Colombian Mining Sector Development 2018-2022

COLOMBIAN

MINING SECTOR DE V E L O PM E N T

2018 - 2022

TABLE OF CONTENTS 1. EXECUTIVE SUMMARY 2. ECONOMIC AND TAX COMPETITIVENESS 2.1 Mining Economy for Development 2.2 Investment 2.3 Taxes 2.4 Royalties 2.5 Customs and Foreign Trade 3. EFFICIENT PROCEDURES 3.1 PINES (Strategic Projects of National Interest) 3.2 Environmental Procedures 3.3 Mining Procedures and Fiscalization 3.4 Procedures to acquire explosives 4. LEGAL CERTAINTY AND MINING DEVELOPMENT 4.1 Strengthening of the General regulatory framework 4.2 Updating of the Mining Code 4.3 Citizen Participation 4.4 Social Protest 4.5 Previous Consultation 4.6 Illicit Extraction of minerals 4.7 Land Restitution 4.8 Mining Formalization 5. REPUTATION

ACM COLOMBIAN MINING SECTOR DEVELOPMENT 2018 - 2022

1. EXECUTIVE SUMMARY Mining is of key importance in the development of our country. It has traditionally represented close to 2% of the national Gross Domestic Product (GDP), 7% of the non-urban GDP of the country and 28% of the GDP of the mining municipalities. According to ACM’s calculation, a tax contribution has been estimated in the amount of COP 4 trillion between taxes and royalties. Furthermore, in several regions mining is the main source of economy, for example, in Guajira, its share is 42%, while in Cesar, Chocó and Córdoba the share is 33%, 22% and 5% respectively. In addition, this industry (historically) represents 28% of exports1 and 22% of the direct foreign investment in the country. According to a study of the ANM (National Mining Agency) derived from the fiscalization process of 2014, formal mining generates close to 350.000 direct jobs and around 900.000 indirect jobs, for a total of more than one million employments in its chain. Fedesarrollo made a study about mining chains2 concluded that for every peso generated by mining, 2.44 pesos are created in other sectors, where the most representative are transportation, industry, services and construction.

The last fiscalization process of ANM evidenced that out of the 10.061 mining titles in Colombia 75% are in the hands of Colombian corporations and individuals; 10% of the titles are owned by multinational companies; 6% are in the name of indigenous jurisdictions; 1% owned by mining associations, 0.4% are in the hands of cooperatives and 9% correspond to temporary authorizations as defined in Article 116 of Act 685 of 2001. The type of mineral with the largest production (53%) is construction materials followed by precious metals that represent 39%. It is

worth mentioning that mining titles in exploration stage (in other words, those for the production of minerals) cover 1% of the national territory.

When dealing with environmental matters, it should be highlighted that this industry is highly regulated, because it requires the preparation and presentation of specific documents such as the DAA (Environmental Diagnosis of Alternatives) –the EIA (Environmental Impact Study) and the EMP (environmental Management Plan) in addition to the requirement of environmental license for the production phase. We can also mention that it is subject to obtaining a series of associated permits which procedure is done at the jurisdiction of the area of interest, such as scientific research previous to the preparation of the EIA, concession and catchment of underground and superficial water, permits for spilling, for forestry use, permits for atmospheric emissions, occupation of the riverbed, end of bans, among others, mandatory in many cases in the exploration stage. It should be mentioned that many of the environmental procedures incorporate citizen’s participation instances as per Act 99 of 1993 and subsequent regulations such as Decree 1076 of 2015.

According to our calculations if Colombia is able to generate a true mining environment, and taking the investment projected data of the 12 mining PINES projects included in the list of the National Government, we estimate that a new investment would come to the country in an amount close to US$6.7 Billion which would allow a relevant increase in the mining production of the country, as follows:

Calculations of the increase in the Contry mining production

GOLD

Additional 2,6 million +130%

COAL

Additional 16 million +17%

Troy OZ Tons

NICKEL

Additional 14.000+ 34%

Toneladas

LIMESTONE Tons

Additional 3 millones

1 The main minerals the country exports are coal, gold, nickel, emeralds and recently copper that has increased its share. Coal is the second exportation product in the country after oil, and gold is fourth, nickel is exported as ferronickel in the tenth place and emeralds are twenty sixth. In average (since 2009) US$12.474 billion a year have been exported in minerals, including the external sales of the basic industry of iron, steel, precious metals and nonferrous metals. In the last 8 years the maximum value reached was in 2012 when, benefitted by the increase of international prices, US$17.309 Billion were exported, 29% of the national total. In average, mining exports have represented 28% of the total external sales of the country during the last 8 years. Exports of coal represent 51% of the external sales of minerals, gold 16%, ferronickel 5% and emeralds 1%. Other industrial basic goods associated to mining have a share of 26%.

2

Fedesarrollo (Martínez, A. and Aguilar T., 2013). Study on socio-economic impacts of the mining sector in Colombia: sectorial chains.

ACM COLOMBIAN MINING SECTOR DEVELOPMENT 2018 - 2022

2

In total, the impact of developing these mining projects would contribute to 3 additional percentage points to the national GDP and close to 3 trillion pesos more in taxes.

COLOMBIAN GEOLOGICAL POTENTIAL

CONTRIBUTION IN TAXES MILLION $ 1.149.079

1.090.694

632.924

RENT

ROYALTIES

OTHER TAXES Geological potential in Colombia

The above, without mentioning the increase in the regional GDP as a result of the “mining bet”. For example, Fedesarrollo’s figures regarding the department of Tolima show that under the mining scenario the departmental GDP shall reach a growth rate of 7.2% in year 2025, exceeding in 2.6 percentage points the medium expected growth for the region.

For this purpose, it is necessary to replicate better international practices in mining competitiveness matters, such as those recently adopted in competitor countries like Peru, Chile and Ecuador, which included a tax regime in benefit of investment, legally stable agreements, review of the mining and environmental regulations and the development of a Center of Mining Excellence, to use our mining as a development, growth and wealth engine.

These practices shall additionally guarantee the production in all our territory to achieve a true knowledge of our subsoil to make the best decisions regarding public policies, with first hand data.

Nevertheless, in order to generate this mining development, competitiveness is to be improved, and guarantee clear and stable regulations that allow the investors recover the legal certainty, with decided support to improve reputation.

