Why every miner wants to be Colombia’s new best friend

Once tinted by drug cartels and civil war, Colombia is now one of Latin America’s fastest growing markets and, according to the World Bank, the most secure country in the region in which to do business.

In the past year, investors, mining companies and explorers alike have been focusing on the South American country and reasons for this abound.

Colombia’s economy, which is Latin America’s fifth largest, has grown four times as rapidly as Canada’s in recent years, with foreign investment quadrupling between 2002 and 2008.

The country holds vast and, until now, untapped natural resources, including coal, gold, silver and oil and the government has been taking a number of measures to boost the sector, which currently accounts for only 2% of Colombia's economy.

One of them was the creation of a new national mining agency in November, which started operating officially yesterday, as reports the local news site Portafolio.co.  The organism (Agencia Nacional de Minería -ANM) will coordinate the sale of mining and mineral exploration rights and multiply efforts to attract investments directed to both expanding existing production and exploring areas where rich deposits of key resources are suspected.

During the recently held Exploration Forum 2012 in Chile, Colombia’s energy and mining minister Mauricio Cardenas said the country expects a $10 billion investment in mining, crude oil and energy projects this year.

Gold, Coal and Oil

The gold sector alone is expected to attract over $2 billion by 2015. Among the companies that will make it happen there are names as Anglo Gold Ashanti, Anglo Gold America, Gran Colombia Gold Mining SA, AUX, Eco Gold and Mineros S.A. All of them have recently announced ambitious plans in the South American country.

Coal is the other main driver of Colombia’s mining boom. This week, the country’s leading coal producers announced they are increasing investments dramatically to improve and expand their ports. The move is considered crucial for rising coal production in the country to 120 million tons by 2014

The country aims to raise coal output 35%t to 115 million tons a year by 2014, from last year's level of over 85 million tons and gold output by 30% to 73 million tons from 56 million tons last year, according to data from the mining and energy ministry’s web site.

It's not only mining that is being lauded. Colombia's state-controlled Ecopetrol says that its oil extraction costs are 40% cheaper than the industry norm. Reuter's Raul Gallegos writes that Ecopetrol enjoys "rock-bottom on-shore extraction costs" since far less of the country's oil and gas reserves have been tapped, and there is still lots left to explore. Ecopetrol is capitalizing and recently a 37% rises in Q1 earnings.