Copper companies look to ColombiaGold investment continues

MINERSCopper companies look to ColombiaGold investment continuesPaul HarrisColombia is attracting increasing interest as a new frontier for copper companies | Credits: Credit: Shutterstock31 October 2024Colombia is attracting increasing interest as a new frontier for copper companies, and major miners have a long-term vision that looks beyond the short-term political environment, delegates at the CGS Colombia 2024 conference in Medellin heard on Tuesday.The most recent entrant is leading copper producer Freeport McMoRan, which opened an office in Colombia this year and has entered into an exploration joint venture with Vancouver junior Max Resource related to the multi-target Sierra Azul sedimentary copper project in Cesar.Freeport successfully operates in some of the world's most challenging jurisdictions and is bringing its family ethos and optimism to Colombia, said SVP of exploration Mac Canby."Colombia has seen a remarkable number of discoveries, but there have not been as many developments. We are optimists and increasingly think it is doable in Colombia. It is about finding common ground based on the principles of ask, listen and learn, and communicating our commitments to standards very clearly," said Canby.Colombia has one copper mine, Atico Mining's El Roble in Choco, that produced 13.2Mlb of copper and 10,140oz of gold in 2023 from a volcanic massive sulphides deposit. This is tiny compared with most of the world's copper mines. The two projects vying to be Colombia's next copper mine are also small on the world stage, although would be big for Colombia.Pushing hard to be the next copper mine is the Robert Friedland-backed Cordoba Minerals with its Alacran project in Cordoba. The company obtained a construction permit in August and just needs the environmental permit to start a US$420 million development. Alacran, denominated a project of national interest, has a December 2023 feasibility study for producing 24,000tpa of copper, 37,000ozpa of gold and 357,000ozpa of silver over a 14.2-year mine life."We filed the EIA in December 2023, and we are waiting for that to be able to kick off construction next year, with the first production in late 2026 or early 2027. We are looking at financing and want to have a package with one or two companies," chief executive Sarah Armstrong-Montoya told delegates.Cordoba is an example of a mining project that received permits during the administration of Gustavo Petro, contrary to popular wisdom that the current government is anti-mining.Obtaining its environmental permit would mark a milestone for the country because Cordoba is planning an open pit mining operation with a low strip ratio of about 1:1, accompanied by a 17,000tpd processing facility for fresh and transition ore, and a 2400tpd wash gravity plant. Open pit mining in Cordoba is not as controversial as in other parts of the country as Alacran is located near South32's Cerro Matoso open pit nickel mine and an open pit coal mine.AngloGold Ashanti's $1.2 billion Quebradona copper-gold-molybdenum project in Antioquia would be the country's biggest metal project and produce 137Mlbpa of copper for 22 years. AngloGold failed in its first attempt to permit the project in 2021, and is working on an updated environmental impact assessment to make a new submission in the future. That submission could wait until the change in government in two years when many expect a centrist or right-leaning government to be returned, following the lack of progress the country has seen under the left-leaning government of Gustavo Petro.At Sierra Azul, Max has a 120km north-south trend to explore in which it has determined three main districts: AM, Conejo, Uru. At AM, where it sees a target of 50-100Mt, 1200m of scout drilling has been completed with a highlight of 48m grading 1.8% copper and 7.2gpt silver. Conejo has two targets 1.6km apart, with samples averaging 4.5% copper, with no drilling yet. At Uru, it has 12 targets and drilled 2200m in 12 holes with a highlight of 10.4m grading 3.4% copper and 48gpt silver.Aiming to resume drilling before the end of the year is Rugby Mining at its Cobrasco project in Choco. It has drilled 2283m in three holes that confirmed a large porphyry copper target. Drilling returned 82m grading 0.9% copper and 199ppm molybdenum within 808m grading 0.42% copper.The third hole was stopped at a depth of 300m with the last 2m running 2.69% copper, 151ppm moly and 7.3ppm silver. "We are looking for a partner for the project and hope to start drilling before year-end," VP of corporate development Jon Hermanson told delegates.Rugby's neighbour at Cobrasco is Minera Colombia de Cobre, with its Comita project, which is partnered with Rio Tinto.Lucas Marsden of FTI Consulting said that, in addition to formal mining projects, Colombia's copper exports could be rising to the detriment of the renewable energy sector as cable theft increases.Marsden spoke about the renewables sector in Latin America. Climate change and the El Nino climate