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Colombia is a country with a strong mining tradition, inasmuch as indigenous and afro-descendant communities located in rural areas depend on small-scale mining. The Colombian mining industry ranges from simple stone and gravel extraction to sophisticated coal, emerald, copper, nickel and gold. In total, the Colombian mining industry extracts around 211 minerals throughout the national territory, which ranks the country as one of the most important producers of nickel and coal in South America and the second-largest producer of emeralds in the world. Nevertheless, the industry is still going through a complex period, caused by different judicial and administrative decisions that continue to trigger concerns regarding legal instability and uncertainty for foreign investment. Government is aware of the concern and is seeking to address these issues.

More recently, as a result of the global covid-19 pandemic, regulations were issued to facilitate continuance of operations in the mining sector. Nonetheless, as in many jurisdictions, required protocols and restrictions have of course resulted in reduced activities. There is, however, an inmense potential in Colombia given the prospectivity throughout the country.

Historically, 2018 marked a particular year of importance in recent mining regulatory developments. The Colombian Constitutional Court issued a historic decision, which determined that municipalities do not have the exclusive prerogative to decide on the use of the subsoil, and therefore cannot veto or prohibit mining or hydrocarbon activities through popular consultations. The decision of the court provided that territorial entities have limited powers to decide on the use of land, as such prerogative corresponds to the executive branch. Furthermore, the Constitutional Court established that the determination of land use must be the result of coordination between the central government and regional authorities.

Mining in Colombia is developed on a number of levels, with different standards of production and environmental management. Small-scale mining, for example, has the largest number of production units and, although still deficient in relation to overall performance, it is still significant in terms of generating employment and, in some cases, its capacity to add value to the extracted mineral. Medium-scale production projects are characterised by their higher knowledge of the resources and reserves, their planning strategies and their higher level of compliance with labour and mining health and safety standards. On the other hand, large-scale projects are executed under the best technical, economic, environmental and social conditions, which are very important for the country's economy not only for their capacity to generate income, but also for their social and regional impact (i.e., open-cast mining projects).

Although the mining industry is one of the fundamental pillars of the Colombian economy (in terms of foreign investment, exports and its contribution to gross domestic product (GDP)), in 2019 the sector increased from a GDP share of 4.75 in 2018 to 5.40 per cent. Efforts to confront illegal mining and improvements with regard to community concerns and environmental organisation claims may have likely motivated the positive result. The fact that mining operations are not required to stop during the covid-19 pandemic, and efforts by industry to improve its sustainable development approach will have an important say in the 2020 results.

The Colombian government has done much to improve virtual access to mining processes and this too will likely help expedite much-needed reforms. Thus, while covid-19 has had relevant negative impacts across industries it is also true that it may have indirectly contributed to eliminating red tape that was still present in the mining sector. Mining authorities are confident that the promotion of investment in Colombia as well as improved online management may in fact boost activities in the sector. Even before covid-19, the Decree 2078 of 18 November 2019 created the Integral Mining Management System (the SIGM) and the ANN MINERIA platform has also become operational to assist with e-mining processes. This will be the key challenge throughout 2020, alongside environmental permitting and prior public consultations, when required.


Legal framework

The regulatory framework for mining in Colombia is made up of regulations relating to different categories, ranging from constitutional to mainly technical norms, which regulate day-to-day mining operations.

The Colombian Constitution of 1991 provides that the subsoil and non-renewable resources are state property, while also allowing for individuals to acquire rights over those resources. Additionally, in accordance with Article 334 of the Constitution, it is the state's responsibility to intervene in the use, production, operation, exploitation and distribution of the minerals obtained from the soil and subsoil, which directly translates into a specific regulation for the mining industry and allows individuals to develop these activities.

The main regulation in force is the Mining Code issued through Law 685 of 2001 (the Mining Code), which seeks to regulate the legal relationships between the state and individuals at all stages of mining (i.e., exploration, construction and assembly, exploitation, processing, transport and marketing of minerals in the soil or subsoil).

Aside from the existing regulations, the Ministry of Mining and Energy, through its Vice Ministry of Mines, issues government policies in relation to the management of the mining sector, which seek to formulate, adopt, articulate and coordinate policies and plans for the sector. Other relevant functions intended to improve the overall performance of the sector are developed by other entities subscribed to the ministry as follows.

The National Mining Agency (ANM), created through Decree 4134 of 2011, is in charge of executing the title and registration processes, technically assisting projects, and promoting and observing the obligations arising from mining concessions.

