Feature: Colombia pro-mining referendum will not soothe global miners

Eco Oro Minerals

10/04/2018 16:03

By Julia Symmes Cobb and Nelson Bocanegra
    VETAS, Colombia April 10 (Reuters) - Jose Alberto Gamboa,
whose smile flashes the gold he has spent his life digging from
Colombia's frosty Andean mountains, says he will do whatever it
takes to protect his town's only industry: mining.  
    "We would get guns and go to war," the grizzled 67-year-old
miner said during his break at the Queen of Gold mine, near
Vetas, on the steep slopes of Santander province. "How else
could we feed our children?"
    Gamboa is not alone. Vetas municipality will soon hold
Colombia's first-ever, and so far only, local vote aimed at
enshrining the right to mine, in sharp contrast to a wave of
environmentally focused anti-mining referendums over the past
year that spooked investors and forced a major gold project to
close. 
    The pro-mining referendum in Vetas may prompt more
elsewhere. But pro-mining votes seem set to benefit local
companies and mining in streams and on mountainsides, not
multinationals including Continental Gold  CNL.TO , EcoOro
 EOM.CD , Red Eagle  R.TO  and AngloGold Ashanti  ANGJ.J , which
pulled out of a $360 million investment in Cajamarca after an
anti-mining vote last year.
    Miners have called for clarity on whether the referendums,
be they pro or anti-mining, are binding. But the government has
failed to legislate the issue, which is dampening foreign
investment at a time when Colombia is grappling with low growth.
    "Just give us clear rules," said Juan Camilo Narino of
AngloGold.  
    In all six votes held so far, locals voted against mining.
Some 54 more votes are planned.
    Though locals fear the fate of Cajamarca, whose economy
nose-dived when AngloGold left, few municipalities have good
relationships with multinationals and do not wish to back them
in a vote. According to a recent survey, Colombians consider
international miners arrogant and dishonest.
    "It's not for the gringos who want to get all the money to
take it out of Colombia," said Gamboa, a father of seven.
    AngloGold did not campaign against the Cajamarca vote, keen
to avoid accusations of meddling in local democracy.
    The Mining Ministry promised a law to regulate use of the
referendums, but it has yet to materialize. May presidential
elections have dimmed hopes for a prompt solution. 
    Mining minister German Arce has said communities are free to
hold the votes, but the choice to allow mining rests with the
government.
    "Laws are changed by Congress," Arce said at a recent
industry event. "This isn't a problem the state resolves alone
or companies resolve alone."
    The mining ministry did not respond to a request for further
comment.      
    
    QUEEN OF GOLD
    Locals also hope the pro-mining referendum will stymie new
court rulings and environmental regulations that could close off
more land, especially in places like Vetas and neighboring
California, which have delicate, high-altitude wetlands.
    This has already happened at Canadian miner EcoOro's
Angostura project in California, which was cut in half by a 2014
constitutional court ruling that expanded wetland protections.
EcoOro, which has invested more than $250 million in Colombia,
including Angostura, is suing for $764 million in damages and
declined to comment. 
    Colombia's government has until November to release the
final wetland delimitation and residents fear a majority of the
municipality will be included. A new government takes office in
August and could influence the decision.
    "We want the national government, the courts, public opinion
to see that here in Vetas we want mining and we want to decide
for ourselves," said municipal official Angelica Garcia. "If
they restrict mining the municipality will disappear."
    Mining accounts for some 90 percent of the local economy,
Garcia said. The Queen of Gold, one of four local miners in the
municipality, employs 60 people and is owned by a group of 12
families. 
    "We support the (pro-mining) vote but we're not interested
in supporting any multinational," said partner Johanna Rangel,
whose father helped start the mine. 
    In California municipality some still make their living
panning for gold. Officials said the community has a fraught
relationship with Minesa, the latest multinational to start a
project there, pledging to directly employ 1,000 people.
    California's mayor Hugo Lizcano said the company, owned by
the government of Abu Dhabi through its investment arm Mubadala
Investment Corp  MUDEV.UL , caused "friction" with the community
because it did not hire the number of locals it had promised.
    Minesa, which is applying for the project's environmental
license, plans to invest around $1 billion over the next five
years, eventually producing 410,000 ounces of gold per year.
    "Since we arrived in the area we've been interested in
having a direct and clear dialogue with the communities," the
company said in an email, adding it hoped a "large majority" of
jobs would be filled by locals. 
    Red Eagle and Continental Gold did not respond to requests
for comment.

 (Reporting by Julia Symmes Cobb and Nelson Bocanegra
Editing by Helen Murphy, Christian Plumb and David Gregorio)
 ((julia.cobb@thomsonreuters.com; +571-518-5381;))