The Paz del Rio coalmine enterprise was Colombia’s first public company, born out of a pressing national need. In fact, mining in Colombia began towards the early 20th century, around the time of the First World War. Back then, the United Kingdom was a global leader in the production of coal and all of its related machinery, such as railroads and metal factories. Thus, most of the world’s coal was traded through the United Kingdom and, when the cargo ships were blockaded during the First World War, Colombia faced the need to look domestically for this energy resource. It was then that the Paz del Rio coalmine was established as a state-owned company. Nevertheless, as of today, the Colombian government has sold its stake in the coalmine and it currently belongs to the Brazilian consortium Votorantim.

State Companies and Industrial Development in Colombia

Colombia’s National Mining Agency (NMA) prioritizes national and international companies that take into account sustainable development and social responsibility in the rural territories. Therefore, the NMA has issued resolutions that oblige companies to comply with social responsibility, environmental, and sustainable development clauses in order to apply for a mining title. Furthermore, Colombia’s NMA prioritizes junior or explorer companies because, currently, only 3.5% of the national territory is being mined, of which 2.6% is in active extractive operation and about 0.9% is in exploratory activities. This is due to the fact that Colombia’s mining industry, perhaps uniquely in the world, was halted for decades because of the violent conflict. Now that the country has entered into a new era of peace and development, 95% of the national territory is open to investors and, thus, the NMA’s main interest today is the exploration of mining potential. Said exploration is mainly conducted by junior or explorer companies, which are the foreign investors being encouraged to come and work in Colombia.

Within this scenario, Colombia’s mining industry and economic sector is very dynamic because it is a totally private business, based on a concessions system. This means that the NMA is a partner to all mining titles alongside the private company, which is the business principle of a concession. Meanwhile, in the case of Colombia’s hydrocarbons sector, the largest player in this field is the state-giant Ecopetrol, a public-private company. This is due to the fact that, throughout Colombia’s history, the country prioritized the development of its hydrocarbons sector over traditional mining.

Half a century ago, Colombia developed some major mines, namely Cerrejón, Cerro Matoso, Drummond, Prodeco, and Paz del Río, this last one has been in operation for over one hundred years. However, for fifty years Colombia stopped its mining initiatives for a variety of reasons. Firstly, because of the situation of the guerrillas that prevented biologists and other scientists from getting to know the territory, which also led to a national prioritizing of the hydrocarbons sector, hence Ecopetrol. Therefore, in a certain way, the mining industry in Colombia was reborn about ten years ago, which provides a horizon of opportunities for foreign and private enterprises willing to venture into the national industry.

(Read more about Fostering Mining and International Investment in Colombia)

Subscribe to Growth Stories, a weekly newsletter with the latest insights and opportunities you need to become a successful farmland owner.