New frontiers: As geological knowledge expands, so too could mineral reserves

The identification of the mining sector as a driver of economic growth by the incumbent administration was largely, and rationally, based on geological potential. While large coal reserves are well documented, along with smaller deposits of gold, copper, emeralds and other minerals, the most attention-grabbing aspect of the country’s geological make-up is that, despite a long history of mining, it remains relatively unexplored. One of the primary challenges for the newly created National Mining Agency (Agencia Nacional de Minería, ANM) is to increase geological knowledge.

Before the ANM’s creation, the Colombian Institute of Geology and Mining (Instituto Colombiano de Geología y Minería, INGEOMINAS) was responsible for managing and regulating mineral extraction. Following the creation of the ANM, the agency has been restructured to focus on geological mapping under its new name, the Colombian Geological Service ( Servicio Geológico Colombian, SGC). With Resolution 18-0102 of January 2012 the SGC identified the minerals of strategic interest: gold, copper, phosphates, platinum, potassium, magnesium, coal, uranium, iron, columbite-tantalite (coltan) and all their associated minerals, concentrates and derivatives.

Over the next four years the SGC will conduct studies to determine their quantitative and qualitative characteristics, with an emphasis on the rarer minerals, such as coltan. A 2012 study by the Ministry of Mines and Energy revealed only 52% of the subsoil had been analysed, and just 5% if geophysics is considered. Therefore, the geo-scientific study of strategic minerals is a key aspect of the ANM’s broader industry strategy, which is given high priority under the National Mining Plan and is financed with 2% of mining royalties.

INTO THE UNKNOWN: A large part of the country’s allure as a mining destination is the fact that it is relatively unexplored. The most basic geological mapping completed by the SGC accounts for just over half of the national territory. This is principally the result of over a half-century of fighting with armed guerrilla groups and narcotics traffickers in the jungles and mountains. At various points such groups are estimated to have controlled more than 50% of the national territory. Major efforts by the last two governments have restricted the influence of terrorist groups to sparsely populated areas. The Ministry of Defence estimates the area now occupied by criminal gangs to have fallen to 28%. This improvement in security has allowed for mining and hydrocarbons exploration in previously unexplored areas. As such, various projects are being undertaken by junior mining firms as the public and private sector work to survey land that holds similar characteristics to other Andean mining countries, such as Peru and Chile. According to the Metal Economics Group, in 2012 over 2% of private sector exploration budgets globally went to Colombia.

STRATEGIC MINING AREAS: In 2012 President Juan Manuel Santos announced the restructuring of a vast swathe of territory, declaring 18% (around 20.5m ha) of Colombia to be “Strategic Mining Areas”. In these areas the government, through the ANM, will shift from its normal policy of issuing permits and licences on a first-come, first-served basis and instead auction mining concessions in the same manner as with hydrocarbons concessions, with an eye to attracting the top companies to explore and extract minerals.

While the delineation of Strategic Mining Areas is not a new concept – under Law 685 of 2001 special mining reservations may be created by the government for purposes of social or economic development – this is the largest such use of them.

The SGC was scheduled to compile geo-scientific data on the Strategic Mining Areas during the first half of 2013, while the second half of the year is set aside for the ANM to structure and develop the process for what will likely be a 2014 auction of concessions within the designated areas.

COAL: Though deposits also exist in the interior of the country, the majority of active coal beds are located in northern areas, where one of the world’s largest open pit coal mines exists in Cerrejón. At the beginning of 2012 Colombia’s 6.37bn tonnes of bituminous and anthracite coal reserves, “hard coal”, gave it 92% of all proven hard coal reserves in Latin America, and 1.6% of global reserves. It also possesses smaller reserves of “soft coal” (sub-bituminous and lignite), with just 380m tonnes, which is 6.8% of all soft coal in Latin America and less than 0.1% of global reserves, according to BP’s 2012 “Statistical Review of World Energy”. Combined coal reserves of 6.75bn tonnes provide Colombia with 54% of Latin America’s reserves and 0.8% of the global total. The National Office of Mining and Energy Planning (Unidad de Planeacíon Minero Energé tica, UPME) estimates from 2009 put the country’s total possible coal reserves at 16.67bn tonnes.

GOLD & COPPER: Official data for gold and copper reserves has yet to be released, though the majority of exploration and production of both currently take place in the Middle Cauca Belt in the Antioquian Batholith. The belt lies several hundred kilometres east of Bogotá, runs in a north-south direction through the interior of the country and is home to numerous large, low-grade porphyry gold and copper deposits that are ideal for bulk mining operations.

While much of today’s formal exploration and extraction of gold is carried out in the Middle Cauca Belt, Colombia is home to a total of four primary gold belts that offer attractive formations for exploration, including the Chocó Belt, the Segovia Belt and the California Angostura district, where epithermal and placer gold deposits are also found, according to a 2011 study by World Gold Analyst.

OTHER MINERALS: Apart from coal, gold and copper, Colombia possesses numerous minerals, including ferronickel, iron, emeralds and other rarer minerals, such as columbite-tantalite (coltan) and even uranium. The south-eastern Amazon region bordering Brazil could hold significant deposits of iron ore, silver and potassium, according to previous studies conducted by INGEOMINAS. Nickel mines exist in the northern Caribbean region as well, with the nation’s six mines combining to provide 37.87m tonnes of nickel, according to the latest available data from the UPME.

Vast unexplored tracts of land hold significant promise of additional mineral reserves. A lack of geological information and the informal nature of the current mining industry mean that official reserve statistics are lacking for the main metallic minerals, although the early indications are that Colombia holds very similar mineral deposits to those found in Chile and Peru. Indeed, World Gold Analyst suggests that strong geological evidence supports claims that deposits of a similar grade and size of gold and copper to those found in Peru and Chile exist in Colombia. According to the Ministry of Mines and Energy, just 4.2% of national territory was covered by mining licences in 2010, a figure which will not have risen much since, given the restructuring of the industry’s supervising entities. All of this points to a promising – if unknown and unquantified – future for the mining industry, making the upcoming tender by the ANM all the more exciting.

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The Report: Colombia 2013

Mining chapter from The Report: Colombia 2013

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