Colombia to decide Greystar permit by April: official

Reuters Business News
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Posted: Mar 18, 2011 2:44 PM
Colombia to decide Greystar permit by April: official

By Diana Delgado

BOGOTA (Reuters) - Colombia's government is expected to decide by April 18 whether to approve an environmental permit for the Angostura gold project operated by Greystar Resources, the country's environmental inspector said.

The Environment Ministry has 30 working days following a March 4 public hearing to decide on the future of the project, which has divided local communities between those seeing job opportunities and critics who fear environmental fallout.

"The ministry could extend their decision, but they told me that they will not do that," Oscar Amaya, state ombudsman for environment, told Reuters. "They will deliver their final decision within the legal term, which is 30 working days."

Colombia, once dismissed as a failing state mired in drug violence, is enjoying a resurgence in oil and mining investment as its long guerrilla war wanes and companies return to explore in areas that used to be considered too dangerous.

Greystar faces opposition from local authorities, the country's inspector general and environmental groups, which call Angostura a threat to a delicate Andean ecosystem.

Critics say the mine will affect Santurban, a so-called "paramo" area believed to be the source of rivers and streams that supply water to 2.2 million inhabitants in Colombia.

The company, which is based in Canada, rejects those concerns, saying the mine poses no risk to the environment.

The Ministry of Environment has about 140 technical and legal reports on Angostura following two public hearings. That information is enough to deliver a final decision, Amaya said.

ENVIRONMENTAL DEBATE

Greystar planned to start construction of the mine early this year. Output of gold and silver was expected to begin in the second half of 2012. But, due to the delays, production could start in mid 2013.

Angostura is expected to produce an average output of 511,000 ounces of gold per year and 2.3 million ounces of silver per year.

The company plans to invest $1 billion over the next four years, including for mine construction, and $3 billion in operating expenses over the 15-year life of the project.

Amaya's environmental division at the state ombudsman's office has recommended the Ministry of Environment consider rejecting the license because it believes Angostura will threaten water quality, endemic plants and wildlife.

Amaya said the Environment Ministry was not obliged to follow its recommendations. But some analysts believe the ministry most likely is abide by the request.

"The Constitutional Court has said repeatedly that strategic ecosystems such as paramo must be protected," he said.

Greystar says its environmental study was filed with the Environmental Ministry on December 22, 2009, before a modification of the mining code that forbids activities in paramao became effective on February 9, 2010.

But Amaya argues mining activities should not occupy paramo ecosystems and says plans to build infrastructure above the paramo to capture gold using cyanide is another reason the ministry should reject the project.

The company defends its techniques, saying its planned infrastructure would prevent any chemical leaking.

Angostura has 10.2 million troy ounces of measured and indicated gold reserves and 3.4 million of inferred resources, with 74 million ounces of silver reserves and resources, according to preliminary studies.

(Editing by Patrick Markey and Walter Bagley)