Local Time: Print

Mining (MIN)

A Top Export Prospect for Colombia

Market Estimates

(in U.S. $ millions)

2011

2012pr

2013est

Total Market Size

1,126

1,380

1,520

Total Local Production

115

120

126

Total Exports

85

100

104

Total Imports

1,096

1,360

1,500

Imports from the U.S.

420

517

583

(The above statistics are unofficial estimates in millions of USD)

Sources: National Planning Department, Mining and Energy Planning Unit, and World Trade Atlas

Mining Return to top

The Colombian mining sector continues to be an attractive investment market for U.S. equipment suppliers as several companies continue their expansions (especially coal and nickel), even though, international commodity prices have been experiencing a downward trend during the year.

Recently the government created the National Mining Agency (ANM) as the resource administrator. Additionally, they created the National Environmental Licensing Authority (ANLA) as the agency that will evaluate the environmental impacts of large transportation infrastructure, mining, and oil & gas projects and award (or deny) environmental licenses or permits. This has become a major obstacle in the development of projects that aim to expand the country’s transportation infrastructure and mining and hydrocarbons production. This is a key issue for U.S. companies as large mining, oil & gas, construction and infrastructure projects are subject to a stringent environmental license approval process that is three times longer than it was in 2006. The government is actively working with private sector companies to identify ways to streamline the process, reduce procedural bottlenecks and allow for a more predictable process.

Since February 2011, the government suspended new mining license applications, effectively postponing the sector’s expansion, but allowing ANM to identify current mining license-holders that are not actively developing projects. This effort is in line to attract qualified investors that would be interested in participating in future auction of mining blocks in the recently created national strategic reserve of 20 million hectares of areas that are known to contain key minerals such as gold, copper, and other minerals.

The implementation of revisions to the national mining code and the National Mining Development Plan (PNDM) focuses on expanding existing mining projects and the development of new ones and support the government’s goal to increase Colombia’s mining exports. The government is developing an exploration plan to cover more than 120,000 square kilometers of geologically promising areas, including geophysical and geo-chemical prospecting that could allow a better understanding of mineral potential and attract private partners.

Colombia has proven coal reserves of 6.6 billion metric tons and up to 4.5 billion tons of indicated reserves (about 40 percent of Latin America, and rank number 10 in the world). Production levels have expanded 88 percent since 2002 to reach more than 85 million in 2012 (and could reach 140 million tons per year by 2019).

Precious metals production, especially gold and silver, have increased to more than 11 percent per year to 55.9 tons (gold) and 24 tons (silver) between 2004-2011. Companies such as AngloGold Ashanti, B2 Gold, Continental Gold, Gran Colombia Gold among others, are developing feasibility studies or applying for exploration licenses.

Imports of mining equipment benefit from a favorable peso-U.S. dollar exchange rate; relative proximity of Colombia to the U.S.; and with the implementation of the U.S.-Colombia Trade Promotion Agreement (U.S.-CTPA) which went into effect on May 15th 2012, Colombia will eliminate import duties for equipment, spare parts, and accessories destined for various mining activities (production, processing, and transformation).

Best Prospects/Services Return to top

Mineral exploration (geophysics, mapping, diamond drilling, tunneling), production equipment (drilling, extraction, loading, hauling and crushing), and mining software (resource estimation, modeling, mine design and planning, maintenance and optimization); environmental consulting remediation and mine closure), and mine safety equipment.

Opportunities Return to top

Cerrejón, the leading Colombian coal producer, is expanding its operations in La Guajira with thermal coal production with open pit operations and aims to expand production to reach 40 million tons per year, and 80 miles of railway systems and a seaport capable of receiving ships (180,000 tons capacity). Cerrejón is a joint venture (BHP Billiton, Anglo American and Xstrata).

Drummond, the second largest coal exporter in Colombia, and fifth worldwide continued to expand its operations Colombia to reach 27 million tons in 2012, and has plans to expand its production capacity to 40 million tons per year.

Resources Return to top

CS Bogotá contact: Julio Carbó, Commercial Specialist

Email: Julio.Carbo@trade.gov

Tel: (571) 275-27-23

Colombian Government: www.gobiernoenlinea.gov.co

National Planning Department (DNP) www.dnp.gov.co

Ministry of Transportation: www.mintransporte.gov.co

Ministry of Mines and Energy: www.minminas.gov.co

Mining and Energy Planning Unit: www.upme.gov.co

National Concessions Institute (INCO) www.inco.gov.co

Drummond Ltd.: www.drummondltd.com

Carbones del Cerrejón: www.cerrejoncoal.com

Colombian Geological and Mining Service: www.ingeominas.gov.co

Inter-American Development Bank (IDB): www.iadb.org/exr/country/eng/colombia/

The World Bank (WB): www.worldbank.org