At the beginning of this year, the price of an ounce of gold in the country was around 1,200 dollars, today (eight months later and with a pandemic that slowed the world economy) the value of an ounce of this metal reached 2,000 dollars, which translates into an increase of 60%.
For Colombia, a country in which only five mining projects (Buriticá, Mineros, Gramalote, Marmato and Soto Norte) have an extraction potential of 1,190,000 ounces of gold – almost 34 million grams -, this increase in its value, According to unions and experts, it translates into an opportunity for an economic recovery for the post-pandemic.
“To overcome the lag caused by this crisis, gold mining projects are fundamental, mainly because they will inject resources from taxes and royalties into the Nation, which will reduce the tax burden, thus avoiding a possible tax increase “said Jorge Castro Corvalán, civil engineer and consultant for business families.
In this link you can find a complete special on the details of the Soto Norte project, in Santander, with its delimitation and information on the municipalities near it, several of them with a mining vocation.
According to the Dane report for the second quarter of this year, of the Gross Domestic Product (GDP), the extraction of metallic minerals, such as gold, grew by 21.1%.
In contrast, the extraction of stone coal decreased 50.5%, and that of crude oil and natural gas fell 15.4%.
In fact, the president of the Colombian Mining Association (ACM), Juan Camilo Nariño, stated that the higher the price of gold, the greater the amount of income that the country will obtain from the payment of taxes and royalties on behalf of the projects that would extract gold.
On the other hand, as a “Golden opportunity for the country”, qualified the Minister of Mines and Energy, Diego Mesa, the rise in gold prices.
“The figures show that Colombia has a golden opportunity. The price of gold hit record highs, surpassing the barrier of $ 2,000 per ounce. At the end of 2019, Colombia’s gold production reached 36.6 tons and the goal is to double gold production by 2030, exceeding 60 tons with the entry of these large projects, by transforming the sector, ”said Minister Diego Mesa Puyo.
To overcome the lag that caused this crisis, gold mining projects are essential
Another advantage that the increase in the price of this metal leaves the country is that foreign companies, through mining projects, investments would increase, in different fields of the economy.
“The moment a company starts a mining project, it implies a giant investment: they have to move their equipment to the country, install it, hire personnel (from various disciplines) and carry out the procedures required by law,” said Lucas Arcila, Master in Public Policy from the Paris Nanterre University.
To understand the size of the money that the Nation would receive on behalf of this activity, of the 2,000 dollars that an ounce of gold currently costs, 31% of this price, that is, about $ 600, he stays in the country for taxes and royalties.
Among the taxes that companies have to pay are VAT and payroll taxes, profit and even explosives.
In this section, it is also necessary to take into account what is known in the economy as country risk and more in investments that are destined to mining.
“Investing in Colombia has more risks than doing it, for example, in the United States. However, as the profits of these businesses are profitable, the companies are willing to take the risk”, Clarified Sergio Cabrales, professor of the Master of Petroleum Engineering at the Universidad de los Andes.
The goal is to double gold production by 2030, exceeding 60 tons with the entry of these large projects
Illegal attracts crime
For Jorge Castro, among those interested in entering this business, with the rise in gold prices, are criminal groups.
“Gold will continue to rise in price, the $ 2,000 it reached is just one notch. This brings a consequence of care and is that If the professional and formal concessions of mining, especially gold, are not accelerated, criminal gangs will try to extract it on their own. Are licenses or violence”Castro warned.
Within this section, those familiar with the subject also conclude that the procedures to begin exploitation should be expedited.
“Many times the mining projects are delayed because the procedures are very long. The institutional system does not give a quick response and it takes months, and even years to grant environmental concessions and licenses. So if you want to reactivate the economy, you have to give them speed “Arcila concluded.
According to figures from the ACM, In 2018 alone, the mining sector generated more than 350,000 direct and indirect jobs throughout the country. For this reason, if extraction projects, not just gold, are carried out, the generation of more work would be promoted.
In fact, the gold mining projects of SOto Norte, Gramalote, Mineros and Buriticá would generate more than 11,000 jobs.
For the National Government, an important point to take into account in the economic reactivation is the formalization of the country’s small miners.
“In addition to contributing to increased production of legal gold, it can positively impact the lives of many miners and their families. To the date, We have achieved that around 1,700 small gold miners have consolidated their mining and environmental legality. Likewise, we work so that almost 6,000 small miners consolidate the path begun under the different figures authorized by law, of which about 2,400 are in Antioquia, and we are accompanying 3,000 small gold miners with a vocation so that they can start this transition to legality, “said the Vice Minister of Mines, Carolina Rojas.
Why did gold go up?
There were several reasons, partly driven by the Covid-19 pandemic, that led to gold reaching historic prices, not only in Colombia, but also in the world.
“Gold has been the currency of all central banks, when it rises, due to uncertainty, all banks try to have a little safe haven money. Added to this is the drop in interest rates, ”commented Jorge Castro.
Safe-haven money, like gold, are assets that are safe despite the economic uncertainty that surrounds the planet and that, in general, do not fall in price. Therefore, the great demand for this metal, together with the fall of the dollar, led to an increase in its prices.
Colombian gold in the world
With 35.6 tons, Colombia ranks 22nd in the world ranking of gold production, which is led by China with 401.1 tons, followed by Australia (313) and Russia (279.9).
According to calculations by the Colombian Mining Association, with the new gold extraction projects, the country would reach 81.4 tons, which would allow it to reach 15th place in this world ranking.
Part of the increase in tons produced would come from Gramalote (Antioquia) and Soto Norte (Santander), each with a potential of 400,000 ounces, which would place them in position 39 in the list of mining projects in the world, led by Muruntau, in Uzbekistan, with more than 2,600,000 ounces.
The different uses of gold
* Special editorial content project, under the auspices of the Sociedad Minera de Santander (Minesa).