BOGOTA May 21 Colombia's oil and mining
industries, hit by lower output and growing resistance to some
key projects, are pleading for help from the next government to
streamline slow and erratic regulations.
The country's commodities sector, once a darling of foreign
investors, has lost its luster in recent years as shifting
environmental rules, delays in obtaining permits and local
community resistance leave many projects stuck on paper.
The winner of Colombia's presidential election on Sunday -
or a run-off vote next month - will face slowing growth in oil
output and stalled mining projects just as peace talks with
Marxist rebels open the possibility of tapping crude and gold
whose extraction has been hampered by war.
A peace deal with FARC rebels could boost annual economic
growth by 1 to 2 percent, the government says. It also would
bolster investor certainty in oil and mining, with much of the
country's mineral wealth in areas where conflict persists.
"If Colombia sets clear rules for the sector, there is
enormous potential," said Santiago Angel, vice-president of
hydrocarbons and energy at ANDI, a business group. "The main
problem is coordination."
The front-runners, center-right President Juan Manuel Santos
and right-wing Oscar Ivan Zuluaga, are both seen as
market-friendly candidates who support foreign investment.
Foreigners invested about $8 billion in the oil and mining
industries last year alone. Those sectors have outpaced overall
growth in Latin America's fourth-largest economy since 2008, and
now account for about 10 percent of GDP.
Deputy Mines Minister Cesar Diaz said last week the mining
sector could double or triple in size if Colombia reached a
peace agreement and established a better regulatory framework.
Mining exports actually fell one-fifth in value to $11.2
billion in 2013 as both output and the average price of coal and
Strikes and port and railway shut-downs were partly to
blame. But keeping the sector growing, the government
recognizes, will require improving liaison between the various
entities that oversee it.
"I wonder if Colombia realizes that (mining) isn't growing
but going backwards," said Claudia Jimenez, former head of the
Large-Scale Mining Sector Association, which represents coal
miner Drummond, nickel producer Cerro Matoso and other firms.
A surge in mining permit requests prompted a two-year
moratorium on new mining rights that ended last year. But an
environmental review of where mining should be allowed in one of
the world's most biodiverse countries is still ongoing.
Companies entangled in that review include Canadian miner
Eco Oro, which has invested $230 million over 18 years in the
Angostura gold and silver project but still does not know if it
will be able to mine the area.
Colombia dropped to 82nd in 2013 from 25th in 2009 in
Canadian research institute Fraser's ranking of mining countries
based on regulatory complexity and investor friendliness.
"The government is conscious, I'm conscious that it hasn't
been easy for the industry," Santos told an oil and mining
conference last week, although he said his government improved
efficiency and cut corruption in regulatory bodies.
The government has given signals it may have to backtrack on
a 2011 legal reform that slashed the share of oil and mining
royalties paid directly to local authorities, spurring an
increase in resistance by communities.
"This hasn't been good for the industry. There is then no
incentive to have a mining operation nearby except jobs," said
Jimenez, the mining group's representative.
Hundreds joined protest marches this year and last against
new oil projects in Meta province, Colombia's biggest onshore
oil region, fearing water pollution and possible displacement
from their homes.
(Editing by Brian Ellsworth, Kieran Murray and Dan Grebler)