Año 1 Edición 25 Página 12
Año 1 Edición 25 Página 12
OVER 2,000 APPLICATIONS ON JULY 2
PROGRESS AT A HIGH ATTRITION COST
The opening of the mining applications system is great news for the industry but the process has not have an investment friendly execution.
1) Rules for application: Announced one week before the opening including:
Source: OPHIR MRI
The National Mining Agency( ANM) new filling system succesfully received more than 2,000 applications in the first hours of July 2. Under the new regulations, the critical requirements to apply to a mining contract in Colombia, for a non-strategic area, is the following:
1) Online application through the National Mining Agency webpage
2) Physical delivery of technical documentation supporting the proposal including map and Minimum Exploration Program
3) Physical delivery of documents supporting the investment, including certification of economic capacity to perform exploration program
The ANM registers the turns in which applicants participate, and one day after the application the final report with areas requested is published.
The lapse for a resolution can vary from 3 to 6 months according to ANM officials, based on the remaining processes to be atended.
With the new process, the cascade effect( second propsoal being revised after the first one is rejected) is nullified, allowing free areas to be available to the public sooner.
Resolution 428: Establishing the minimum investment requirements to consider an exploration program acceptable. This is an important effort by the ANM but needs refining as some criteria are formulated on an area basis and soar prices for critical activities such as drilling. This requires a more selective analysis.
Decree 1300: Establishing the financial muscle of the applicant. Based on the above, many developers have to reduce their areas( increasing risk) or make a proposal with unreal considerations, which leads to frozen areas during the evaluation period.
In addition, focusing on borrowing capacity or requiring a bank certification as warrant is unreasonable as banks do not invest in mining exploration. While this left room only to developers with strong institutional support, opens the door to discuss about organized investment in mining in Colombia.
2) Exclusion areas: The Ministry of Environment announced the Decree 1374 establishing areas to be excluded from new mining titles, for a period up to two( 2) years.
In theory, the ANM could grant one of this areas to be explored( concession contract), with the risk of it being declared a no-mining zone in the next 2 years. This is a very un-friendly posture, and based on this, concession contracts in these areas should not obligate investment until its status is defined.
The map showing these areas( see next page) was realeased one business day before the opening bell for applications, giving virtually no time to adjust corporate strategies.
The fact that the Ministry of Environment can interfere in the mining business at any point with a new decree with no scientific support, like this one, is concerning. With nearly US $ 1.2 million invested in new applications, it is being time to clearly define no-mining areas.
Opinions expressed in this report accurately reflect autor’ s personal opinion about the company of concern. Also, the author certifies that he has not received, is not receiving and will not receive any direct or indirect payment in exchange for expressing a specific opinion