Greystar : Colombia Permits This Year

Greystar expects to get its environmental permit for Angostura in Colombia this year.

BY JOHN OTIS

BOGOTA –Canada-based Greystar Resources was one of the few international gold mining companies exploring in Colombia in the mid-1990s, an era when Marxist guerrillas controlled many parts of the country. But persistence could pay big dividends. Greystar's Angostura concession, located in the California-Vetas gold district in northeastern Colombia, may hold 10 million troy ounces of gold. This dovetails nicely with President Juan Manuel Santos’ plan to make mining one of the country’s five “locomotives” of economic growth.

But Greystar’s plan to build Colombia’s largest open-pit gold mine has hit snags. It would be located in and around a fragile high-mountain ecosystem known as paramo. Parmos are cloud-shrouded areas covered with peat bogs, grasslands and shrubs. Colombia is home to nearly 60 percent of the world’s paramos, which act like mountaintop sponges and serve as vital sources of water. Environmentalists also point out that a 2010 reform to the mining code technically bans mineral extraction from paramos. But the government says projects like Greystar’s must be analyzed on a case-by-case basis. Greystar President Steve Kesler recently spoke with Latin Business Chronicle about the company’s outlook in Colombia.

Latin Business Chronicle: How do you view the prospects for Colombia’s mining sector?
Kesler: In Latin America, Chile was the investment country for mining in the 1990s, Peru in the 2000s, and in the 2010s it’s going to be Colombia. The mineral resources are here. But there has been no exploration for the past 15 or 20 years. So, Colombia is poised to do exactly what Chile did 20 years ago: Use mining as a locomotive of growth. [But there must be] leadership in the government to say: ‘We are going to develop the mining industry and we are going to do it in the most environmentally and sound manner. But we need to develop the mining industry to improve the living standards for the people of Colombia”

How has the Angostura project evolved?
Kesler: We’ve been here 15 years. Clearly there was opportunity in the California-Vetas gold district. There had been small-scale mining there for 500 years. We recognized that the geology was very attractive. After starting exploration we had to suspend operations from 1999 to 2002 because the area was a red zone occupied by FARC guerrillas. We came back in 2002 and had to spend the next two years clearing the 300 land mines that were sown around the area. Since then we’ve done 300,000 meters of drilling and underground tunneling to prove that this is a very large resource.

How much have you invested in Colombia?
Kesler: We’ve spent $150 million on exploration, studies and land purchases. Following Greystar, other Candian companies are now working in that area. There’s a general expectation that California-Vetas will be understood as one of the most important gold mining districts in the world. We have a resource of 10 million ounces plus. There are people who believe that… the district could be a 30 million ounce resource. [Besides Greystar] no other large-scale mining project is ready to go in this country because no one else has been here. This is the only one that’s ready to make the investment, create jobs and fulfill the strategy of the Santos government to use mining as a locomotive for growth.

Can you proceed now that Colombia’s reformed mining code bans mineral extraction from paramos zone?
Kesler: The code also says it’s necessary for environmental agencies to undertake technical, social and environmental studies (and then) define which paramo areas should be excluded from mining. There are legal uncertainties. But we are fully committed to recuperating all the land that we will impact. We will use 1,000 hectares. For every hectare that we impact and recuperate, we will buy another six hectares in other areas for their protection and recuperation. Our commitment is to improve, not harm, the paramo.

It’s not just environmentalists opposed to this project. Business leaders and the engineering association in Bucaramanga (the capital of Santander state located near the site) have also come out against Greystar. They say a massive open-pit gold mine will put the local water supply in danger.
Kesler: For the life of me I find it very difficult to understand [that]. Here is a project that brings in the highest technology in the world and lots of opportunities for engineering companies. Mining in Colombia is going to happen. If you don’t get responsible mining you?ll get illegal mining which is damaging to the environment. All the illegal gold mining that’s been going on in this country has severe environmental damage and a large part of it is being used to finance illegal groups and the purchase of arms. This country desperately needs investment and President Santos knows that.

When do you expect a final decision from the government on building the gold mine?
Kesler: We hope to get the environmental permit this year and start production in the middle of 2013.