July 30, 2010 / 7:13 PM / 9 years ago

Colombia Jan-May gold output up 33 pct-official

* Country could produce 3 million ounces in 2012

* Colombia may see $5 bln in investments over 10 years

By Diana Delgado

BOGOTA, July 30 (Reuters) - Colombia’s gold production grew 33 percent in the January-May period to 20 tonnes (643,000 troy ounces) versus the same period last year due to new projects coming online, the country’s mining regulator said on Friday.

Miners in Colombia, South America’s largest gold producer until 1937, have been encouraged to seek the yellow metal due to soaring prices — currently at $1,170 an ounce.

“That (growth) was possible thanks to the increased number of projects that began producing in the provinces of Santander, Cauca and Antioquia,” Mario Ballesteros, head of the Ingeominas regulator, said on the sidelines of a mining seminar.

Ballesteros — who declined to mention the specific projects — said that the Andean nation’s output was 15 tonnes in the same period last year.

The resource-rich Latin American country has more than 40 international companies exploring for gold, according to the miners Association, Asomineros, a unit of the nation’s industrialists group ANDI.

Gold miners have come back to Colombia since violence fell after President Alvaro Uribe sent troops to take back areas once under control of illegal armed groups.

Mining and Energy Minister Hernan Martinez told the conference late on Thursday gold output was likely higher in January to May due to increased illegal gold extraction.

“There is a lot of informal gold mining with projects that are not registered or that we cannot control ... This year we increased controls and we are seeing the results,” he said.

U.N. experts have said Colombia’s gold bonanza has a dark side — mercury poisoning spreading from miners to the population of a northwest state where they use mercury to extract the precious metal. [ID:nN13250481]

Colombia could produce around 3 million ounces of gold in 2012, twice as much as the 1.57 million ounces produced last year and much higher than the 501,500 ounces produced in 2006, Ingeominas said in February. [ID:nN03167364]

Colombia may attract as much as $5 billion over the next ten years, slightly higher than the $4.5 billion initially expected, Arturo Quiros, director of Asomineros, told the two-day mining conference late on Thursday.

“We have detected five new gold projects that will require $5 billion in investment, but we are too conservative as investment in this sector could be higher,” Quiros said. (Writing by Jack Kimball; Editing by Marguerita Choy)

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