The Mining-Energetic Planning Unit is in charge of the comprehensive and permanent planning of the sector, of providing indexes of the development of the sector, and is responsible for the production and circulation of information required by the different stakeholders in the sector and by the entities involved in developing new policies for the sector.

The Colombian Geological Service is in charge of scientific research for the potential resources of the Colombian subsoil in accordance with the policies set forth by the Ministry of Mines and Energy.

Finally, the Government Policy, with respect to the different sectors of the economy, including mining, is incorporated in the National Development Plan 2018-2022, issued via Law 1955 of 2019, which established the following new matters with respect to mining:

  1. created a temporary environmental licence for off-record miners (i.e., individuals that are small-scale traditional miners). This mechanism allows off-record miners to conduct mining operations on a temporary basis and until the mining authority issues a final decision with respect to the environmental licence;
  2. eliminated certain requirements for the assignment of the mining title and extended the 45 business day term for the authority to decide on the assignment to 60 business days. In addition, it eliminated the 'affirmative administrative silence', pursuant to which an assignment of a mining title was deemed approved whenever the authority failed to issue a decision within the specific term provided for in the law;
  3. ordered the implementation of a mining grid system to be applied for concession applications and even for mining titles granted, which will allow precise identification of the location of the mining titles;
  4. included the possibility for extending mining concession contracts issued under Decree 2655 of 1988 for a 30-year term;
  5. established that mining concession contracts must be settled and liquidated within the 12-month term following the termination of the mining contract; and
  6. included the possibility of extending regulation for oil and gas easements contained in Law 1274 of 2009, to mining activities.

This later aspect will allow miners to negotiate and obtain easement rights without purchasing the properties. Note should also be made of the regulations issued within the covid-19 regulatory framework. Of particular importance is Decree 574 of 15 April 2020, pursuant to which payment of surface rights were suspended up to fifteen days following the end of the quarantine declaration, albeit other economic rights continue in full force.

Capital raising

Mining rights and required licences and permits

i Title

Mining regulations in Colombia follow the principle that, notwithstanding exempted rights, the subsoil and all mineral resources located therein are owned by the state and as a result may only be exploited with prior authorisation in the form of a mining title issued by the competent authority (to date, the ANM).

The Mining Code defines mining titles as concession agreements that grant the licensee a personal, exclusive and temporary right to explore and exploit minerals in the subsoil and within the contracted area. In addition, the concession agreement grants the licensee the right to acquire ownership rights of the extracted minerals in exchange for royalties. Mining titles are granted for a maximum period of 30 years, renewable for another 30 years, counted from the date of registration of the mining title before the National Mining Registry. The Mining Code is emphatic that mining titles grant rights only for the exploration and exploitation of minerals in the subsoil and, thus, any right or title to the surface where mining operations are to be conducted must be negotiated and acquired by the licensee.

Pursuant to the Mining Code, duly registered mining titles (i.e., the rights and obligations under the concession contract) at the National Mining Registry can be totally or partially assigned to a third party. For this purpose, the assignor must file the corresponding assignment agreement. Upon filing, the ANM has to accept or object the assignment within 60 business days pursuant to Law 1955 of 2019. The Colombian state, and in particular the ANM, may declare the expiry or termination of a mining title at any time for any of the following causes:

  1. dissolution of the entity holding the title, except in cases where the entity ceases to exist because of a merger deriving from a takeover;
  2. lack of finances that seriously affects the performance of contractual obligations;
  3. a lack of performance in work within the terms established in the Mining Code or the non-authorised suspension of such work for more than six continuous months;
  4. non-payment of the complete economic considerations on time;
  5. omission of a previous notice to the authority about the assignment of the mining title contract;
  6. non-payment of fines or the non-reinstatement of the bonds that endorse the title;
  7. a gross and repeated breach of regulations of technical order on mining exploration and exploitation, or of hygiene, security or labour provisions, or the annulment of necessary environmental authorisations for works and installations;
  8. an infringement of provisions on excluded and restricted areas for mining;
  9. a gross and repeated breach of any other obligation deriving from the concession contract; and
  10. when the source of the exploited minerals comes from a place different from that of its extraction, causing the economic considerations related to the title to be destined for a different municipality from that of its origin.
ii Surface and mining rights

As the regulations stand, mining titles are granted by the ANM to legal entities or individuals, whether nationals or not, on a first come, first served basis; in other words, the first entity to apply for a free area is entitled to receive a mining title in the form of a mining concession agreement. Prior to awarding a mining title, the ANM must verify the compliance of the tender requirements set forth in the Mining Code – in addition to the applicant's economic and legal capacity, those requirements are as follows:

  1. identification of the requested area and extension and information about the land use restrictions applicable;
  2. designation of the relevant minerals subject to exploration;
  3. identification of the competent environmental authority;
  4. identification of the ethnic groups settled within the area of influence of the requested area; and
  5. indication of the terms of reference and guidelines applicable to exploration work, and the economic estimates derived from those terms and guidelines.

