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Raising the bar on mining: Can Colombia’s government rise to local expectations?

by Claudia Strambo, Stockholm Environment Institute and Ana Carolina Gonzalez, Universidad Externado de Colombia
Tuesday, 28 June 2016 16:40 GMT

* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.

Big companies and national government must do their part to clean up Colombia's mining industry

In late May, Colombia’s Constitutional Court struck down a provision in the 2001 Mining Code that gave the national government sole authority over mining permits, and barred local or provincial authorities from creating exclusion zones where mining is not allowed. 

The ruling was a victory for municipalities and provinces (departamentos) where opposition to mining is on the rise. Even in Colombia’s two main coal-producing departments, el César and La Guajira, opposition to large-scale mining is now strong.

Previous rulings, in 2014 and 2015, had required the national government to work with local authorities to agree on mining permits, but stopped short of letting local authorities block a permit. The new decision thus marks a turning point in the governance of mining in Colombia. The Colombian Mining Association has strongly criticized it, saying it will directly affect investment and the future of mining.

Opposition to extractive operations is driven by concern about social and environmental impacts, which local officials say far outweigh any economic benefits. A majority of royalties paid by mining companies (up to 80%) used to be allocated directly to the municipalities and departments where mining occurred, or through which minerals were transported. However, since a reform in 2012, direct revenue from mining activities has been gradually reduced. Since 2015, producing regions only receive 20% of the royalties directly. The rest is redistributed across the country through a complex system of funds.

The recent ruling by the Constitutional Court only concerns the mining sector, but there has also been growing opposition to oil and gas extraction in producing regions, because of similar environmental, economic and political grounds.The latest dispute involves a license for oil exploration in a region dear to Colombians’ heart, the Macarena. This is where the Andes, the Orinoco plains and the Amazon meet. It is a natural treasure. When the oil exploration license was announced in April, it triggered protests.

The governor of the Meta department (to which the Macarena belongs) argued that the local people, backed by local and departmental authorities, wanted to bet on eco-tourism, not oil, for their economic development. The license was ultimately revoked, and the director of the Environment Licensing National Agency (ANLA in Spanish) resigned amid a political fiasco.

Extractive industries are very aware of the growing resistance they face. At the Colombian Mining Association’s recent annual conference, the sector’s crisis of legitimacy and difficulties with subnational governments and communities were identified as a key challenge to future development.

CMA President Santiago Ángel Urdinola emphasized the need for the mining sector to improve its image and communicate better with departmental and local authorities – and with the public in general. When one company does wrong or gets caught up in a scandal, he noted, the whole sector is affected. Instead, he argued, the entire industry needs to invest in communications and outreach to rebuild public trust.

That could be difficult. First of all, the mining industry is struggling due to low global commodity prices – so it has limited resources to invest in publicity and corporate social responsibility programmes. But more important, the message is unlikely to resonate. For more than a decade, the industry has blamed the low levels of development associated with mining on corruption and low institutional capacity. However, as research and the changes in the distribution of royalties have shown, corruption is only part of the problem.

The main reason why resource extraction is failing to drive development, and instead is mostly associated with negative local impacts, is that the Colombian government has also done a poor job of enforcing existing social and environmental regulations. Moreover, extractive industries have done little to bring economic and social benefits to the places where they operate, notably because of corruption and lack of institutional capacity. If mining companies want to be seen as socially and environmentally responsible, they need to demonstrate that they are, by cleaning up their operations and respecting the boundaries set by communities.

The national government must also do its part. The courts’ growing role in restricting mining suggests that what the sector and the government consider to be responsible mining lags falls short not only of local authorities’ standards, but also those embedded in Colombia’s laws and Constitution. It is time to raise ambitions to match those of Colombian society.

Claudia Strambo is a research associate at the Stockholm Environment Institute, in Stockholm. Ana Carolina González coordinates research on mining and energy resources at the Observatorio de Políticas, Ejecución y Resultados de la Administración Pública at the Universidad Externado de Colombia, in Bogotá.

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