Mining

The mining industry includes the extraction and the production of metallic and non-metallic minerals activities. As owner of the non-renewable mineral resources, the State acts through the National Mining Agency (ANM) to manage and administer mineral resources. Colombia’s exploration and exploitation rules follow the principle "first in time, first in law". However, existing mining titles may be transferred between private parties, upon approval of the mining authority.

The mining industry’s contribution in total 2017 GDP was 1.92%, reaching COP$ 7.89 billion, with a decrease of 6.25% compared to the year 2016. Coal, which is the main mining resource for export in Colombia, accounted for 65.67% of the mining GDP, representing 1.26% of the national GDP.

Colombia has great investment potential in mining exploration, since less than 4% of its territory is dedicated to mining. At the end of 2017, the country had granted 8,375 mining titles, 41% of which correspond to construction materials and 21% to gold and precious metals.

Positive expectations do arise in the different subsectors of mining activity:

  • Emeralds are one of the mining subsectors with the greatest growth potential in the country. Colombia is currently the second largest producer of emeralds in the world. Emerald exploitation is concentrated in eight municipalities in Boyacá and Cundinamarca, where Muzo holds the largest share with 79% of the total, followed by Quipama with 14%.
  • Regarding gold, currently there are several projects in operation, including: Segovia and Marmato, and Santa Rosa de Osos. Additionally, projects in Buriticá, Gramalote and Cisneros are expected to initiate operations between 2018 and 2020. Likewise, it is expected that the Sotonorte project in Santander will obtain its environmental license by 2018. With those projects initiating operations in the coming years, Colombia’s gold production is expected to increase by 39%, bringing it closer to the 10 leading gold producers in the world by 2020.
  • As for copper, there are important findings in the departments of Chocó, Córdoba, Tolima and Boyacá. The country’s potential regarding this mineral has motivated the implementation of exploratory programs, mainly in Córdoba and Antioquia. The following areas host the main projects: San Matías, Quebradona, Anzá, El Dovio, La Mina, Natagaima, Pantanos and Murindó, and Cobrasco.
  • Colombia is the 13th largest producer of nickel in the world. The Cerro Matoso project, the main project of this mineral in Colombia, which has been exploited for over 30 years, will increase its production from 37,000 to 41,000 tons with the implementation of La Esmeralda project in the rural area of Montelíbano Córdoba.
  • Finally, Colombia has important iron deposits, located mainly in the departments of Cundinamarca and Boyacá.

Hydrocarbons

The hydrocarbons chain in Colombia is comprised of conventional oil and unconventional oil extraction, continental and offshore deposits, and the search for potential crude oil and natural gas deposits. Additionally, it includes the hydrocarbons exploitation, transportation, distribution and commercialization. The oil industry represents 8% of Colombia's GDP and generates more than 95,000 direct and indirect jobs. Additionally, between taxes and royalties, the hydrocarbon business contributes nearly $32 billion to public finances.

The State, as owner of non-renewable mineral resources, acts through the National Hydrocarbons Agency (ANH), to manage and administer hydrocarbon resources. In this sense, the exploration and exploitation of hydrocarbons in Colombia currently requires the assignment of an area by the ANH, and the execution of a technical evaluation contract (TEA) or an exploration and production contract (E&P). 

At the end of 2017, Colombia's oil reserves were estimated at 1,659 million barrels, of which 95% belong to Ecopetrol. During 2017, the exports of petroleum and its derivatives were 21% higher than those registered in 2016. On the contrary, the volume exported was reduced by 9.5% per year.

Oil production in Colombia is mainly concentrated in Meta, Casanare, Arauca, Santander, Huila and Putumayo. The level of exploration in the sector has experienced a significant increase; in 2017, 41 exploratory wells were registered compared to 21 in 2016. According to ANH data, 14 of the exploratory wells drilled are in Casanare, meaning this department holds 37% of the total, followed by Meta and Putumayo. On the other hand, the Colombia has four offshore exploratory wells located in the Caribbean Sea, near the departments of La Guajira and Córdoba: Purple Angel, Gorgon, Siluro and Brahma.

The ACP estimates that oil production for 2018 will be between 860 and 880 thousand barrels per day on average.

Featured Information

  • The mining and quarrying sector – which includes extraction of crude oil, natural gas and minerals – accounts for 6.08% of national GDP.
  • The metalliferous minerals GDP is COP$ 1,30 billion pesos, representing 16.5% of mining GDP and 0,32% of total GDP.
  • The Ministry of Mines and Energy had formalized 10.042 mining production units by October 2017.
  • In 2017 Colombia generated 854,121 barrels per day.
  • In 2017, Ecopetrol invested US$ 2.6 billion and could even reach US$ 3.3 billion, of which 90% is earmarked for exploration and production.  
  • There are 1,665 million barrels in Colombia's oil reserve, which guarantee sustainability for just over 5 years.
  • In 2017 the investment in hydrocarbon production exploration (E&P) in Colombia was reactivated (US$ 3.4 billion: +67% vs 2016).
  • The ACP expects oil production to be between 860 and 880 thousand barrels per day in 2018.
     

