Company Formation: How to Set Up an Emerald Mining Company in Colombia?

In recent years, the Colombian emerald mining industry has quickly developed and has become an important part of the Colombian economy, so much so that it currently accounts for 2% of the country’s GDP. Colombia is attractive for investors because of its accessibility to high-quality emeralds. Also, the Colombian government has made the process for obtaining a license for emerald mining in Colombia accessible to companies and investors which gives them access to the exploration, extraction and exploitation of these type of gems. This article will inform you about the current emerald business market, the role of the Colombian government and which license you need to set up an emerald mining company in Colombia.  

Setting up an Emerald Mining company in Colombia – Overview

The famous emerald areas in Colombia are located in the departments Bóyaca and Cundinamarca. According to the National Mining Agency (Agencia Nacional de Minería) and the Ministry of Mines and Energy (Ministerio de Minas y Energía), Colombia was the second largest emerald producer in the world in 2017. At the moment, only 3.8% of Colombian soil has been used for mining purposes, although Colombia has much more geological potential. Colombia is ready to be discovered by new investors and companies and is therefore a great business opportunity.

A lot of companies have already obtained an emerald mining license in Colombia. The 3 largest companies in the emerald mining business are Texas Mining Colombia (MTC), Hexa Resources LTD and Fura Gems Inc. 

Fura Gems Inc. is a Canadian company who completed its acquisition in January 2018 for the Coscuez Mine in Boyáca, Colombia. The main goal of this company is to gather representative samples of emeralds from different levels of the Coscuez mine and to modernize the mine and increase the company’s geological knowledge. 

Texas Mining Colombia and Hexa Resources LTD are also located in Boyáca and both active in the Muzo area. Texas Mining Colombia is focused on a responsible way of mining for the exploration and exploitation of emeralds. Hexa Resources LTD is an emerald mining company who concentrates on mining that benefits the local communities and the environment by their HSEC (Healthy, Safety, Environmental and Community) program. 

Who Is the Emerald Mining Authority in Colombia?

According to the Colombian Constitution, the Colombian State is the official owner of all the emerald resources in Colombia. Nevertheless, individuals can acquire rights to emerald resources via a mining license. This license will give you the legal permission and prior authorisation that is issued by the competent legal entities. 

In name of the State, there are two legal entities in charge of giving you the permission and authorisation for a mining license: The Colombian Ministry of Mines and Industry and the National Agency of Mining (ANM). A mining license for emeralds in Colombia is valid for 30 years. 

How to Obtain an Emerald Mining License in Colombia?

There is no existence of a special mining license for emeralds specifically. This means that a normal mining license is enough to get the legal permission to set up an emerald mining company in Colombia. One of our former articles ”How to Get a Mining Title in Colombia?” contains all the information in detail that you need to know to obtain this license however, here we give you a quick overview. 

In Colombia, there are three pathways for obtaining a mining license:

1. Staking on a “first-come, first-served” basis and completing the relevant mine concession application process.
2. Winning a bid through the public auction process for areas within a SMA, and/or
3. Through direct purchase and subsequent transfer of a mining concession from an existing owner.

The consequent steps are:

• The investor and/or mining company must first confirm that the area is not already claimed, which can be confirmed through the National Mining Registry.
• The investor and/ or mining company has to purchase a PIN number, which is a unique number to identify the company and allows for the commencement of the process. It also gives you access to complete the concession application process online.
• After submission, the ANM will confirm whether the requested area is free and also evaluate the technical and legal feasibility of the proposal and then issue a formal decision.

Be aware of the fact that:

• A concession owner has the legal right to transfer the ownership to a third party without intervention of the Colombian government because it is an agreement between private parties. Investors are advised to review four key aspects before buying and/or investing in an existing concession:
  • Confirm the validity and ownership of the mining title.
  • Confirm the geographic boundaries of the concession.
  • Confirm if there are any outstanding financial and/or legal obligations.
  • Confirm that the title is not within a area where mining is prohibited.

Where Can I Find More Information About Setting Up an Emerald Mining Company in Colombia?

If you’re interested in finding out how you can invest in the emerald mining industry in Colombia, at Biz Latin Hub we have extensive experience in assisting foreign mining companies do business in Latin America and our professional and experienced mining lawyers can provide you with all the answers that you need! Please contact our CEO, Craig Dempsey here and see what we can do for you! 

Watch this video if you want to know more about forming a company in Colombia!