If the industry is to continue to thrive, it must integrate the rising expectations of local residents, miners, and municipal governments backed by the constitutional court with the legal needs of international firms that have expended as much silver, sweat, and ink as anyone.
Catchphrases can often cut both ways, depending on who is uttering them. “It was the best of times,“ says the tenant in a renter’s market. “It was the worst of times,“ says the landlord. Of those that have defined the past five years—from social dysfunction and economic stagnation to civil war—perhaps no statement has ambiguously loomed larger than “this is what democracy looks like.“ For miners in Colombia, never has the question been more acute. In the wake of last year’s extraordinary breakthrough with the FARC, hopes among most of the world, especially the mining community, were running extremely high. What had been off-limits for five decades and, in some cases for all intents and purposes, since the dawn of time, was now ripe for the picking. Military pacification of vast swathes of the mineral-rich countryside was to seamlessly translate into an equally vigorous commodification of the landscape’s untapped resources. Before the demos and judiciary got in the way.
Following the law of rising expectations to the letter, environmental activists, local residents, and indigenous groups in mining communities across the country have begun opposing major mining initiatives through a series of referendums and ballot initiatives that, somewhat surprisingly, have been overwhelmingly backed by both municipal authorities and the courts. In April, South Africa’s AngloGold Ashanti was forced by acourt order to halt its activities at its largest gold exploration project in the country, La Colosa, after residents in the nearby township of Cajamarca voted to ban mining in the area.
With 14 years of work under its belt and millions invested in the project in central Tolima, a mountainous province southwest of Bogotá, the company had no choice but to swallow this bitter pill and accept the municipality’s decision—despite the fact it had invested USD900 million in three projects across Colombia in the past decade. A potentially USD2 billion investment expected to one day yield 28 million ounces of gold, La Colosa was the largest of AngloGold’s projects and expected to become one of the most important gold mines in the world. Backed by the mayor and constitutional court, residents argued the mine would harm the local water supply, a claim that AngloGold disputes.
Tellingly, the Tolima vote was only made possible by a crucial 2016 decision by the constitutional court to overturn the national government’s sole power to approve mining concessions. Now mayors and provincial governors have the power to challenge exploration permits, a move that delighted environmentalist and sent chills up the spines of mining firms everywhere from Johannesburg to Canberra.
To be sure, not everyone is going quietly. Only days before the vote in Cajamarca, Canadian mining conglomerate Gran Colombia Gold filed for damages worth USD700 million from the Colombian government after a court order forced it to halt operations at its Marmato project until further consultations could be held with local communities. This time, however, the dispute in question was not whether, but who, would mine the literal mountain of gold thought to be lurking beneath Marmato—the Canadian conglomerate or the artisanal miners who have inhabited the Antioquian town for centuries. Gran Colombia had acquired the Marmato project after buying Medoro Resources Ltd, another Toronto-based gold mining firm in 2011, and is basing its suit against Bogotá on breaches it claims have been made to the Colombia-Canada free trade agreement also signed that year.
Nor are they alone. Another Canadian firm, the Halifax-based junior explorer Zonte Metals, is suing the local authorities in Antioquia province for their failure to grant the requisite mining permits for a 30ha site it is scouting in conjunction with AngloGold. In February, a special court granted Zonte the right to proceed with its lawsuit against the local authorities, sending its stock up by 11% the day of its announcement.
Whatever the court’s decision in these cases, the sooner they come the better. As in love, uncertainty can be a far more expensive externality than upfront rejection. And like jealous lovers, shareholders hate to be kept waiting. At least in part because of these pending legalities, Gran Colombia’s stock price has fallen from USD11.50 five years ago to USD0.10 a share today.
In the case of Gran Colombia, the Ministry of Commerce has until October to decide upon the case; if by then it has yet to resolve the dispute, the Canadian firm will plead its case before the Arbitration Committee of the World Bank.
It nearly goes without saying, but each of these rulings—or lack thereof—have sent chills down the spine of the Colombian Mining Association (ACM) and the broader international investment community. At the ACM’s annual meeting in May, miners warned that each referendum would only embolden further communities to adopt similarly aggressive postures against the industry. Though not all related to mining, there are another 39 popular referendums currently pending, the passage of which seems to be growing by the month.
In the words of Mateo Restrepo, the Colombian chief executive of Toronto-based Continental Gold, the La Colosa ruling had sent “a disastrous signal“ to potential foreign investors. They also complained that residents were denying themselves billions worth of precious metals that otherwise will merely lie idle in the ground.
To be sure, above and beyond debates over who stands to benefit the most from mining projects or whether it is a zero-sum arrangement are broader, thornier questions of national versus municipal versus popular sovereignty; how to best attract healthy and sustainable means of foreign investment; and how to balance the needs of development within the bounds of democratization. After all, there seem to be two competing truths at stake here: on the one hand, only prosperity wrought by some rational appropriation of Colombia’s abundant if ever elusive spoils will bring Colombia from the realm of necessity into the realm of freedom—and bury the hatchet for dime-a-dozen Marxian rebels and finally end Colombia’s belatedly simmering cold war.
On the other hand, should the country fail to learn the lessons of a 50-year civil war fought at least as much on the basis of land tenure as anything else, and make the necessary and more equitable distribution of Colombia’s bounty, then it risks building its post-conflict house on a social foundation of sand: mining will have to be somewhat as democratically distributed as it is extracted. Not to mention suitably regulated. A string of deaths at illegal gold mines throughout 2017 highlighted the precariousness of much of the industry. As such, the pacification of the countryside must also be accompanied by its formalization—and great leaps forward made in safety standards, exploration, and arbitration. Only a country as creative, resourceful, and quick on the draw as Colombia can meet such a challenge.