3

Current mining titles Mining reserve areas

Source: National Mining Agency - Colombian Geological Service

In this regard, we present the following proposals on public policies to reach such objectives which will be broadened throughout this document: 1. Adoption of best practices to attract investments 2. Legal certainty guarantees 3. Amendment to the royalties general system 4. Improvement of the procedure and coordination among authorities involved in the mining licensing process 5. Strengthening of the PINES policies and exploration promotion 6. Strengthening of the Mining National Agency and of the formalization and fiscalization process

ACM COLOMBIAN MINING SECTOR DEVELOPMENT 2018 - 2022

2 ECONOMIC AND TAX COMPETITIVENESS This chapter develops the importance of the mining sector in the Colombian economy, taking mainly into account its contribution to economic growth, foreign trade, investment and tax collection and within such context it establishes the main proposals on tax matters, royalties regime and foreign trade so that the mining sector strengthens its competitiveness and in that way be able to develop all the geological potential of the country.

COMPETITIVENESS ECONOMIC AND TAX In order to benefit from the potential of the mining sector as an engine of the national economy it is required to establish a competitive public policy that incentivizes the attraction of mining capitals in the country and which allows potentiating economic growth, exports and investment.

2.1. Mining Economy for development In 2016, the mining sector grew 4.7% and was the second sector of economy with the highest growth in the year, after the financing establishments, consequently pushing the national economy. In 2017 it is estimated that the sector shrinks around 6 points, due to greater controls in illegal gold mining, an adjustment in coal production in the center of the country and the contraction in the demand of construction materials due to the reduction of such activity.

It is expected that in 2017 exports will reach a historic record in coal exports, thanks to the production increase in the Caribbean zone. Likewise, it is expected a greater participation of gold formal projects over the national total, derived from the advances in major scale production and greater controls to the illicit extraction of minerals.

In 2017 the recovery of International prices in some minerals and the increase in mining production in the country has allowed exports growth in 39%, according to the year to date figures until November, and reach values close to those recorded in the same period in 2014. It is expected that at the end of the year mining exports will be close to US$12 Billion and their share in the national total exceeds 30%3.

CONTRIBUTION TO GROWTH OF MINING EXPORTS ANNUAL VAR %

GROWTH OF THE NATIONAL ECONOMY AND THE MINING SECTOR ANNUAL VAR %

39%

25% 20%

24%

15%

25%

10%

8%

5%

2%

0% -5% -10%

-10% -24%

-15% -20%

2006 2007 2008 2009

2010

MINING TOTAL Source: DANE, National Accounts.

2011

2012

2013

2014

2015

2016

National GDP

2017

2010

2011

2012

2013

-30% 2014

2015

2016

2017

COAL

GOLD

FERROUS NICKEL

ESMERALDAS

COPPER

IRON AND STEEL

PRECIOUS AND NON-FERROUS METALS

TOTAL

Source: DANE. External trade. ACM Calculations.

Note: The chart shows the contribution to the growth of exports by mineral, pursuant to the variation in the annual percentage growth and its share in the total of mining exports. The values correspond to the term January – November.

3 Out of the 39 points of growth in the 2017 exports, coal has participated with 28 points and gold with 4. Ferronickel and emeralds continue in the same

levels of the previous year therefore their contribution is almost none, one point between the two of them, while external sales of the basic industry of precious and nonferrous metals provides 6 points of growth.

5

ACM COLOMBIAN MINING SECTOR DEVELOPMENT 2018 - 2022

2.2. Investment

PARTICIPATION OF FOREIGN INVESTMENT FOR EXPLORATION IN LATIN AMERICA AND ANNUAL AVERAGE INVESTMENT DURING THE LAST FIVE YEARS.

One of the main challenges in mining is to recover foreign investment. Participation of mining in the Direct Foreign Investment flow IED (direct foreign investment) has deteriorated during the last years, in such manner that it moved from 24% (between 1999 and 2013) to zero in 2016. Although there has been a slight improvement during 2017, during the first three quarters of the year the IED mining flow has reached USD 441 million, its levels are far from those observed during the mining boom between 2004 and 2014 when the annual average IED flow exceeded USD$ 2 billion per year.

Average annual investment of the last 5 years in countries of the region M USD

21% México Nicaragua

Guatemala

Panamá Colombia

Guyana Surinam Guyana Francesa

6%

7.815

2%

Ecuador

Chile: 22% Peru: 22% Mexico: 21% Argentina: 7% Brazil: 7% Colombia: 6% Bolivia: 2% Ecuador: 2%

7%

22% 2%

Perú

Brasil

2.528 2.147 1.878 1.492

Bolivia

22% Chile

Peru

7%

Argentina

Chile

Mexico

Colombia

Argentina

Source: SNL Metals, 2017 – S&P Global

2480 2474 2977 1582

DFI FLOW AND DEVELOPMENT OF MINING PRICE INDEX 3.014

3.500

-97

441

533

1838

1790 1081

47 -65 51 302 -6 464 507 524 466 627

1246

2151 1796

3014

MINING SECTOR IED FLOW M USD

Participation of foreign investment for exploration in Latin America

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

*Information of the period January-September 2017 Source: Central Bank

2.500 2.000 1.500

18

2.474

16

1.838

1.790

20

2.977 2.480

3.000

14

1.582

12

1.081

10 8

533

1.000

441

500

4

0

Compared with other countries of the region Colombia shows loss of competitiveness attracting mining capitals. According to SNL Metals4, the country only attracted 6% of the mining exploration in Latin America while México, Peru and Chile respectively achieved 21%, 22% and 23% of the investment for exploration in the region and were the foreign capitals attraction leaders in the region. Also, the average mining IED flow in those countries exceed the national average where Peru, leading the capital flow, attracted USD$7.815 billion dollars and Colombia only USD1.492, with the smallest attraction in the sample5.

The descent of the investment flow, according to the attraction of mining capitals indexes, is the result of the lack of incentives and legal certainty, more than price fall of mining commodities . As shown in the following chart, although the price recovered during the second semester of 2016 and continued recovering during 2017, investment did not recover completely, and investment flow in 2016 was the lowest since 1994 (year in which the series started to be measured), while during 2017 it shall be less than half of the years with similar price levels.

-500

6

2

-97 2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

0

FLOW OF DFI MINES AND QUARRIES (M USD) MINING PRICE INDEX (RIGHT AXIS) Source: Central Bank. ACM Estimates.

Note: The mining price index is estimated according to the different mining commodities reference prices traded in Colombia and are weighted according to their relative importance in the national economy.

