New boundaries of Santurbán park deal a blow to mining in Colombia

Published by MAC on 2014-04-03
Source: Business News Americas

New boundaries of Santurbán park deal a blow to mining in Colombia

By Greta Bourke

Business News Americas

1 April 2014

After years of uncertainty, the Colombian government has finally defined the borders of the Santurbán páramo regional park in Santander department, but the outlook is fairly negative for mining companies in the region.

First of all, the environment ministry (Minambiente) decided to extend the limits of the park from 11,000ha to 42,000ha. Páramos are high altitude ecosystems, usually above 3,000m, that are rich in biodiversity. Mining was prohibited in these areas by the Colombian government in 2010, so the extension of the park area means more mining concessions will be affected by the ban.

"The main agreement is that people will not be displaced and we want to give them more legal security over their ownership of the land," environment minister Luz Helena Sarmiento said when announcing the news in a closed meeting with authorities. Her comments were clearly not directed at mining companies. Indeed, it is not at all clear what will become of the miners that have exploration projects in the region as they have not been informed yet of the specific coordinates of the park.

The Long Wait

Canadian miners with exploration ventures in the area include Eco Oro Minerals, with its Angostura gold project, and CB Gold, which has the Vetas gold project.

AUX, the Colombian gold mining subsidiary of Brazilian businessman Eike Batista's troubled EBX group, also has properties in the area, although Batista has reportedly been trying to sell them.

These companies have been waiting for years for the government to confirm the limits of the páramo before deciding how to proceed with their projects. Colombia's previous mines and energy (Minminas) minister Federico Renjifo said that mining companies already licensed and holding environmental permits would be allowed to continue working within the new park, but that no new projects would be approved and licenses would not be renewed upon expiry.

The new park boundaries will affect 10 mining concessions, Sarmiento was reported as saying by local paper Portafolio. Of the 10, only two have environmental permits.

Sarmiento also said that Eco Oro will suffer the most because a large part of its Angostura project is within the park. This is particularly relevant because Angostura was declared a project of national interest as recently as June 2013 so it would appear to have the backing of the government.

Lack of Coordination

One of the biggest obstacles to the development of new mining projects in Colombia is environmental opposition, and this has been gaining in importance due to the failure of Minminas and Minambiente to work in a coordinated fashion towards a common goal of sustainable development.

The Santurbán park resolution was being watched very closely by international investors as it provides a signal of which side is gaining the upper hand in the fray between mining and the environment.

Although this round has clearly been won by the environment, investors might not be too disheartened if authorities have some sort of compensation plan in place. Stripping companies of their rights to mine after they have invested time and money in the country would send a very negative message to the market.

Changes

Meanwhile, the agriculture ministry will be meeting with local authorities and representatives of civil society to develop new productive projects in the páramo. When the communities change their crops and desist from mining activities, they will be compensated by the government, Sarmiento said. It remains to be seen whether mining companies will receive the same treatment.