Business, Economics and Jobs

Angostura mine: Colombia tries to cash in on gold

ANGOSTURA, Colombia — Plans for a massive open-pit gold mine in the upper reaches of the Andes Mountains have sparked visions of El Dorado — and fears of environmental havoc.

Vancouver-based Greystar Resources estimates there may be 10 million troy ounces of gold in Angostura, a wind-swept patch of the Andes near the tree line some 10,000 feet high. Angostura is one of several Colombian gold projects that could soon begin production if they overcome environmental hurdles.

“Colombia is poised to do exactly what Chile did 20 years ago: use mining as a locomotive for economic growth,” Greystar President Steve Kesler said in an interview. “This area could become one of the most important gold-mining districts in the world.”

But opponents call the Angostura project, which has received funding from the World Bank, dangerous and illegal. They have organized street protests, created anti-Greystar Facebook pages and demanded public hearings.

That’s because Greystar’s mine would be located in and around the vast Santurban paramo in northeast Colombia. Paramos are unique, cloud-shrouded zones covered with peat bogs, grasslands and shrubs which together act as mountaintop sponges and serve as vital sources of water for many parts of Colombia. Nearly 60 percent of the world’s paramos are located in Colombia.

Critics fear Greystar’s project could permanently damage the Santurban paramo and that an accident could contaminate rivers with cyanide.

“It’s not worth the risk,” said Erwing Rodriguez-Salah, president of FENALCO, the main business association in Bucaramanga, a city of 600,000 located about 30 miles down the mountain from Angostura.

Some high-tech gold mines have good safety and environmental records. But cyanide spills, landslides and other problems have plagued a number of sites in Latin America, Asia and Africa, where most of the world’s gold is being mined.

Because most gold is microscopic, extracting it can literally involve moving mountains. To produce just one ounce of the shiny mineral at an open-pit mine, tons of rock must be excavated and crushed then sprinkled with a diluted cyanide solution, which dissolves the gold so it can then be separated and smelted.

All this leaves an extra-large footprint. In neighboring Peru, for example, residents living near Yanacocha — one of the world’s largest open-pit gold mines — complain that the operation has desecrated the Andean landscape and provided them with few benefits.

Still, there’s a huge motive for mining companies to keep digging even in the most remote and inhospitable climes: In the past decade, the price of gold has jumped from $300 an ounce to more than $1,300.

(Read: Why the world's love affair with gold is dangerous.)

“At that price, it’s worth the effort,” said Arturo Quiroz, president of Asomineros, a mining industry group in Bogota.

High prices have led to a surge of interest in Colombia, which is underexplored. For years, mining companies avoided Colombia due to the long-running guerrilla war. Greystar arrived here in 1995 but was forced to suspend operations for three years due to rebel attacks.

Absent major international firms, most gold extraction has been carried out by Colombian miners who dig tunnels or dredge rivers. Some projects are controlled by drug traffickers and guerrillas and many use large amounts of mercury that often gets dumped into rivers.

A recent United Nations report listed Colombia as the world’s No. 1 mercury polluter per capita due mainly to unregulated mining. A mere 16 government inspectors are in charge of monitoring 3,000 mines. Last year 155 miners were killed while 26 have already died this year in explosions and tunnel collapses.

Quiroz, of Asomineros, said the way out of this chaos is to support legitimate companies such as Greystar. “We need to promote legal mining,” he said. “If we don’t, the illegal miners will take over.”

During a recent visit, the Angostura site was a picture of order. Men in hard hats drilled for rock samples. Engineers sat in pre-fabricated offices typing on laptop computers. Nearby, workers tended a nursery where hairy-leafed Freilejons plants, the iconic flora of the paramos, were starting to sprout.

“The landscape is going to change a bit,” said German Diaz, a Greystar engineer. “But we’re going to put all the vegetation back.”

Indeed, Greystar officials claim that for every acre the project affects, the company will reforest six acres of the Santurban paramo. That’s one reason why the International Finance Corporation, the profit-making arm of the World Bank, has invested $12 million dollars in Angostura.

“This project has the potential to set new environmental and social standards for mining in Colombia,” William Bulmer, the corporation’s global head of mining, said when the agreement was announced in 2009.

However, independent mining consultant Guillermo Rudas points out that the Wolrd Bank has also gotten involved in controversial mining ventures, such as Yanacocha and a gold mine in Guyana, where a 1995 accident sent a torrent of cyanide-laced water into a tributary to the Essequibo River, the South American country’s main water source.

After sinking $150 million into exploring Angostura, Greystar was gearing up for gold production when the Colombian government abruptly changed its mining code last year to prohibit mineral extraction in paramos. But that’s only made things more confusing.

Not only had the government already granted hundreds of exploration permits in paramos, but it turns out that the legal definition of what constitutes a paramo is unclear.

Greystar argued that many paramos are no longer pristine ecosystems because they have been populated by peasant farmers and prospectors. In fact, the lower areas of Angostura have been scarred with tunnels and roads by miners, who have been extracting gold here for hundreds of years. “The paramo’s lakes and waterfalls are all lovely but that’s not where the project is located,” said Kesler, Greystar's president.

The government recently declared that licenses for mining in the paramos would be decided on a case-by-case basis. Its ruling on Greystar is expected next month.

As the deadline looms, opponents warn that there’s no prior example of returning damaged paramo to its previous state.

Gonzalo Pena, an engineer in Bucaramanga who has studied the Angostura project, said Greystar can try to cover up its tracks with Freilejons but the plants grow just one centimeter per year. Thus, to reach the height of 1 meter, he says “it will take 100 years."