Foreign companies and individuals have the same rights as nationals. The main difference is that foreign companies shall set up a branch in Colombia, except in cases where activities do not exceed the term of one year. According to the External Regulatory Circular Letter DCIN-83 of the Central Bank, the branches of foreign companies are subject to the foreign exchange special regime that includes, among other things, the obligation to channel resources by filing the corresponding foreign investment forms.

In addition, pursuant to the Mining Code, mining is considered a public interest activity, which in practice enables the holder of a mining title to request expropriation and the imposition of easements over properties required for the development of the permitted mining activities. Moreover, pursuant to the National Development Plan 2018-2022, the imposition of mining easements shall be carried out as provided in Law 1274 of 2009, which regulates oil and gas easements.

iii Additional permits and licences

In addition to the environmental permits and licences explained below, a mining title-holder is required to take out a mining and environmental insurance policy, which must be in force during the entire project.

Pursuant to the Colombian insurance regulations (Law 1328 of 2009 and Decree 2555 of 2010), only those insurance companies authorised by the Finance Superintendency are allowed to issue insurance policies in Colombia. Thus, any insurance policy issued by a company not authorised in Colombia will not be deemed valid.

Mining title-holders are required to submit the annual mining basic form each January, with the corresponding information relating to the period from January to December of the immediately preceding year. They must also submit the semi-annual mining basic form each July, with the corresponding information relating to the period from January to June of the current year. In these forms they must indicate, inter alia: the status of construction and exploration activities, production and sales, programme of work, employment and work conditions, and environmental issues.

iv Closure and remediation of mining projects

Aside from the insurance policy described above, there are no specific regulations in connection with the closure and remediation of mines. Closure and remediation obligations are set out in the environmental licence and on a case-by-case basis, depending on the type of mine, mineral and location, pursuant to Decree 1076 of 2015, which regulates the characteristics that each closure and dismantling plan must contain.


Environmental and social considerations

i Environmental, health and safety regulations

The Constitution defines Colombia as a social and democratic state and, within this scope, it recognises protection of the environment as a fundamental principle and collective right. The Constitution sets out the key elements that guide the country's environmental management, namely environmental protection, commitment to sustainability and economic efficiency, fiscal control, citizen participation and respect for culture.

Law 99 of 1993 – the Environmental Law – established the Ministry of Environment (currently the Ministry of Environment and Sustainable Development (MESD)) and rearranged the public sector responsible for the environment and natural resources.

The MESD, with the president of Colombia, is the entity responsible for formulating environmental policy, considering this element as a central focus for economic and social development, growth and sustainability of the country.

The Colombian legal and institutional framework for environmental management supports global trends of sustainable development, a concept formalised in the Rio Declaration of 1992 and in numerous treaties to which the country has adhered, including the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal, the Rotterdam Convention for the implementation of a prior informed consent procedure for certain hazardous pesticides and chemicals in international trade, and the United Nations Convention on Biological Diversity, among others.

ii Environmental compliance

Projects and activities that may severely affect natural resources require environmental authorisation in the form of an environmental licence. In addition, any project or activity that requires the use of access to natural resources must obtain a specific environmental permit. In the case of mining, an environmental licence must be granted either by the Environmental Licence Agency or by a regional environmental authority. Furthermore, when it comes to environmental authorisations, the main regulation is Decree 1076 of 2015, which, among other things, defines the environmental authority in charge of granting environmental licences for mining projects based on the projected production.

Moreover, pursuant to Decree 1076 of 2015, an environmental licence for mining is only required for the construction, installation and exploitation phases. During the exploration phase, the mining operator must obtain the necessary and individual environmental permits depending on the natural resources to be used or affected.

iii Third-party rights

In addition to the foregoing, two particular considerations regarding third-party rights must be indicated.

First, as a rule of constitutional and international recognition, projects and activities that may potentially affect cultural diversity must consult all ethnic communities located within the area of influence prior to commencement of any activity. Prior consultation is a fundamental right that seeks to protect the cultural, social and economic integrity of ethnic groups and provide them with the right to participate in the decision-making process regarding measures or projects, activities or other work to be carried out in their territories.

