge.
Combined with this, there is increased government interest in helping foreign companies to enter the Colombian market, through removing legislative obstacles, streamlining visa processes and ever working to improve the permit application and approval process for mining projects. However these oportunities can be met with challenges due to large amounts of burocracy and non-occidental ways of doing business.
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.