At the same time, the Fraser Institute that every year estimates the mining investment attraction index, shows Colombia during 2016 as a country of middle attraction for mining investment, below other countries of the region such as Peru, Chile, México and even Brazil. Historically, Colombia has been placed amongst 17 to 65, being 2010 the best year (17 among 79 countries) and had the worst grade in 2016 (65 among 104 countries).

4 From S&P Global Market Intelligence, prepared based on the information of SNL Metals & Mining. July 24, 2017 data.

5 Information from the central banks in each country and in Peru from the Ministry of Mines of that country.

6 In 2016 the mining commodities prices touched the minimum historical levels. In the case of coal the API2 – BCI7 reference price reached 40 USD /ton in February, while nickel was traded at 3,8 USD/lb. during the same month. Copper recorded a minimum of 2 USD/lb. in January of the same year).

ACM COLOMBIAN MINING SECTOR DEVELOPMENT 2018 - 2022

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MINING INVESTMENT ATTRACTION INDEX (2016). DEVELOPMENT IN LATIN AMERICA RANKING DURING THE LAST 5 YEARS 39 28

PERU

11

39

CHILE

52 45

25 50

77 51

36 61

GUYANA

MEXICO

FRENCH GUYANA

BRAZIL

2012

32 65 87 76 92 83 90 88 95 89 74 90 64 92 96 102

COLOMBIA 2013

ECUADOR

2014

BOLIVIA

GUATEMALA

2015

HONDURAS

PANAMA

DOMINICAN REPUBLIC

VENEZUELA

2016

Source: Fraser Institute.

This classification is based on two elements: the geological potential and the political perspective. According to this international Institute, Colombia has the second best geology of the continent and the worst political perception, only surpassed by Venezuela, Ecuador, Guatemala and Bolivia. This perception includes: 1) security; 2) uncertainty regarding protected areas; 3) uncertainty regarding the application of regulations; 4) uncertainty regarding environmental regulations; and 5) community development conditions, and all of them in connection with legal certainty.

MINING ATTRACTION INDEX BY COMPONENTS FOR THE COUNTRIES OF THE REGION (2016) GEOLOGICAL POTENTIAL Peru Colombia Guyana Mexico Chile Ecuador Brazil French Guyana Bolivia Guatemala Venezuela Nicaragua Panama Honduras Uruguay Dominican Republic

17 36 40 43 49 53 54 63 73 79 83 84 87 89 96 100

Source: Fraser Institute

7

POLITICAL PERCEPTION French Guyan Chile Guyana México Peru Nicaragua Brazil Dominican Republic Uruguay Honduras Panama Colombia Bolivia Guatemala Ecuador Venezuela

34 35 50 53 54 57 64 68 77 82 85 86 97 89 95 104

Source: Fraser Institute

ACM COLOMBIAN MINING SECTOR DEVELOPMENT 2018 - 2022

2.3. Taxes A study carried out by EY7 in 2012 concerning the state participation in coal and gold mining projects for a selection of mining countries shows Colombia as the second country with the highest tax burden for coal and gold projects after Indonesia, and in the first place for underground gold mining, situation that was probably worsened after the 2016 tax reform that includes taxes to the dividends, among other taxes that impacted the sector.

TAX BURDEN RANKING FOR MINING PROJECTS.

GOLD Open sky

1 2 3 4 5 6 7 8

Indonesia Colombia Argentina Peru Australia Chile Canada South Africa

COAL Underground

Colombia Indonesia Argentina Peru Australia Chile Canada South Africa

Open sky

1 2 3 4 5 6 7 8

Indonesia Colombia Argentina Australia Peru Chile Canada South Africa

Underground

Indonesia Colombia Argentina Australia Peru Chile Canada South Africa

Source: EY

At the same time ACM has identified that the mining GT may exceed 75% in almost all scenarios and in some cases, depending on price behavior, is close or may even surpass 100%8.

Since tax burdens is one of the main criteria when making decisions to invest in a country, it is essential to think about a competitive model to face tax schemes of countries with which we compete and that may allow to recover the mining investment.

These are some of the proposals regarding the main taxes paid by the sector and other taxes in connection with operation competitiveness.

2.3.1. Income Tax The income tax fee for this year 2017 is one of the highest in the world and with the transition regime established by the past tax reform (Act 1819, 2016) a lower fee (33%) shall only exist after 2019. Since the average fee on income in the OECD countries is 24%, we suggest the fee on income be reduced to levels near 25%, to compete with Chile and Peru which are the main mining countries in the region.

7 EY (2012). Comparative analysis of state participation in gold and coal mines in Colombia.

8 This is not a reality exclusively of the mining sector. According to Consejo Privado de Competitividad, Colombia does not have an equitable, progressive or efficient tax system. The current system is excessively complex and punishes investment and employment. Also, according to Doing Business Report, Colombia has one of the highest world’s effective tax fees: 69,8% and has place 182 out of 191 countries; in Latin America it is only surpassed by Argentina and Bolivia.

ACM COLOMBIAN MINING SECTOR DEVELOPMENT 2018 - 2022

8

FEE ON INCOME OF THE OECD COUNTRIES9 40% 40%

33%

35%

30%

25%

20%

15%

10%

5%

COLOMBIA 2017

ESTADOS UNIDOS

BELGICA

FRANCIA

ALEMANIA

COLOMBIA 2019

MEXICO

JAPON

AUSTRALIA

PORTUGAL

GRECIA

ITALIA

NUEVA ZELANDA

CANADA

LUXEMBURGO

ESPAÑA

CHILE

HOLANDA

AUSTRIA

COREA

ISRAEL

NORUEGA

SUECIA

SUIZA

DINAMARCA

TURKIA

ESLOVAQUIA

ISLANDIA

ESTONIA

FINLANDIA

ESLOVENIA

REINO UNIDO

POLONIA

LETONIA

REPUBLICA…

IRLANDA

HUNGRÍA

0%

Source: OCDE 2.3.2. Wealth Tax The 2016 tax reform did not extend wealth tax or taxes on the patrimony stipulated in the 2014 tax reform. We expect that this condition is kept and that this onerous tax or any other tax burdening the patrimony has been permanently eliminated since it causes double taxing on income, impacting both the companies in operation stage usually with high patrimony levels, and the attraction of capitals for exploration.

