PUBLICATION

Engineering & Mining Journal

AUTHORS

Alice Pascoletti, Katie Bromley, Andrew Mason

Colombia Mining 2014 E&MJ Release

March 07, 2014

Over the last decade Colombia has undergone a transformative age that has vastly enhanced the long-term prospects of the country’s mining sector. As the administration of former-president Alvaro Uribe aggressively improved the country’s security situation from 2002 to 2010, majors and juniors alike demonstrated unprecedented interest in the “Last Andean Frontier.” According to Colombia’s National Administrative Department of Statistics, foreign direct investment in the mining sector grew at an average rate of 5% per year between 2005 and 2010. When Uribe’s defense minister and successor, Juan Manuel Santos took the reigns in 2010, he identified the extractive industries (mining and hydrocarbons) as one of five “locomotives for economic development.”

As Santos’s first term reaches its twilight, the mining sector faces a number of challenges, both internally and externally, that have slowed the country’s once robust locomotive. Many proposed gold projects are stalled either by regulatory hurdles or internal financing issues, while Colombia’s second largest source of export revenue, thermal coal, saw a 4% decline in production in 2013. Of course, a major factor in this slow development is the uncertain outlook of global markets; gold prices hover $650/oz below their record highs and cheap gas in the United States is reducing the medium-term demand outlook for Colombian coal. In 2012, foreign direct investment in Colombia’s mining sector declined 5.5% compared to 2011. The situation is not improving; during the first seven months of 2013, investment in mining and aggregates fell by 3.1% compared to the first seven months of 2012.

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