The process for prior consultation, regulated through Presidential Directive 10 of 2013 and Decree 2613 of 2013, is a joint activity to be carried out between the representatives of the projects and the Ministry of Internal Affairs whenever the latter certifies the presence of ethnic communities in the area of influence of a project or activity. In brief, the consultation process must follow these steps:

  1. certification of the existence of ethnic communities in the specific territory – issued by the Ministry of Internal Affairs;
  2. participation of the ethnic communities in the production of environmental studies;
  3. consultation hearing presided over by the pertinent environmental authority;
  4. declaration of agreement or disagreement regarding the impact assessment and protection measures proposed in the management plan;
  5. making the decision public; and
  6. monitoring the decision.

If no agreement is reached, the existing regulation provides for an extended deadline for discussion. Should the parties not enter into an agreement after the extension, the disagreement will be formally stated as the result of the process, and the pertinent environmental authority will decide whether or not to issue an approval.

It is of utmost importance to note that the Constitutional Court, when deciding on constitutional actions regarding tutelage, has ruled that the failure to undertake a consultation process results in a violation of fundamental rights and, as a result, orders the temporary suspension of the project or activity.

On the other hand, during 2016, the Constitutional Court ruled as unconstitutional Article 37 of the Mining Code, which stated a prohibition for regional entities to restrict mining activities in their territory. In other words, to date, regional entities (e.g., the municipalities) do not have the exclusive prerogative to decide on the use of the subsoil, and therefore cannot veto or prohibit mining or hydrocarbon activities through popular consultations.

iv Additional considerations

Under Colombian law, given that the environment is subject to special protection by the Constitution, both the legislator and the government are legally authorised to broaden existing regulations to protect the environment and guarantee the fundamental rights related to it, to the extent that acquired rights are not protected in relation to environmental issues.

The Constitutional Court has ruled that there are no acquired rights regarding environmental matters, and has declared the referred article to be unconstitutional. In 2011, the Colombian Congress established that mining activities could not be developed in the páramos (high, treeless plateaux).

Article 34 of the Mining Code establishes that it is not possible to carry out mining activities in areas declared by the Colombian government as areas for the protection and development of renewable natural resources or environmentally protected areas (exclusion areas), such as areas included in the national parks system, regional natural parks and forest reserves. Article 34 does not specifically mention páramo areas as exclusion areas. However, the Article was modified by Article 3 of Law 1382 of 2010, to expressly include páramo areas as one of the areas protected by that Law. Law 1382 of 2010 was later declared to be unconstitutional.

The National Development Plan of 2011, which initially sought to protect acquired rights before February 2010 and established that protection and environmental authorisation could continue, but with no possibility of extension, was later also declared to be unconstitutional. As of the issuance of Decision C-035 of 2016, the Constitutional Court formally banned all mining activities within páramo areas, regardless of expired rights that existed prior to February 2010. In 2014, the MESD issued Resolution 2090 containing the delimitation of the area known as Páramo de Santurban, within which two major mining projects at exploration stage are located. In 2017, the Constitutional Court issued Ruling T-361 of 2017, which annulled Resolution 2090 on the grounds of a lack of participation by the communities located within the Páramo de Santurban area, and ordered the MESD to issue a new delimitation to be developed under a participating, effective and deliberative procedure. At the time of writing, the Santurban delimitation is yet to be issued.

Operations, processing and sale of minerals


i Royalties

Companies committed to any production of renewable natural resources shall be liable to a royalty in favour of the state. Declaration, liquidation and payment of royalties must be made by mining operators in either monthly or quarterly instalments, depending on the mineral exploited, for which a unique form has been designed by the ANM. The 'Form for Declaration of Production and Liquidation of Royalties, Compensation and other Fees for the Exploitation of Minerals' was developed in accordance with stipulations in Decrees 145 of 1995 and 600 of 1996.

Royalties must be paid on mine-head production based on the production volume and the type of extracted mineral. Royalties are independent from any tax payments.

Construction minerals, limestone, plaster, clay, gravel1 per cent
Non-metallic minerals3 per cent
Metallic minerals5 per cent
Radioactive minerals10 per cent
Salt12 per cent
Platinum5 per cent
Alluvial gold6 per cent
Gold and silver4 per cent
Iron and copper5 per cent
Nickel12 per cent
Coal (exploitation of less than 3 million tons per year)5 per cent
Coal (exploitation of more than 3 million tons per year)10 per cent
ii Taxes

The mining industry is taxed under the general Colombian taxation regime at both a national and regional level (i.e., there are no special taxes, deductions or incentives dedicated exclusively to the mining sector). While at the national level taxes apply to all residents and with the same tariff, the tariff for regional taxes varies from one region to another.