2.3.3. VAT discount for capital goods In Colombia it is allowed to deduct VAT payment over capital goods from income tax. This gives the chance to recover the value equal to the fee on income of VAT paid

9

9

(40% of 19% in 2017 and 33% of 19% after 2019). Nevertheless, in other countries of the region such as Peru, Chile, Mexico and Ecuador it is allowed to recover 100% of the VAT paid when buying capital goods; in other words, it is deductible. Also, the recovery may be performed during the same month in which the machinery is acquired in such manner that there is a double effect: recovering the investment and thus attracting new investment and a cash flow effect due to a quick capital recovery. Therefore, we propose that VAT on capital goods be deducted (today deductible) so that 100% of VAT may be recovered and not only the amount corresponding to the fee over income, as it was established to incentivize offshore oil exploration.

The fee indicated in the Chart is the corporate or first category fee excluding taxes on dividends.

ACM COLOMBIAN MINING SECTOR DEVELOPMENT 2018 - 2022

2.3.4. Territorial Taxes According to the tax reform commission 33 territory taxes were identified: 13 from departments and 20 from municipalities and at least 24 taxes and contributions without a major Law support, as well as the proliferation of stamps at national level. For the mining industry the most onerous taxes are public lighting and stamps. We believe that a regulation framework for territories is required, clearly establishing which are the sub- national taxes, fixing the passive subjects, the generating fact, fees, and frequency to which it is subject, with clear rules, technical fundamentals and in equal conditions for all the country reducing local government discretion.

2.3.5. Tax on explosives Mining and construction sectors are the main taxpayers on explosives10, with a fee that was increased from 5% to 20% in 2011. This measure that does not exist in other countries of the region decreases competitiveness because it increases production costs and also encourages misuse of raw materials and even smuggling. Thus, we propose eliminating such tax.

2.3.6. Incentives to mining exploration To encourage mining exploration a mechanism that allows recovering the VAT paid in this stage is required, just as in Chile and Peru. Today, the only option to recover VAT in exploration is waiting until the production activity starts, situation that may last many years or in many cases it may not occur. This circumstance is worsened by the limit imposed in the latest tax reform with loss compensation after 12 years, because it limits VAT recovery in a period that is difficult to reach in a mining project. Thus, we propose that mining companies during nonproductive periods subscribe an investment commitment with the Government in order to recover VAT, as it happens with offshore hydrocarbons exploration11.

In addition, it is necessary to review the amounts of the mining canon during the exploration stage and according to the amounts paid in the regions, because the high costs discourage the attraction of capitals that allow improving geological knowledge and development of future major mining projects. Currently in Colombia, the mining canon is three times higher than in Chile, seven times more than in Argentina, eight times more than in Peru and seventeen times more than in Brazil.

10

Created in 1993 by Act 100, article 224, amended by Act 1438, 2011, article 48.

11

Tax Code, article 485-2

ACM COLOMBIAN MINING SECTOR DEVELOPMENT 2018 - 2022

2.3.7 Works for taxes and Works for royalties The norm stipulated in Act 1819, 2016 that allows undertaking works for taxes has been well received in the mining sector because it is the opportunity to efficiently invest in the regions of influence. Nevertheless, we consider that certain amendments to the Act are required so that it may have a better reception. Mainly it is required that works for taxes may be carried out along all the national territory and not only in ZOMAC municipalities. This would allow to rectify in part, some of the discourage generated by the amendment to the general royalty system of year 2011. Among the improvements to this measure it is required to allow access to explorers, reducing balances in favor, alleviating the sanctioning regime and establishing another type of unforeseen facts different from Force Major.

We also propose the legal creation of works for royalties allowing the mining sector to invest in works required by the regions for their development and be chargeable to the payments of royalties.

2.3.8. Other elements to achieve more mining competitiveness Act 1819, 2016 established a new fiscal depreciation regime with fees that aim at using the same system for tax and accounting depreciation. It is convenient to review the good’s depreciation tax scheme as well as the conditions of accelerated depreciation in industries such as the mining industry that operates with up to three shifts a day. At present, Peru has encouraged accelerated depreciation as a mechanism to attract investment, in such manner that while in Colombia the machinery depreciates in 10 years, in Peru the term is 5 years. We even consider that the country should move further on and allow aggressive tax depreciation rates, of one or two years for example, to attract the eyes of investors into the country.

The revision of self-withholding rates that the mining industry has which reaches 2, 6%, which together with the advances on income, generates balances in favor in the industry that affect the cash flow of the companies.

10

Regarding mining costs, it is important to migrate to a competitive model of energy collection which significantly impacts the operation costs. Likewise, prices and overruns for taxes on fuels which are the ones using the main raw material of the industry should be revised and the taxes on this input affect the mining sector more than proportionally than what happens in other sectors.

Finally, we call for a revision of taxes on formal hiring which today are located within the mining tax burden in the first lines according to the Private Competitiveness Council, in this country taxes on salaries contribute to 18,6% of the profits while in Ecuador and Peru the rate is 13,7% and 11% respectively and in other countries like Chile and South Africa it barely reaches 4%.

2.4. Royalties Mining royalties present today two conditions that should be reviewed in order to look for a model which will allow to solve three situations: i) royalties have higher rates that in other competing countries of mining capital, ii) the change in the distribution of royalties have affected the “political social” interest for mining projects and, iii) provide legal certainty to the deductibility of royalties. To migrate to a truly competitive royalties system, a balance of the tax burden according to the evolution of the different mining projects and the behavior of the international prices should be sought in such a way that it contributes to the recovery of the investment and establishes staggered contributions according to the profitability of each mining project.

A study carried out for the Association by Guillermo Perry12 this year, concludes that the system that Colombia has for the payment of royalties is uncompetitive compared to the models of other mining countries of the region such as Peru and Chile. It highlights that for example, Canada, Peru, Chile and recently Argentina have migrated to a royalty’s scheme that taxes mining companies according to profitability levels and does not depend, as it currently happens in Colombia, exclusively on the production levels.

Perry, in the study, stablishes various models to estimate the contribution by royalties in coal, gold and nickel under 5 scenarios: The current Colombian model, the two Peruvian models (with or without legal stability) and the two Chilean models (large and medium company.

