Sunday, June 4, 2023

Colombia sets its sights on Codelco deal

Colombia is in talks with Codelco, the world’s biggest copper miner by production, to join an exploration boom triggered by the opening up of new territories once controlled by the Revolutionary Armed Forces of Colombia (Farc).

“Codelco is interested … we hope that Colombia will be its first international incursion,” Mauricio Cárdenas, Colombia’s mining minister, said in an interview with the Financial Times.

Diego Hernandez, chief executive of Codelco, said this month that regional expansion is a priority for Chile’s state-owned copper miner this year. It has only limited foreign interests, investing $3.5m since 2008 on exploration in Ecuador and last year agreeing to invest a further $10m-$30m.

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Colombia is the world’s fifth-biggest producer of coal and has high hopes for its gold sector, but copper exploration and production is still in its infancy.

“In the case of copper we think we have the resources – we have the geological information – but we have very limited exploration,” Mr Cárdenas said.

Colombia has no state mining company and no interest in partnering with investors, he added. “We just want to make sure that they [Codelco] find a friendly environment to invest in.”

Foreign investment in mining and energy in Colombia hit $12bn last year as companies sought to gain a foothold in promising regions that have become feasible exploration prospects for the first time in decades after Colombian security forces reclaimed Farc-controlled territories.

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“Many people tell me they see Colombia as the last frontier where mining resources are easily accessible and deposits are easy to extract,” Mr Cárdenas said.

The minister has twice met Mr Hernandez of Codelco in Davos and in Bogotá. A spokesperson for Codelco confirmed the company was actively looking for projects in Colombia.

“In Colombia, Codelco has a number of confidentiality agreements with local companies that has allowed it to review a number of prospects, but so far none of them meet the requirements of large-scale mining,” the spokesperson said.

Colombia’s exploration boom would “undoubtedly bring new discoveries and therefore opportunities for companies such as Codelco to form strategic alliances or partnerships in projects with high potential,” he added.

The country has earmarked 2.9m hectares of land for mining exploration but the issuance of new concessions has been frozen for more than a year after safety and corruption scandals in the sector.

More than 300 miners died in Colombia in 2010 and 2011, and of the 9,000 mining titles issued by the government, only 60 are active.

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The government will launch a new mining agency, modelled on Colombia’s National Hydrocarbons Agency, next month, ahead of a new mining code going to Congress in July.

The new agency will introduce a more competitive bidding process for mining concessions and monitor compliance with exploration, production and environmental and social requirements.

The code will seek to free thousands of idle mining titles from the hands of speculators, give greater powers to security forces to combat illegal mining and impose stringent economic and social standards on the sector.

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