June 2011 Mining Code update

The lead off for this issue is news that Colombia’s Constitutional Court struck down Law 1382 of 2010, which amended Law 685 of 2001, Colombia’s Mining Code. Juan Carlos Henao, president of the Court, determined that this was unconstitutional as there was no prior consultation with indigenous or ethnic black communities, which there has to be for laws that will affect said communities. Exploration and mining occurs in said communities ergo cogito sum a bit of an embarrassment for the government.

Law 1382 was generally unpopular with miners and explorers as it was a political rather than a technical law, which left various technical questions unanswered, as Greystar Resources found out to its cost. For example, Law 1382 prohibited mining activity in Paramo regions but faield to define what a paramo is for the intents and purposes of the law.

AngloGold Ashanti has also seen project development mired in similar uncertainties with its La Colosa project in Tolima department. “The project has suffered obstacles in the exploration phase that clearly has delayed the schedule.“Some critical decisions as to where we can do activities, what kind of permits do you need and how will they be obtained need to be clarified,” said Rafael Herz, AGA head in Colombia.

So where does leave the exploration and mining sector now? Well, the Court decided that the effects of its ruling would not be applied for two years, in effect maintaining the status quo while giving the government two years to consult with the various community groups to be able to present the bill to Congress again.