In all the scenarios a similar trend is shown about the payment for royalties that varies with the behavior of the international prices although with a basic difference in the current Colombian scenario compared to the models of Peru and Chile. The nominal payment level with the Colombian model is much greater than the regimes of the other countries, in particular in the coal extraction, partly due because in the low prices time, a gap is opened in the payment of royalties in the Colombian model compared to other models where under the Colombian regime an important contribution of royalties is caused in spite of the fact that no profits are

PRESENT VALUE OF THE ROYALTIES AND SPECIAL TAXES TO MINING BY YEAR 2015 IN MILLION PESOS REGIME

COAL

NICKEL

GOLD

Colombia -Effective Collection -Simulation: Act 756 of 2002

17,029,194 13,265,122

3,784,363 -

177,348 -

Peru -With contract -Without contract

2,820,143 3,962,689

2,023,656 2,625,953

111,306 134,984

2,749,822 2,920,440

2,451,185

87,673 113,729

Chile

- Exact application of the Chilean regime -Application under assumption that companies are big

Source: Perry (2017)

12

11

Perry (2017) Mining and oil royalties towards an efficient design.

ACM COLOMBIAN MINING SECTOR DEVELOPMENT 2018 - 2022

generated of that very low profits are generated, situation that is not caused under other models in the moments of low prices which would discourage investment in the industry.

Perry also estimated in his study, the (NPV) net present value in the payments of royalties of the different models from the historical series, where the NPV of the effective collection of the Colombian model is 6 time greater than that which had been applied with the regimes of other countries for the case of coal, while for nickel and goal it is approximately 50% higher.

Therefore, it recommends the migration to a progressive scheme which in addition according to the consultor, it has the virtue by way of taxes or returning greater resources to the country and to the regions in times of high prices, when the business profits exceed the normal operation conditions but in turn does not stifle the investment at times of low prices.

The second challenge around the model of royalties is to achieve an efficient distribution of the mining resources in the areas where the activity is developed. As it is well known, the current model has brought a great rejection from several communities where the extractive operation is carried out, given that they do not perceive a greater or direct benefit derived from the location of these operations in their territory.

In turn, the proliferation of OCADs (Collegiate Bodies of Administration and Decision) and the institutional weakness of various municipalities where mining is located, has resulted in a very low or critical royalty projects management in most cases as it is shown in the map below.

ROYALTIES MANAGEMENT PROJECTS INDEX (MARCH 2017)

IGPR RANGES

Therefore, the reform of the system of distribution of royalties is necessary to recover the political and social interest in the projects at political and social level. In this sense, it is proposed to amend articles 360 and 361 of the Constitution via a legislative act seeking for a more efficient mechanism in the distribution and execution of the royalties where the producing municipalities are favored in an important way13.

Finally it is necessary to give full legal clarity to the deductibility of royalties to avoid in this way possible interpretations of the auditors of DIAN on the decisions of the State Council that declared the nullity of concept 015766 of 2005 of DIAN but ratified the deductibility if they comply with what is stipulated in article 107 of the Tax Statute.

2.5. Customs and Foreign Trade Given that our main markets are the external ones14 we propose to encourage a commercial policy that allow to access to markets where agreements are not yet in place. In this sense, it is fundamental to access Euro-Asiatic countries like Turkey, Japan and China amongst other Asian markets that are strategic both in the sale of minerals and in the supply of goods for the operation of the industry. In this sense commercial agreements made in the framework of the Pacific Alliance should be used, enhancing the mining offer of the countries that make up the alliance (Mexico, Peru, Chile and Colombia) with regard to the current and future important demand for minerals which takes place in East Asia.

Also it is proposed to optimize the customs model, eliminating or modifying some of the obstacles associated with import processes such as the request of certificates of conformity for electrical and lighting products, the requirements associated to the import of yellow machinery, the handling of physical and virtual documentation and other details that make the foreign trade processes expensive and difficult.

Outstanding Medium Low Critical No executor

Suorce: DNP:

13

https://www.sgr.gov.co/SMSCE/ÍndicedeGestióndeProyectosdeRegalías.aspx

Today only 12% is destined in the funds to direct allocations to producing municipalities, ports and Regional Autonomous Corporations.

14

The main markets for Colombian coal today are: Turkey, the Netherlands, United States and Brazil. For gold, United States and Switzerland, for nickel China, Japan, South Chorea and India and for emeralds United States, Hong Kong and Thailand.

ACM COLOMBIAN MINING SECTOR DEVELOPMENT 2018 - 2022

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3 EFFICIENT PROCEDURES Having clear and true rules is important for the development and growth of any industry, in this chapter the procedures established for the mining industry in various fronts were analyzed which led us to conclude that there is an excess of provisions which in practice are of difficult application or are required only from one of the parties involved. In this sense, recommendations were made to improve this aspect which has a decisive impact on competitiveness.

EFFICIENT PROCEDURES

3.1. PINES (Strategic Projects of National Interest) In order to improve the process and coordination of the different authorities involved in the licensing stages in Colombia15, the strengthening of the PINES is proposed within the framework of the provision of CONPES (National Council for Economic and Social Policy).Therefore it is proposed to create an entity or dependency with ministerial rank to lead the PINES process, based on three key elements: • Centralize/consolidate the competence to carry out the procedures; • Implement inter-institutional coordination strategies; • Implement good practices strategies regarding design and development of environmental assessments.

Practices that could be incorporated or improved in this new entity that will be created in Colombia have been identified in the MPMO (Canadian Office for the Management of Large Projects), as an international reference of this figure in a country that has developed the extractive sector with a comprehensive and strict licensing process.

For the creation of that entity the following must be taken into account:

Regulatory Alignment

• Include in the Constitution and in the Law the definition of the legal framework for the (PINES), as well as the competences and scope of the institutions created to lead the initiative.

• Define the Presidential Directive with guidelines for prioritizing management (personnel, resources, commitments, amongst others) for PINES projects, addressed to all national, regional and local entities.

Institutional Architecture • Creation of institutions with economic and human resources with the necessary managerial and technical competences.

• Assignment to each entity of an officer specialized in PINES with licensing functions. The functions of said officer should be articulated with the institution ensuring the comprehensive licensing of a project.

• This new institution should assume the leadership of the projects from the conceptual stage and actively participate and carry out permanent follow-up throughout the entire implementation process in order to reduce the uncertainties in the execution.

• The new institution must create articulation mechanisms not only at national level but also at regional level (for example CAR, departmental governments and Mayor’s Offices) of PINES projects.

Communication and divulgation • Define a communication strategy aimed at building trust from the national regional and local levels through spaces of discussion and dissemination about the projects, which guide decision making and evidence the transparency of the processes.

• Generate actions directed to interest groups so that they will be acquainted with the PINES projects and understand them.

