TerraLex Cross-Border Guide to Cross-Border Guide to Mining Rights

In Colombia, all mineral rights, except for few titles such as the acknowledgment of private property, are property of the State. Obtaining a mining right does not transfer ownership of the minerals but creates a temporary right to explore and/or benefit from minerals in exchange for royalty payments so long as the mining title remains in good standing.

Mineral property rights are governed by the Colombian Mining Code (Law 685 of 2001), which has been subject to various changes and amendments. The oldest version applicable is Law 20 of 1969 which was superseded by Decree 2655 of 1988, which in turn was superseded by Law 685 in 2011 which is currently in effect, along with other laws, decrees, and resolutions.

Under the Mining Code, there is a single type of mineral tenure: a mining concession agreement covering exploration, construction, and exploitation. The initial duration of a mining concession agreement is 30 years but may be extended for up to 30 additional years.

The authorities involved in regulating the mining industry in Colombia are the following: 1. Ministry of Mines and Energy: Formulates and develops policies, regulation, plans, and programs for the mining sector. 2. National Mining Agency: Manages the mineral resources owned by the State and promotes the optimal and sustainable use of such resources. 3. Until 1988, the Colombian Ministry of Mines and Energy was directly responsible for the administration of the mining law as it relates to mining titles. In 1988, these duties were assigned to a separate agency called Minercol. On January 27, 2004, under Resolution 180074 these responsibilities were assigned to Ingeominas. On November 3, 2011, under Decree 4134, the Government created the National Mining Agency, the entity to which administration of the mining law (as it relates to mining titles) was transferred. 4. Governorship of the Department of Antioquia: Manages the mineral resources located in Antioquia Department and promotes the optimal and sustainable use of such resources. The National Mining Agency delegated its managing function for the mining titles located in the Antioquia Department’s jurisdiction. 5. Mining and Energy Planning Unit – UPME (acronym in Spanish): This entity oversees mining planning. 6. Colombian Geological Service: This entity oversees the study of natural resources and of the subsoil’s geological potential. 7. Ministry of Environment and Sustainable Development: This entity oversees issuing regulations concerning the mining projects' environmental control.

The steps to obtain a mining concession agreement are as follows: 1. Apply before the National Mining Agency or the Governorship of the Department of Antioquia (each, the “Relevant Mining Authority”). 2. Evaluation by the Relevant Mining Authority of the area available to grant a mining concession agreement. 3. Evaluation by the Relevant Mining Authority regarding applicant’s compliance with legal, technical, and financial capacity. 4. Agreement process between the Relevant Mining Authority and the mayoralty(ies) where the mining concession agreement will be located. 5. Public hearing aimed at sharing with the community the information on the applications filed within their jurisdiction. 6. Subscription of the minutes of the mining concession agreement between the Relevant Mining Authority and the applicant. 7. Registration of the mining concession agreement with the National Mining Registry.

Please see answer to questions number 5.

The list: 1. To be granted with a mining concession agreement. 2. To obtain the environmental permits allowing the use of non-renewable natural resources. 3. To pay annual surface fees to the Relevant Mining Authority. The surface fee is calculated on the total area of the concession during exploration stage. 4. To obtain, on annual basis, a mining-environmental insurance policy aimed at guaranteeing compliance with mining and environmental obligations, payment of fines and unilateral termination (caducidad). 5. To submit, on an annual basis, the Basic Mining Form (“FBM” per its acronym in Spanish). The purpose of the FBM is to obtain updated and permanent information on the activities of the mining concession agreements and the titleholders, which serves as a basis for the consolidation of information for the authorities regarding statistics, control of production and royalties, among others. 6. At the end of the exploration stage and as result of the studies and exploration works, before the end of this stage, the titleholder shall submit the works and construction program and the impact environmental evaluation.

The list: 1. To have and approved works and construction program. 2. To have an approved environmental license. 3. To pay royalties to the Relevant Mining Authority on quarterly basis. 4. To obtain, on annual basis, a mining-environmental insurance policy aimed at guaranteeing compliance with mining and environmental obligations, payment of fines and unilateral termination (caducidad). 5. To submit, on annual basis, the Basic Mining Form (“FBM” per its acronym in Spanish). The purpose of the FBM is to obtain updated and permanent information on the activities of the mining concession agreements and the titleholders, which serves as a basis for the consolidation of information for the authorities regarding statistics, control of production and royalties, among others. 6. To put into practice the rules, the best methods and technical procedures applicable to mining exploitation. 7. To avoid damage to the exploited or removed materials, and to avoid practices that could deteriorate or sterilize the "in situ" reserves susceptible of eventual exploitation. 8. To keep updated production records and inventories to establish at all times the volumes of raw minerals and those delivered to the processing plants and, if applicable, to the transformation plants. These records and inventories must be submitted to the National Mining Information System.

Titleholders are obliged to pay royalties in exchange for exploiting State’s non-renewable natural resources. Royalties are calculated by multiplying the stated production, the mineral´s liquidation price set by the Mining and Energy Planning Unit and a fixed percentage established by law.