Source: Ministry of Mines and Energy ( MinMinas), National Hydrocarbon Agency (ANH), National Mining Agency (ANM), Unidad de Planeación Minero-Energética (UPME), National Administrative Department of Statistics (DANE), Colombian Association of Petroleum (ACP)

Experience
Provided advice to Indian state company ONGC VIDESH in the acquisition – executed together with Sinopec of China – of a shareholding of Omimex de Colombia, a subsidiary of Omimex Resources, for USD850 million.
Provided advice to Indian state company ONGC VIDESH in the acquisition – executed together with Sinopec of China – of a shareholding of Omimex de Colombia, a subsidiary of Omimex Resources, for USD850 million.
Providing advice on a permanent basis to ONGC VIDESH, an Indian state company, with regard to its operations in Colombia.
Providing advice on a permanent basis to ONGC VIDESH, an Indian state company, with regard to its operations in Colombia.
Providing advice on a permanent basis to SK INNOVATION CO. LTD. in the management of Oil & Gas assets and relations with the government and other contractual counterparties.
Providing advice on a permanent basis to SK INNOVATION CO. LTD. in the management of Oil & Gas assets and relations with the government and other contractual counterparties.
Provided advice for DOLPHIN DRILLING and BOLETTE DOLPHIN in the initiation and development of its activities in Colombia, including the development of an offshore seismic exploration project in the Colombian Caribbean.
Provided advice for DOLPHIN DRILLING and BOLETTE DOLPHIN in the initiation and development of its activities in Colombia, including the development of an offshore seismic exploration project in the Colombian Caribbean.
Provided advice for MAJOR DRILLING, a service company in the mining sector, in connection with several negotiations of agreements with mining companies.
Provided advice for MAJOR DRILLING, a service company in the mining sector, in connection with several negotiations of agreements with mining companies.
Provided advice for HADES ENERGY regarding the review and due diligence of oil assets in Colombia.
Provided advice for HADES ENERGY regarding the review and due diligence of oil assets in Colombia.
Provided advice for OLEODUCTO DE LOS LLANOS ORIENTALES Y OLEODUCTO BICENTENARIO DE COLOMBIA in connection with the pipeline operation and relationship with government authorities, among other matters.
Provided advice for OLEODUCTO DE LOS LLANOS ORIENTALES Y OLEODUCTO BICENTENARIO DE COLOMBIA in connection with the pipeline operation and relationship with government authorities, among other matters.
Provided advice for PETROBRAS regarding the Oil & Gas asset organization for its Colombian operations.
Provided advice for PETROBRAS regarding the Oil & Gas asset organization for its Colombian operations.
Provided advice for HOCH MINING in the review and due diligence of mining assets in Colombia.
Provided advice for HOCH MINING in the review and due diligence of mining assets in Colombia.
Provided advice to ITOCHU in the acquisition of a 20% interest in Drummond.
Provided advice to ITOCHU in the acquisition of a 20% interest in Drummond.
Provided advice to FORTESCUE METALS GROUP in the initiation of the company’s mining activities in Colombia.

We also provide advice on a permanent basis in connection with the development of mining projects and the operations of the company in Colombia.

Provided advice to FORTESCUE METALS GROUP in the initiation of the company’s mining activities in Colombia.

We also provide advice on a permanent basis in connection with the development of mining projects and the operations of the company in Colombia.

Provided advice to HIGH POWER EXPLORATION on the contractual and tax structuring of the acquisition of stakes in mining projects in Colombia.
Provided advice to HIGH POWER EXPLORATION on the contractual and tax structuring of the acquisition of stakes in mining projects in Colombia.
Providing advice on a permanent basis to CAMERON in connection with the development of its operations in Colombia and the procedures before the Ministry of Mines and Energy.
Providing advice on a permanent basis to CAMERON in connection with the development of its operations in Colombia and the procedures before the Ministry of Mines and Energy.
Provided advice to ECOPETROL in the drafting of public offering documentation in the stocks market.
Provided advice to ECOPETROL in the drafting of public offering documentation in the stocks market.
Asesoría a ECOPETROL en la preparación de los instrumentos de oferta pública en el mercado de valores.
Asesoría a ECOPETROL en la preparación de los instrumentos de oferta pública en el mercado de valores.
Providing advice on a permanent basis to SYNERMIN S.A.S. – GENERARCO S.A. E.S.P. in the development of mining projects in Colombia and the relationship with governmental entities.
Providing advice on a permanent basis to SYNERMIN S.A.S. – GENERARCO S.A. E.S.P. in the development of mining projects in Colombia and the relationship with governmental entities.
Provided advice to VOTORANTIM GROUP in the bidding process before the National Mining Agency for the exploration and exploitation of mines in Colombia.

We have also provided advice on the development of mining projects and environmental issues.

Provided advice to VOTORANTIM GROUP in the bidding process before the National Mining Agency for the exploration and exploitation of mines in Colombia.

We have also provided advice on the development of mining projects and environmental issues.

Advice to LHOIST, subsidiary of Pacific Stone Tech Inc. in connection with the development of mining projects in Colombia and the relationship with local governmental authorities.
Advice to LHOIST, subsidiary of Pacific Stone Tech Inc. in connection with the development of mining projects in Colombia and the relationship with local governmental authorities.