Colombia is blessed with geological riches, particularly gold and copper. However, for decades international miners have stayed away due to security reasons. Their absence helped to foster a massive informal mining industry, especially gold. Illegal mining is the root cause of many of the mining sector’s challenges in Colombia and is one of the crucial pre-investment risks to mining in Colombia that investors should consider when evaluating projects in this country.
Illegal mining has a dreadful track record of environmental degradation. Most Colombian urban voters think of mining as dirty and corrupt. With few exceptions, the political class understands neither the manageability of mining risk in proper hands, nor the long-term development benefits of the sector. Instead, Colombian politicians tend to throw the sector under the bus when a project attracts controversy. As a result, investors must conduct thorough mining project due diligence in Colombia that factors in the impact of illegal mining, public attitudes about mining, the perception of politicians, and the reactions of local communities — these all can make the difference between profitable projects and those which suffer from productivity and security issues, among others.
For miners and investors looking for guidance on the impact of risk in their capital budgeting in Latin America, understanding the strength and threat of unethical competitors is vital to assessing future commercial failure. AMI’s 2022 Latin America Mining Risk Index provides a useful tool for comparing security and operational risk across the 16 leading mining jurisdictions in the region.
Please click below to learn more about this unique report, the first to quantify mining risk in Latin America, and learn more about how it can help you in evaluating pre-investment risk to mining in Colombia and Latin America.