Exclusive Q&A on Mining Law with Ignacio Santamaría

Can you talk us through the current mining landscape in your jurisdiction?
 
LLC&CO.- Currently the mining industry in Colombia is going through a very interesting and in a certain manner contradictory landscape.
 
On the one hand it is expected to have four gold mines entering into production in 2017 (Red Eagle Mining de Colombia Limited, Continental Gold Limited, Antioquia Gold Limited and Gramalote Ltd) and the exploitation of emeralds seems to blossom thank to the arrival of companies like Minería Texas Colombia S.A. and Gemfields PLC. to the Country.
 
However, other than the two companies above-mentioned, new companies have not entered into Colombia in the past four years, and two of the companies already in the Colombian mining market are planning or have already sued the Colombian Government (EcoOro Minerals Corp and Gran Colombia Gold) due, to the legal uncertainty presently prevailing in the Colombian legal system.
 
Indeed, during the last years, and with the aim of protecting the environment, minority’s rights and local community’s decision power, the Colombian Constitutional Court issued many judgments affecting the mining industry and changing the way things have been done in the past few years.
 
Notwithstanding, a change of four of the nine justices from the Constitutional Court is yet to come, hence depending on their political orientation a modification in judgments may occur.
 
Who are the main regulators and what are the key legislations that apply to your jurisdiction?
 
LLC&CO. - The main regulators in Colombia regarding the mining industry are the Ministry of Mines and Energy and the National Mining Agency.
 
The key legislation that applies to our jurisdiction in connection with the mining industry continues to be Law 685 of 2001 (Mining Code), which has been modified and/or regulated by different decrees and resolutions.
 
Mining activities in Colombia are also subject to environmental laws currently in force (Decree 1076 of 2015), laws regulating the use of soils in municipalities (Law 388 of 1997) and to laws related to ethnic communities, among others.
 
Nevertheless, rulings from the Courts as a consequence of constitutional actions and mainly rulings from the Constitutional Court, have become a key element in the application of the law, as said rulings are mandatory when related to fundamental constitutional rights. Thererfore, said rulings have even created and amended, rights and obligations of the authorities, mining companies, communities, etc.
 
Have there been any recent changes or interesting developments?
 
LLC&CO.- Many changes and interesting developments have taken place mainly to the recent Constitutional Court’s judgments.
 
However, we do believe that the most important changes are related to the prohibition to undertake mining activities in moorlands and the possibility for municipalities to forbid mining activities in their territories.
 
Prohibition to undertake mining activities in moorlands:
 
The prohibition to undertake mining activities in moorlands was not incorporated in the Mining Code, however due to the pressure of media and especially of the inhabitants of the city of Bucaramanga (Close to the SanTurbán moorland), the Colombian Government through the National Development Plan made an effort to regulate the extractive activities in moorlands in cases in which valid mining/oil titles and environmental permits/licenses were already granted.
 
Several articles of the National Development Plan, including the one regulating the extractive activities in moorlands were challenged before the Constitutional Court, which, regarding this point, came to the conclusion that extractive activities are banned in moorland areas regardless of whether there were mining/oil titles and environmental permits/licenses validly granted.
 
Possibility for municipalities to forbid mining activities in their territories:
 
Per article 37 of the Mining Code, the municipalities were not entitled to forbid mining activities in their territories.
 
Said disposition was challenged several times before the Constitutional Court which finally made the decision to strike it out due to alleged procedure defects in its issuance.
 
What are the main challenges and opportunities currently facing the global mining industry?
 
LLC&CO.- In our opinion, the main challenges the global mining industry is facing are the following:
 

• Commodities prices;
• Finance sources;
• Tax burdens;
• Environmental and communities regulations;
• Negative image of the industry.

And the main opportunities are as follows:

• Commodities price raising
• Innovation and lowering of costs.

Can you summarise the potential implications of the Paris Agreement on the mining industry?
 
Although the Agreement does not include an explicit reference to the mining industry or to the specific measures to be adopted by each signing country for purposes of reducing greenhouse emissions, it is foreseeable that the mining industry will be propelled to implement cost-efficient technologies and strategies in order to reduce its greenhouse emissions (mainly related to energy consumption). The scope and extent of such measures will be determined by the contents of the intended nationally determined contributions prepared by each signing country. Moreover, it is worth highlighting that the Agreement aims at replacing fossil fuel power generation and promoting instead renewable energies at a large scale. Under such scenario, the coal industry could be severely endangered in the mid and long term.
 
In an ideal world what would you like to see implemented or changed?
 
LLC&CO.- In an ideal world we would like to see legal stability for Colombian people and foreigners interested in investing in Colombia to be able to manage their affairs in an effective, organized and planned manner.
 
It would also be desirable to have ethnic groups using their rights and special protection under the Constitution in a fair and consistent manner and not abusing of them as often occurs.
 
Likewise, we would like environmental authorities to make decisions based upon strict technical reasons and not assumptions.

Ignacio Santamaría has been Partner of Lloreda Camacho & Co., since 1996. He is the Head of our Mining & Natural Resources, Administrative, and International Trade Departments.

He has more than 20 years of experience in matters related to Mining Law, including mining joint ventures structuring, establishment of  special purpose vehicles, option agreements and purchase agreements of mining titles and related; and participation agreements, forest reserve extraction processes and environmental permitting in general, among others.

Currently, Ignacio is a member of the Rocky Mountain Mineral Law Foundation, the Interpacific Bar Association and participates in the Annual Meetings of the Prospectors and Developers Association of Canada (PDAC) since 2006

Ignacio can be contacted on +57 1 326 4270 or by email isantamaria@lloredacamacho.com