• Define a predictable management model (zero surprises) • From the planning of the projects, ensure the completeness and crosscutting of the same.

15 Obtaining permits and licenses for the execution of economic projects implies the accomplishment of approximately 30 procedures, before a large number of national and local authorities.

ACM COLOMBIAN MINING SECTOR DEVELOPMENT 2018 - 2022

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Information management and transparency • Disclosure of the criteria considered for the selection of the PINES according to sector.

• Creation of a platform of information system available for disclosure, follow-up and control of the strategic projects.

• Public access (via web) to the regulations and normative systems which allow to reduce the asymmetry in the access to information.

• Facilitate a unified information mechanism regarding the requirements and procedures to develop the PINES projects.

• The adoption of follow-up tools for the National Environmental System – SINA that guarantee the coordination, articulation and concurrence of all the entities that comprise it.

• The development of elements that facilitate the exercise of the Ministry of Environment and sustainable Development as hierarchic superior, to carry out the functions granted by the law and effectively links the entities that integrate the SINA, with the purpose of constructing public policy guidelines of national nature with a view to the standardization of the assessment and processing of licenses and permits.

• The incorporation of social, economic and environmental studies before taking environmental decisions.

Likewise, the consolidation of the Geographic Information System that contains and allows further coordination with the SINA - National Environmental System- is proposed by means of:

• The strengthening of the generation of scientific information headed by the institutes more than in the management of the ministry and the democratization of the use thereof, cannot guarantee the quality and relevance of the information when each stakeholder of SINA must produce its own information.

• Compliance with CONPES No. 3585 “Consolidation of the National Policy of Geographic Information and the Colombian Infrastructure of Spatial Data – ICDE” (2009), so that all the producing entities and users of geographic information will accept and comply what was proposed.

• The strengthening of SIAC (Environmental Information System of Colombia) in such way that all the Colombian information contributed by the stakeholders and users of SINA is available there.

• Consolidation of the GEODATABASE, with corporate contribution to the environmental baseline obtained with the environmental impact studies – EIA and its geodatabase (headed by ANLA) with information at a scale of no less than 1:25:000.

This interinstitutional and coordinated process, if successful, could be the basis for the creation in a second stage, of a single window for environmental and mining procedures, in which, as a good practice, the comprehensive evaluation of projects is carried out, with the compliance with the legal terms and offering further security to the communities about the decision that are made without the need for the projects to be previously classified as PINES by the National Government.

3.2. Environmental Procedures In view of the high volume of procedures and its dispersion some improvements to the environmental system are proposed, such as:

• The implementation of indicators that allows the tracking of the investment of economic resources providing from the environmental obligations such as compensations and 1%.

• Adjust the compensations manual for its unification and avoid in that way, multiple charges, with high discretion over the same area.

• That the Ordinance Plan and Management of Watersheds (POMCA’S) recognize the importance of projects of public use and social interest and in addition the reinforcement of the coordination spaces between the regional authorities and the sectoral ministries, in order to reach further articulation between the environmental determinants, the sectoral plans and the bets for regional development.

• The process of subtraction of areas of forest reserve which is today performed at the Forest Direction of the Ministry of Environment, which proposes to transfer the competence of the procedure to ANLA deserves a special mention, since it is contrary to the nature of the Direction responsible for it, jeopardizing the advance of the applications that do not have deadlines or true procedures.

• The measurement and analysis of the normative impact that allows to consider the positive and negative effects of the normative proposals prior to its issuance, as it is used in the (RIA) – Regulatory Impact Analysis in the OECD countries, evidence-based element for the formulation of policies.

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ACM COLOMBIAN MINING SECTOR DEVELOPMENT 2018 - 2022

3.3. Mining Procedures The institutional strengthening of the Mining Authority (ANM) and its assessment capacity, information processing and follow-up is what will enable the mining sector to consolidate in the reliability of the operations generating confidence and security in the citizens in that the mining title holders and the execution of mining activities are carried out under the highest standards. On the hand sufficient, stable and knowledgeable staff is required to meet the mining requirements aiming at strengthening the comprehensive fiscalization process to all the title holders.

For this reason we believe that in the light of the CONPES document 3839 of 2015 the resources required for the institutional strengthening of ANM must be appropriated. Amongst others, is the need to have a unique information platform that systematizes all requests for paperwork and its follow-up via webpage.

Also, it is very important to conclude the Colombian mining cadastre project and to integrate it to the multi-purpose cadastre initiatives, now underway.

3.4. Procedures to acquire explosives An administrative procedure must be established that will allow more coordination between the different competent authorities, for which it is important to adopt a national regulation on the procedure and terms in the Mining Authority, the Arms Trading Control Department, Ammunition and Explosives – DCCA of the Army, Indumil and the Battalion of the area, to ensure the allotment of the quota and timely distribution of the raw material.

ACM COLOMBIAN MINING SECTOR DEVELOPMENT 2018 - 2022

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4 LEGAL CERTAINTY AND MINING DEVELOPMENT In this chapter the main subjects that affect the development of the mining activity and which is closely linked to legal certainty are addressed and a series of actions are proposed, that, if implemented would allow this industry to consolidate as a determining stakeholder for the growth and development of the country.

LEGAL CERTAINTY AND MINING DEVELOPMENT To grant legal certainty to investors, confidence should be generated when judicial administrative decisions are taken as well as the promotion of spaces of dialogue for the construction of an adequate mining policy. This is necessary since the decisions of the high courts in the last years have generated great concerns on the stability of legal relationships of the mining sector, leading to a lack of decision making by the competent officers and abrupt changes case law16.

4.1. Strengthening of the general regulatory framework • Mining development: The regulation of the Colombian mining sector is derived from the constitutional framework where the State is recognized as the owner of the natural resources that lie in the subsoil, nevertheless, before the overflowing increase of popular consultations and municipal agreements that intend to prohibit mining activities, it is proposed to move forward towards a constitutional reform that expressly assigns competences to national authorities for the management and control of the strategic sectors for the economy.

• Land use planning with mining approach: Under the understanding that today more than 900 EOT/POTs (land use planning scheme/land use planning) are outdated, it is necessary to generate a public policy that allows an updating protocol, under the assumption that all economic activities are allowed unless there are zones previously declared by the environmental authority as protected zones and that coordinated participation spaces are established by the national competent authorities where the way of developing these activities is discussed, allowing the coordination in the adoption of land planning tools according to what is established in Act388 of 1997 and article 38 of Act 685 of 2001 (Mining Code), that established that the municipal authorities must consider the mining-geological information of their territory as well as the special reserve zones and zones excluded from mining.

