* Bogota will ask miners to propose royalty sharing
* Competitive tender process will start in 2013
* Nearly 3 million hectares set aside under program
* Andean nation has become hot mining destination
By Julie Gordon
TORONTO, March 5 Colombia will start
awarding mining concessions in 2013 under a new competitive
tender process and in the first year hand out a maximum of 20
percent of an area set aside by the government for mineral
development, a minister said on Monday.
The government will award the titles using various criteria,
including proposed exploration spending and how much a company
offers in terms of revenue sharing with the government, Mines
and Energy Minister Mauricio Cardenas told Reuters.
"Rather than changing royalties, we ask the market to tell
us what is the maximum royalty we can get from that area," said
Cardenas, who was in Toronto for PDAC, the mining industry's
largest annual conference. "It's an innovation."
In recent years Columbia has emerged as a hot destination
for exploration spending. Foreign direct investment, or FDI, in
the country more than doubled in 2011 to $14.4 billion, up from
$6.8 billion in 2010, as a military campaign against
narcotics-funded insurgents and criminal gangs made it safer to
conduct business there.
In percentage terms, Colombia's growth in FDI outstripped
that of all other countries in South America in 2011, according
to the latest data from the United Nations Conference on Trade
and Development. Investments in Chile grew to $17.6 billion from
$15.1 billion, while those in Peru rose to $7.9 billion from
The new concessions are expected to accelerate the influx of
foreign capital into the South American country. Last month,
Colombia said it would set aside nearly 3 million hectares (7.4
million acres) for mining development. That represents some 60
percent of its known mineral resources.
The Andean nation will hand out the first of the
concessions, which contain gold, silver, coal and other
strategic resources, under the new tender process in 2013.
"We have to do this gradually because it is a lot of land,
and we need to make sure that we do several rounds in the
future," said Cardenas. "We don't know the final figure, but
think about 10 or 20 percent of that, maximum, which is already
a lot of land."
REVISED MINING CODE
The country will continue to award mining concessions
outside the reserved strategic hectares on a "first come, first
served" basis, said Cardenas.
At the same time, the government plans to revise the mining
code to give it the power to revoke titles for assets it sees as
improperly explored or developed, and put them back into the
strategic pile to be auctioned or tendered.
"The one thing we want to avoid is titles that go to
individuals or companies that only want to speculate with them,"
said Cardenas. "We've had a lot of trouble with that."
The revised mining code will give the authorities more power
to shut down illegal miners and destroy their equipment. That
bill is slated to come before Congress in July.
Cardenas, visiting Toronto during a rare cold snap in an
otherwise balmy winter, said Colombia owes a great deal to
Canada's junior miners, who have so far spent hundreds of
million on exploration in the country. But he warned that those
looking to get rich quick at the nation's expense are not
"Investors should not think about this as a short-term,
highly profitable ventures," he said. "We'd like them to see
this as long-term, sustainable projects with adequate rates of
(Editing by Frank McGurty)