phenomenon have the region under alert. "70% of the installed hydropower in Latin America is under risk, particularly in Mexico, Argentina and Chile, as the world gets hot. There are also increasing wildfires in Bolivia, Brazil and elsewhere, resulting in water rationing in Colombia and power shortages in Cuba and Ecuador," said Marsden.Marsden said that wildfires are both natural and criminal. "Climate terrorism is on the rise by miners, loggers and farmers pushing back on attempts to halt deforestation," he said.PetroMuch of president Petro's legislative agenda has met resistance leading him to complain of an "internal coup" by the uncooperative Congress. His legislative successes have come when he has modified his proposals, Sergio Guzman, chief executive of Colombia Risks Analysis told delegates. Guzman cautioned that while elements he has not compromised on have been defeated or not advanced, such as constitutional reform, he has successfully planted their seeds in the political mind, which may become election issues going forward."Petro wanting to change the constitution isn't going to happen, but he wants to cement the idea of a system overhaul to make this into an electoral argument in the 2026 election," said Guzman.Petro cannot run in 2026, and indeed, with an approval rating of 31%, down from 64% shortly after he was elected, he would face a tough challenge if he could.For the mining sector, Petro has held back from trying to reform the Mining Code, although he has a mining law bill that seeks to make key changes. He is looking to constitute a state mining company called Ecominerales and push small miner formalisation."Ecominerals would violate the rule of competition [that prohibits state agencies competing with the private sector]. Ecominerales would not be a company of small miner formalisation, although perhaps it should be," Esteban Martinez, deputy director of thinktank GDIAM told delegates.The law panel was harsher in its view of Ecominerals. "Colombia cannot lose the budgetary certainty it needs for defence, health, and education to play mining roulette," said lawyer Hernando Escobar.Hernan Rodriguez, partner at Dentons Cardenas, said that while Petro has improvised with much of his legislative plan, with mining, there is a plan. "Decree 44 is the most worrying initiative as it allows the Ministry of Environment to declare temporary reserve areas under the precautionary principle without any social, economic, technical or environmental studies or consultation. They will be for an initial five years, extendable for five more, and depending upon how you read the bill, indefinitely. This is why it is the most challenged bill," he said.Marsden said that one of the drivers for illegal and criminal mining is a lack of formal exploration and mining activity. "Not granting licenses opens the door to illegal mining. There are 300 cases of illegal mining in the Cobre Panama zone since [First Quantum Minerals mine in Panama] was shut last year," he said.The mining sector's defence is to file legal challenges. "We have a contention strategy whereby for everything that comes out, we demand to surround those who make decisions based on law, as the country is going to need the financial resources mining brings," said Rodriguez.EcuadorColombia faces competition from its southern neighbour Ecuador where SolGold secured a US$750 million funding package in July for its Cascabel copper-gold project from Franco Nevada and Osisko Gold Royalties that will finance the company through to a construction decision, and then provide a $650 million chunk of construction capital. Cascabel received an exploitation contract for 35 years in June."We are moving to be a construction-ready project and hope to have our permits at the end of 2026. Cascabel will have a production grade of 1.45% copper equivalent over the first 10 years of production that will generate $7 billion in free cash flow," chief executive Scott Caldwell told delegates.In addition to Franco and Osisko backing the company, SolGold has BHP, Newmont and Jiangxi Copper 6% as shareholders.The investability of the project may depend on external factors as much as those that are in the company's control. Ecuador faces a presential election in late 2025 with a new president to take office in February 2026. The early popularity of president Daniel Noboa has waned rapidly as an energy crisis has gripped Ecuador. Low rainfall has reduced the capacity of its hydroelectric generation, coupled with falling oil production, which means the country is experiencing regular power outages."I live in [capital] Quito, and the power is out for several hours a day. We have an office on the twelfth floor, and I can get fit running up and down the stairs because the elevators aren't working," said Caldwell.To help secure energy for Cascabel, SolGold is going to build a 200MW run-of-river hydro project with solar complement. SolGold is also working with G Mining, which built Lundin Gold's Fruta del Norte gold mine in Ecuador, to technically de-risk and optimise the project.