• CONPES for the promotion and development of the mining sector: a short and medium term route for the advancement of this sector should be established, with a national and territorial strategy of articulation of competences and the implementation of a policy to increase exploration and entry in the period of production of important projects that have the capacity to be poles of economic and social development.

• Land Registry: when the mining title is granted it is necessary to establish a procedure that allows the acquisition and registry of lands necessary for the development of mining projects as an activity of public interest, granting legal certainty to the mining operation and to the inhabitants of the region.

This will lead to the development of the great geological potential for which the country is well known, leveraged in the improvement in security due to the reduction of the armed conflict in some mining areas and taking advantage of the advances in geological, geochemical and geophysical research of the Colombian Geological Service17, that offer public information for the mining sector that generates greater interest to the investors in areas of the territory and in the different minerals in the subsoil.

4.2. Updating of the Mining Code The creation of a multi-functional high level group is proposed whose mission is the analysis and proposal for the updating of the mining code, guaranteeing the participation of all the stakeholders of the chain (small, medium and large-scale mining adjusting the 2001 normativity to the new international mining trends, as well as the normative development of jurisprudence.

16 The ACM made an analysis on judgements of the high courts and land restitution judges on the 2010-2017 period, concluding that for the case of the Constitutional Court 60 judgements have been delivered with impact over the mining sector: 27 of constitutionality, where in 50% of the cases the rule has been declared totally or partially unconstitutional; 33 writs for the protection of the constitutional rights selected, 90% resolved against.

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19

https://www2.sgc.gov.co/ProgramasDeInvestigacion/DireccionTecnicaRecursosMinerales/Paginas/recursos-minerales.aspx

ACM COLOMBIAN MINING SECTOR DEVELOPMENT 2018 - 2022

4.3. Citizen Participation Bearing in mind the development of guarantees for the citizen participation is included in the subjects that require normative development to achieve the implementation of the Peace Agreement, it is important to ensure that the corresponding regulation does not jeopardize the economic model or the private investment and that it does not subject the private or public initiative to the design of instances outside the institutional framework. Under no circumstances should incidence be guaranteed, it should not establish unilateral or disproportionate privileges to social movements and organizations, it must be inclusive and shall consider respect between the parties and establish rights and obligations for its exercise in a balanced manner. It must not allow the creation of new mechanisms or participation instances which purpose is to hinder the development of legal activities.

4.4. Social Protest The difficulties derived from social protests and blockades that the mining sector has faced, particularly since 2013, where there has been an excessive increase in this type of events affecting an important number of operations and with high economic costs for the companies and for the country (about COP 1 trillion loss of profit between 2013 and 2016).

TOTAL NUMBER OF REPORTED INCIDENTS

26

181

238

338

consider relevant the construction of a public – private strategy that allows the exercise of social mobilization and protest, with a significant reduction of its impacts, that recognizes that the protest is not an absolute right, that clearly established that it should always be developed in a peaceful way and in case that this precondition is violated, the violent and disturbing activity has to be penalized. Therefore, it is important that it be recognized that the rights of non-protestant third parties should be respected in the same way as those of the protestants; and in the same way, the fulfilment with their obligations has to be demanded. It is a priority to highlight the role of the local authorities regarding these activities, the exercise of the function of the police should be strengthened, and spaces for dialogue should be promoted together with the follow up of commitments acquired.

4.5. Previous Consultation Given the extensive law case development that this matter reached in Colombia, a Statutory Law is required which establishes a true and predictable procedure that offers legal stability to the parties and provides a solution to the main inconveniences that are faced currently such as the dispersion of procedures, the isolated of insufficient information systems, the lack of clarity in the legitimate representativeness of the minorities and poor follow-up on the commitments derived from the consultation, the use of this means as a transactional tool that covers the absence of the state and the possibility of requirements of previous consultation a posteriori. It is important that the initiative establishes a closing mechanism that legally safeguards the parties and guarantee the closing of the processes18. Furthermore, in accordance with the provision of Agreement 169 of 1989, the State is the competent body to carry out the consultation, this should be clearly and expressly indicated as stated by the Constitutional Court, obviously always considering the objectivity, proportionality and reasonableness criteria, it is a priority to prepare a census to give security to the information consolidated in the RUNE, which must finally be the source of verification of its presence.

4.6. Illicit Extraction of Minerals

2013

2014

2015

2016

Loss of profits: 924.8 billion

And its inclusion in the peace agreements have made the issue specially interesting for the industry and that that reason we

The issuance of a law that grants legal tools to the competent authorities to combat the illicit extraction activity which has become a scourge for the country and the zones rich in minerals19, in detriment of our environment, the national economy, the natural resources and society itself, must be achieved.

Any initiative in this sense must include: the articulation of environmental crimes, control of substances and explosives, mechanisms to ensure the traceability of the mineral, controls on marketing, benefit, etc.; it must foresee the confiscation and destruction of machinery and minerals and should evidence the linkage of this crime with other criminal activities such as money laundering, financing of terrorist activities,

18

It is important to consider that while in Colombia only 3.4% of the population is indigenous, and in other countries it reaches 72.2%, like in Bolivia and Peru 24% and 11.9% the previous consultation procedure to the indigenous communities in Colombia are much higher. As of June 2016, as per the ILO reports the number of consultations made were: Colombia 4.496, Bolivia 40, Chile 36 and Peru 28. Even in those countries with a majority of indigenous population like in Guatemala, agreement 169 has not been adopted.

Source: Centro Latinoamericano y Caribeño de Demografía CELADE, regional reports 2015 and 2016, Agreement 169 of ILO.

19

Recent studies show the presence of criminal activities in more than 350 municipalities of 25 departments and even in protected areas of the Natural National Parks System. Source: Mining and development, Universidad Externado de Colombia and Colombia – Production of alluvial gold – June 2016, UNODC report and National Government.

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etc. and even in certain cases it must address the modification of criminal types and finally order to the competent authorities the processing in a very short term of all the formalization and legalization requests filed to date.

