Formalizing status of miners could add $1.3 billion annually to Colombia’s GDP

El Cerrejon coal mine, Colombia | (Image from Wikimedia Commons)

Formalizing the work of tens of thousands of subsistence miners could eventually contribute an additional 0.4%, equivalent to some $1.3 billion, to Colombia’s annual gross domestic product, the energy minister said on Thursday.

Mining in the Andean country, which is rich in coal, gold, emeralds and other minerals, ranges from ambitious projects by multinationals to illegal, mercury-heavy extraction conducted by crime gangs.

Informal subsistence mining is common and is treated differently from illegal extraction conducted by armed groups. Government formalization efforts are meant to expand labor protections, safeguard the environment and collect more taxes and royalties from subsistence miners.

Although formalization efforts are getting results, environmental licensing for informal miners remains a hurdle

“We hope that with this new model, we can generate 300 billion pesos in royalties per year, 450 billion pesos in additional taxes, formalize 27,000 miners that are currently informal and create 11,000 new jobs,” Energy Minister Maria Fernanda Suarez said at a formalization event in Bogota.

The rest of the eventual annual 4.2 trillion peso ($1.3 billion) gain from formalization efforts will come from profits and salaries generated by newly formalized miningoperations, the mining ministry said.

Projects in Colombia will receive some 18 trillion pesos ($5.6 billion) in new investment over the next few years, Suarez added.

Although formalization efforts are getting results, environmental licensing for informal miners remains a hurdle, Silvana Habib, the head of the national mining agency, said at the same event.

Her agency is working with local authorities to speed up the process, she added.

Multinationals eager to explore Colombia’s largely untapped mineral reserves have struggled to get projects off the ground amid a rash of legal, environmental, security and community relations problems in recent years.

($1 = 3,194.67 Colombian pesos)

(By Carlos Vargas and Julia Symmes Cobb; Editing by Peter Cooney)

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