During the exploitation stage, all titleholders are obliged to present a statement of the exploited minerals’ production within ten working days following the end of each quarter.

The transfer of mining rights shall follow the steps below described: 1. Notice to the Relevant Mining Authority regarding the intention to transfer the mining right filed along with the document of negotiation of the mining rights and the documents attesting to both parties legal and financial capacity. 2. The Relevant Mining Authority is granted with a sixty (60) days term to resolve whether the transfer of the mining rights is approved. For the Relevant Mining Authority to approve the transfer of the mining rights it is necessary to be up to date with all the obligations under the mining right. 3. If the assignment is approved, the administrative act of approval shall be registered with the National Mining Registry.

Pursuant to Colombia’s laws and jurisprudence, mining activities cannot be carried out in the following areas: 1. Areas of protection and development of renewable natural resources or the environment, such as areas that integrate the system of national natural parks, regional natural parks, forest reserve areas. 2. Moorland ecosystems. 3. Ramsar wetlands.

During the exploration stage, titleholders shall only obtain the specific environmental permits required to undertake exploration activities (e.g., water permits, wastewater discharge permit, etc.). To undertake build and construction and exploitation activities, the titleholder shall obtain an environmental license that shall cover the life of the project.

The environmental license is required to start build and construction activities and to exploit minerals. To obtain the environmental license, at the end of the exploration stage, the titleholder must prepare and submit to the relevant environmental authority an environmental impact study.

Depending on the amount of minerals expected to be extracted, the environmental license may be issued by the National Authority of Environmental Licenses (“ANLA” per its acronym in Spanish) or by the Regional Autonomous Corporations.

The environmental license must be granted for all the stages of construction, assembly, exploitation, processing, and internal transportation of the corresponding minerals. The environmental license shall include the environmental permits, authorizations, and concessions to use o impact natural resources. The period of such permits, authorizations and concessions shall be equal to the period of the environmental license.

The relevant provisions that include safety policies regarding dams, are the following: - Law 685 of 2001 (Mining Code).

• Mining- environmental guidelines applicable to the exploitation of minerals.
• Decree 1886 of 2015. (Underground Mining Safety and Hygiene Regulation).
• Decree 539 of 2022. (Open Pit Mining Safety and Hygiene Regulation).

The operation and closure of the dam shall observe (i) the general instructions established in the Mining Environmental Guidelines and (ii) the specific requirements of the Environmental Management Plan or Environmental License approved by the environmental authority.

• Some of the technical requirements set forth in the provisions for the safety of dam, include:
• The dam must be located far away from water bodies;
• Before construction of the dam, wind direction, quality and stability of soil, underground water, erosive processes must be taken into account;
• Design the mine closure plan before the initiation of the exploitation stage, further, the mine closure plan must be included in the works and construction program;
• Take into consideration criteria such as quality of soil and ground water; erosive processes and long-term stability of the dam after closure;
• Create an internal drainage structure;
• Design and construct sedimentation ponds, using chemically stable materials;
• Revegetate and reforest the area;
• Isolate reactive materials.

Thermal coal: Currently, the second most extracted mineral in Colombia is coal. Colombia has one of the world's biggest open-pit mines, El Cerrejón. In terms of exports, Colombia ranks as the fifth largest exporter in the world, with one of the largest proven reserves of anthracite coal and bituminous coal in Latin America.

Gold: In the last few years, gold production has been increasing. In 2020, Colombia achieved the highest gold production within the last four years. According to information reported by the Mining-Energy Planning Unit, the largest gold production in the country is in Antioquia and Chocó departments. Two of the most important mines are the Marmato Mine and the Buriticá Mine. Both stand out due to the use of new technologies and modernization programs which increase production and lower costs.

Copper: Copper is one of the minerals with the greatest potential in the country. There are large copper reserves in the departments of Chocó, Putumayo, and Córdoba. Even though currently there is only one copper operation in Colombia, El Roble mine, several areas with high copper potential have been identified and declared as strategic mining areas where mining exploration and exploitation will take place in the coming years. Copper exploitation is likely to increase government revenues, diversify the country’s mining basket, and promote the growth of local economies.

In the next few years, the top mining developments will include the exploration and exploitation of Strategic Mining Reserve Areas, which are accessible areas with high potential for strategic minerals in Colombia, such as gold, coal, and copper. Some areas in Cesar, Bolívar, Chocó, Antioquia, Risaralda, Caldas, Nariño, Putumayo, Cauca, Tolima, Huila, and Valle del Cauca departments have already been delimited by the National Mining Authority. In these delimited areas, no new mining applications can be submitted. Thus, special exploration and exploitation agreements for Strategic Mining Reserve Areas must be awarded through objective selection processes.

Strategic Mining Reserve Areas have been identified as an opportunity to draw a greater flow of foreign investment in Colombia's mining exploration and exploitation activities. The development of Strategic Mining Reserve Areas will also lead to an increase in social investment and additional economic compensation for royalties. The National Mining Agency has identified that the Strategic Mining Reserve Areas will provide significant additional mining resources for Colombia and the development of those areas will contribute to the country’s economic reactivation.