4.7. Land Restitution Greater certainty should be given to the processes that are being carried out in the special jurisdiction of land restitution, giving greater intervention in the administrative stage to mining titleholders and delimit and delimit the scope of the URT (Land Restitution Unit) and of the ANT (National Land Agency) in order to preserve the legal security of the bona fide owners. Also the judicial powers to suspend and annul mining titles due to the land restitution process shall be eliminated, since it is not about real rights. Therefore, the modification of law 1448 of 2011 is proposed to eliminate the judicial powers to suspend and annul the mining titles within the land restitution process, since the mining titles do not affect the superficial property, expressly recognizing the difference between soil and subsoil, repealing the presumption against industrial mining and creating a second instance for these processes. We also consider relevant that in the demands of the URT the figure of soil and subsoil be recognized, declaring the legal impossibility of restitution and thus, the application of alternative measures of compensations or indemnities.

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4.8. Mining formalization Before the formalization process a Decree is proposed that in the development of Law 1753 of 2015 (National Development Plan 2014-2018), differential requirements will be generated for the compliance of the mining and environmental obligations, in the exercise of the formalization subcontracts and the return of areas for formalization. It is necessary to have a guide of environmental mining manual for the projects that are in formalization process, that support the development of the National Formalization Policy promoted by the Ministry of Mines but coordinated with other competent instances like the Ministry of Interior, Labor and Sustainable Development and Ministry of Defense consolidating these processes as a comprehensive strategy of entrepreneurship with guided technical assistance, new work alternatives and access to soft loans. It is also proposed that the areas received, in the partial return of areas by mining titleholders, enter to conform a Bank of Land aiming at the formalization.

ACM COLOMBIAN MINING SECTOR DEVELOPMENT 2018 - 2022

5 REPUTATION OF MINING SECTOR The effects of the illicit mining production have radically permeated the public opinion against well-done mining: mercury, deforestation, poverty, violence, are some of the images that have made a career in the eyes of the citizens. For that reason it is not surprising that in the last report of the Brújula Minera, only 36% of the population surveyed has a favorable opinion of the mining companies and of its institutions.

As a response, the formal mining industry has been working in the implementation of a reputation strategy for the legal and formal mining industry in Colombia, which purpose is to show that well-done mining is an engine of development that respects and protects the environment and promotes the wellbeing and quality of life of the communities.

Following are a series of activities which can be implemented by the National Government in order to contribute to the improvement of the reputation of the mining industry so that it will be better accepted by Colombians.

REPUTATION OF MINING SECTOR PUBLIC OPINION AND MINING SECTOR Sector that most affects the environment Mining Oil and gas Industry Tourism Building Rancher Agricultural DK / NA Commerce

Sector that uses more water

60% 16% 13% 2% 2% 2% 2% 2% 1%

Sector that contributes most to the growth of the country

31% 21% 14% 10% 6% 5% 5% 4% 4%

Mining Agricultural Building Industry Rancher Oil and gas DK / NA Tourism Commerce

Agricultural Building Commerce Oil and gas Mining Industry Tourism Rancher Banking DK / NA

Sector that contributes most to the growth of your region Agricultural Mining Commerce Building Rancher Tourism Industry Oil and gas Banking DK / NA

23% 18% 13% 12% 9% 8% 8% 5% 2% 2%

Sector that generates more employment Building Commerce Mining Agricultural Industry Rancher Oil and gas Tourism DK / NA Banking

20% 13% 12% 12% 12% 11% 8% 7% 3% 2%

Sector that contributes more to the communities

22% 21% 17% 14% 11% 4% 4% 4% 2v% 1%

Agricultural Mining Commerce Building Industry DK / NA Tourism Oil and gas Rancher Banking

19% 16% 15% 12% 10% 9% 6% 6% 5% 2%

Source: Brújula Minera

In addition to the aforementioned proposals, the mining sector requires a determined discourse of support to the industry that will improve in a sustained manner the knowledge that Colombians may have about the mining industry, the importance for the development of the country and the difference between the Well Done Mining and the illegal extraction of minerals. To achieve this we propose: • Use of the seal Well-Done Mining – progress for Colombia: One of the main criticism suffered by the extractive sector is that the community does not perceive a real benefit from the

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mining projects in their region. The neighboring communities consider that the companies do not fulfill their legal obligations in relation to the payment of taxes and royalties, or that the money is not invested in the region and much less in their own communities. For this reason we propose the use of a visual tool that will allow the communities to learn about the projects that have been financed with the royalties and other contributions of the mining sector. This seal must be included in the billboards and/or different graphic pieces that are used in the tangible and intangible projects, financed with resources providing from the mining royalties.

ACM COLOMBIAN MINING SECTOR DEVELOPMENT 2018 - 2022

• Regional public hearings: As part of the mechanisms of participation carried out by the National Government it is proposed to include the mining subjects in the agenda of the regional public hearings of municipalities where this activity takes place: in this way, a high level communication channel is opened for the communities, exercising a process of oversight to verify the compliance of the commitments acquired by the companies with the State and with the communities.

• Institutional Media: Part of the problematic of the mining sector lies in the ignorance that Colombians have about the industry, its impact on national economy and about the interference that this has on the daily life of human beings. It is then proposed to create a space through the institutional channel of the Ministry of Mines and Energy or its affiliated entities where the mining subjects are addressed in a pedagogical manner.

These spaces should be approached in a playful and objective manner, addressing the topics of greatest interests for the communities such as the impact and relationship of mining with the environment and the other natural resources as well as the social responsibility of the companies in the municipalities of mining influence in Colombia.

• Institutional campaign (Civic Code): The aforementioned communication spaces should be complemented with a massive institutional campaign through the different media at national level.

ACM COLOMBIAN MINING SECTOR DEVELOPMENT 2018 - 2022

• Mining Teaching in schools: Through the Ministry of Education it is proposed to include in the Natural Sciences subject, a class that explains to young people about the mineral resources that the country has, the uses of each of them in daily life and the responsible and sustainable ways of production that are present today, as well as the replicable examples in other countries.

• International promotion tours: Colombian minerals export more than 80% of its production, thanks to the fact that those are high quality products with high demand abroad. Nevertheless, products as important for the mining sector in Colombia such as the thermal coal are being threatened by smear campaigns in international markets. For this reason it is proposed to include Colombian export-type minerals in the promotional events organized by ProColombia.

In addition to this, it is proposed to organize joint tours between entrepreneurs of the sector and members of the Colombian government to the buyer countries, with the aim of promoting not only the product but the high standards in social and environmental matters that are implemented by the companies with projects in the country. This activity could be complemented with the participation of representatives of the Colombian government in the most important mining events where the country is promoted as an investment attraction.

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