The current Colombian fiscal regime consists of a combination of the following taxes:

  1. corporate income tax (33 per cent tariff); the corporate income tax surtax (4 per cent tariff for 2018). The corporate income tax (CIT) rate for Colombian entities is 33 per cent (as of fiscal year 2018). In fiscal year 2018, the CIT rate will be 33 per cent plus 4 per cent (i.e., 37 per cent) and as of fiscal year 2019 and thereafter, it will be 33 per cent;
  2. industry and commerce tax (ICA). An event that is subject to ICA is one involving the exercise or performance, directly or indirectly, of commercial, industrial or service activities within the jurisdiction of a municipality. ICA tax rates vary from 0.2 per cent to 1.2 per cent, depending on the nature of the activity to be performed in the respective municipality. The full 100 per cent of ICA paid is deductible for income tax purposes;
  3. bank debit tax. Colombia currently has a bank debit tax in place. This tax is withheld by the financial authorities and has a taxable base of 4 per 1,000 applicable on any withdrawal or transfer made from savings or cheque accounts. The full 100 per cent of bank debit tax paid is deductible for income tax purposes;
  4. value added tax (VAT). All goods and services purchased locally are subject to the standard rate of 19 per cent. This rate applies to all supplies of goods or services, unless a specific provision allows an exclusion from VAT or application of a reduced rate; and
  5. royalties.

In addition, all goods and services purchased locally are subject to 19 per cent VAT.

TaxDefinition – scopeLevelTariff
Income taxThe remuneration of the factors of production, all net income, that increase the equity*National33 per cent (2019)
Industry and commerce taxThe remuneration generated from service, industrial and commercial activities carried out in the municipalityRegionalBetween 0.2 and 1.2 per cent
Bank debit taxAny withdrawal or transfer from savings or cheque accountsNational4 per 1,000
Value added taxAll goods and services purchased locallyNational19 per cent
iii Tax incentives

As an incentive to increase investments in mining exploration, the Colombian government has established a regulatory framework to allow the issuance of tax refund certificates (CERTs), which grant a monetary benefit to be used in the payment of taxes, contributions and fees. In the mining sector, the CERTs correspond to a percentage of the mining investment. For tax purposes, the value of the CERT does not constitute taxable income or capital gain for the entity or individual who receives or acquires it and it may be used for the payment of taxes.

Note that investments in the mining sector that may be entitled to a tax incentive are those that aim to maintain or increase the production of current projects, to accelerate the projects that are in transition (from construction and assembly to exploitation) and to increase exploration projects, fulfilling certain requirements.

iv Duties

Depending on the stage of the project (exploration or construction and assembling), concessionaires shall pay a surface canon. This fee must be calculated annually and the fee will vary from 0.5 minimum daily legal wages to three minimum legal daily wages per hectare depending on the term of the mining title and the area of the mining title.

v Other fees

In addition, if a party establishes an easement for exploration or exploitation of mining activities, it must pay compensation to the owner of the land for the lien created in its land. Similarly, if a party needs to expropriate a piece of land to carry out mining exploitation activities under a concession contract, it must pay prior and fair compensation to the owner.

Finally, after settlement of the concession contract, the mining right-holder must pay all the costs incurred in adapting the land for those activities. The mining environmental policy will secure the relevant obligations during the term of the contract.

Under Law 685 of 2001 and Resolution 338 of 2014, the title-holder must take out a mining and environmental insurance policy. During the exploration phase, the insured amount must be 5 per cent of the value of the planned annual exploration expenditure. For the construction phase, the insured value must be 5 per cent of the planned investment for assembly and construction. During the exploitation phase, the insurance policy must cover 10 per cent of the result of multiplying the amount of estimated annual production by the mine pit price of the extracted mineral, as established by the Colombian government.

Outlook and trends

As has been previously stated, legal instability and uncertainty continue to impair the Colombian mining industry. However, certain minerals continue to show signs of growth, such as nickel, emeralds and construction materials.

Notwithstanding the above, as of the issuance of Decision C-035 of 2016, which formally banned all mining activities within páramo areas, Decision C-192 of 2016, which restated the view of the Constitutional Court according to which there are no acquired rights in environmental matters, the outlook for mining in Colombia continues to be challenging. In addition, advances in investment dispute resolution mechanisms with Colombia at various international arbitration courts will also be indicative of the manner in which the government of Colombia needs to address particular concerns. The mineral potential in Colombia must be accompanied by clear regulatory advances and strong stability messages if the sector is to continue to advance actively in the midst of the current difficult 2020 conditions brought about by the covid-19 pandemic, among other factors.