It is important to take into account as background for this objective selection process of areas ("Mining Rounds") that the National Government plans to carry out through the National Mining Agency ("ANM") the following political and legal circumstances.
1. The National Development Plan 2018-2022 “Pacto por Colombia, Pacto por la Equidad” establishes as a priority within the Pact for mining and energy resources for sustainable growth and expansion of opportunities the strengthening of the criteria for the suitability of mining titleholders so that the country has qualified mining operators who carry out the activity with technical, economic, social and environmental accuracy.
2. Article 20 of Law 1753 of 2015 (National Development Plan 2014- 2018) states that the national mining authority shall determine the minerals of strategic interest for the country, concerning which, based on available geoscientific information, it may delimit free areas as special areas so that such areas can be evaluated on their mining potential, and those that contain a high mining potential may be granted through an objective selection process.
3. The article mentioned above establishes that within the framework of such objective selection processes, the ANM must set the minimum participation requirements, qualification factors, special obligations of the concessionaire, and establish the minimum economic considerations in addition to the royalties.
In this vein, and aiming to promote the growth and sustainable development of the Colombian mining sector within the context of a technical, environmental and social responsibility, in which the Minerals of Strategic Interest that the country possesses are extracted rationally, under the best operational and mining safety standards, provided that it provides better conditions and benefits for both the State and the communities that are located in the defined Strategic Mining Reserve Areas, the National Government, through the Vice Presidency of Promotion and Development of the Ministry of Mines and Energy ("Minminas") published for comments the project "Resolution through which the Terms of Reference for the selection of proposal for the award of Special Contracts for the Exploration and Exploitation of Minerals in Strategic Mining Reserve Areas and its annexes are adopted." The Terms of Reference, which are included as an annex to the resolution mentioned above, and the draft resolution establishing uniform criteria to evaluate the legal, technical and financial capacity of those interested in implementing mining projects in the Strategic Mining Reserve Areas, are also published for comment.
Therefore, the following are published: (i) Draft (Resolution); (ii) Qualification Resolution, and (iii) Terms of Reference to "Select the most favorable proposal(s) for allocating Special Contracts for the Exploration and Exploitation of Minerals in Strategic Mining Reserve Areas as the ANM makes the Strategic Mining Reserve Areas available to the public."
The Mining Round has many resemblances with the allocating processes of areas in the hydrocarbons sector, in which the State has had successful results.
The Mining Round will be open to natural or legal persons, national or foreign, either individually or through associations, who comply with the qualification requirements established in terms of reference ("TOR") or the Qualification Resolution (the "Resolution"). These include:
1. Legal requirements. It is important to point out that foreign legal entities without a branch in Colombia must evidence an attorney-in-fact domiciled in Colombia and submit a document of incorporation issued by the competent authority in the country of their domicile, at least within the four (4) months prior to the date foreseen for the delivery of the Qualification Request.
2. The Qualifying Requirements can be accredited through: (i) companies controlled by the participant; (ii) the participant's parent company; or (ii) companies controlled by the participant's parent company, including in the concept of "control" reasons apart from the shareholder composition.
3. Financial Requirements. The qualification will lead to three ranges: Type A, Type B, and Type C; therefore, the financial requirements vary according to these ranges or categories. However, the financial requirements consist in proving compliance with specific financial indicators:
c. Interest Coverage Ratio or Adjusted Net Worth (plural structures)
4. Technical requirements. The qualification will lead to three ranges: Type A, Type B, and Type C; therefore, the technical requirements vary under these ranges or categories. However, in general terms, these requirements seek to accredit:
a. Participation in mining projects, according to specific criteria by range.
b. That they have made reports of exploration results and resource estimates under any national or international standard.
c. That they have executed minimum drilling campaigns of a certain number of meters, pursuant to the category of qualification.
5. Environmental capacity, which entails accrediting that the participant have adopted and applied an environmental management system that confirms that it is in conditions to execute the projected contracts with strict compliance with the applicable law, good practices, and the most recent technologies in the industry.
6. Corporate social responsibility capacity seeks to accredit having adopted a set of open and transparent practices, based on ethical values and respect for the State, its workers and contractors, the society, the communities, the environment, and renewable natural resources.
The concept of restricted qualification is introduced for those participants who cannot accredit their financial capacity but who can accredit the other established requirements. In these cases, the participant must present to the ANM either (i) a bank guarantee upon first request; or (ii) an irrevocable commitment of investment from a private equity fund.
The qualification must be annually renewed and updated, in April, through the Integral Mining Management System (ANNA Minería) or the one acting in its stead. Likewise, the qualified participants must inform the ANM of any change in their share composition or percentage of participation representing more than fifty-one percent (51%) within ten (10) working days following the date in which such change is formalized.
Comments should be submitted via e-mail: firstname.lastname@example.org and email@example.com, until December 2nd, 2020.
To access the documents, click on the following link: