Mining Lawyer Colombia: How to Do Mining Legal Due Diligence

Mining Lawyer Colombia: the Importance of Mining Due Diligence and How to Do It

The mining industry in Colombia is among the vital drivers of the country’s economy. Currently, the industry is responsible for 2.1% of the country’s GDP, and this is expected to grow, considering sectors such as emerald, gold, nickel, and coal. Foreign direct investment in the Colombian mining industry is nearly 40%. Also, this has provided significant investment opportunities for both local and international companies. Some traverse to other sectors, such as in the legal field. It is where the demand for mining lawyer Colombia services has risen in the recent past. According to the World Gold Council, Colombia is the sixth-largest gold producer in Latin America. Below is an image giving a sneak-peek into Colombia’s.
 

Support for Legal Mining Investment in Colombia

It is a fact that the mining industry in Colombia has been booming in the past few years. Even it is an admirable phenomenon for the economy; there is still a proliferation of illegal miners in the country. Over the years, the government has made attempts to reduce the scale of illegal mining taking place in the country. It is by subjecting all companies to rigorous legal processes to ensure the correct set up of everything. It is the desire of the government that every mining company to be formed responsibly and to take into account all the risks that usually come with setting up a mining company. As a foreign investor, you may not have all the legal facts and details. Therefore, it is always a good idea to work closely with a mining lawyer Colombia.

The costs that come with illegal mining have, for many years, been a major issue for the Colombian government. When the unlawful miners descend upon the mines, so many lives are at risk. The illegal gold mine is the example. The process of refining gold is done using mercury. Then it led to mercury poisoning to thousands of people working in the mines, as well as those living near the mines. They believe that up to 2000 tons of mercury usually find their way into the Colombian rivers. It is pollution whose effects they feel for many more years to come.

Additional Concern

The illegal mines are also at the risk of collapsing and burying alive the illegal miners. In addition to this, there are far-reaching environmental consequences that come with illegal mining and other related activities. These include but are not limited to: digging and excavation, large scale deforestation, dredging, and heavy deposition of toxic chemicals to the environment.

It is for these reasons that the Colombian government have taken a strong stance against illegal mines. It is by putting in place rigorous mining procedures for companies wishing to join the industry. These strict regulations and procedures are to ensure that every mining company is doing the right way. They take all the necessary precautions so to save lives and to minimize destruction to the environment. You will be in a good position by aligning yourself to a good mining lawyer Colombia. It is to ensure total compliance and ensure that your company is forming the right way.
 

The Process of Establishing a Legal Mining Company in Colombia

They highly recommend that you consider the use of due diligence services before you go ahead with your investment. It is the service you need to have an adequate assessment of the risks involved. It will be a great help in helping you make the right investment decision. To help you understand it, we will explore the process of due diligence in the Colombian mining industry. We will inform you about the different steps you need to take as well as how and why you should work with a mining lawyer Colombia.
 

Colombia Mining Due Diligence

Colombia mining due diligence is a prelude to getting into a mining concession primarily to help you understand the current state of the contract. With every due diligence service, you must always do two different analysis – legal analysis and technical analysis.
 

The Legal Analysis

The legal analysis comprises of the following:

• The length of the mining title
• Environmental and technical mining commitments
• A review of the existence of mining titles
• The current status of compliance, including all the obligations obtained by the title
• An inventory of the factual situation

The process of legal analysis done by mining lawyer Colombia also includes an administrative analysis of the title. It is a process which will look into: the current owner or holder of the title, the date of its registration, the title’s operational area, location, obligations, and the mining registry code. They will verify all this information during the process.

Additionally, the process will also involve an analysis of the environmental restrictions of the title. The main reason is to obtain the right information of the zone in question. The analysis of the zone is important. So you can find if there is already a mining title or any environmental restrictions in the area under interest. It is to avoid rejection of the application by the national mining agency.
 

The Technical Analysis

The core of the technical analysis is to analyse all the environmental restrictions. These include the study of all the limitations of mining rights with regards to river areas, forest reserves, and natural parks amongst other geographical locations. The competent environmental authority must advise on the kinds of mineral extraction methods that will not have an impact on the economic exploitation of the surface. They also must advise the respective extraction methods that may be applicable in different areas.
When you consider mining due diligence services from a mining lawyer Colombia, it is also vital to consider several other elements. It is for you to have a comprehensive assessment of the investment and a good idea of the risks you may encounter.
 

The Key Stages of Legal Mining Due Diligence in Colombia

For a due diligence process that will be not only fair but also reliable and complete, both parties must have an MOU or a letter of intent. The MOU or letter of intent must have binding clauses such as clauses on confidentiality, access to information, expenses, applicable laws and jurisdictions and many others. All must be applied during the process of due diligence.

Here is What It the Mining Due Diligence Process in Colombia Entails:

1. Obligations Fulfilment With the State

It involves the verification of the terms, the number of policies and guarantees set by the state for each mining title. The next step to follow is to check the contractual obligation compliance and the requirements as stipulated by mining authority and the verification of deadlines to remedy. The legal regimes applicable to every title will always take into consideration. The next process is to communicate with titleholder about the due process and accompanying terms of the law. Then, you should notify them for administrative acts. Also, all the resolutions issued by mining authority and all necessary administrative actions projected as per the delegation of the functions will have to be signed. This stage includes doing a follow-up on the performance of pending procedures.

2. Compliance With Environmental Obligations and Environmental Liabilities

They must do a review of existing respective environmental licenses has to be done. Additionally, there should not be any pending sanctions, investigations, or any administrative processes. They must review all environmental authorisations held by the owner of the title. These authorizations include forest utilisation, water concessions, atmospheric emissions, and dumping of liquid wastes amongst others. Moreover, the verification of compliance of all the applicable environmental regulations at the exploitation phase will also be done. The sanctioning system in environmental matters in Colombia is very strict and include hefty fines and sanctions on violators. It is another reason why you should work with mining lawyer Colombia when setting up your business.

3. Health, Safety and Environment

This step involves the identification of any historical occurrence of work-related accidents and risks. The process also consists of the consideration of legal provisions that govern mining hygiene and safety. One of the aspects of compliance that can consider is the legal provisions relating to industry safety and health. Another aspect is the verification of any affiliations the workers may have with the social security systems in Colombia. With the help of a mining lawyer Colombia, you have a guarantee of meeting all the compliance requirements as far as health, safety and environmental issues are concerned.

4. Land Management

The seller must avail a study of land management. It should also be accompanied by the characteristic of the properties on the location of the project location, the existence of easements and proof of whether the titles were granted or if it is still in the process of compliance and expropriation with the compensation plans.

5. Foreign Corrupt Practices Act

If the negotiations for the acquisition of a company involves a foreign company, then there must be an anti-corruption due diligence. It is a legal requirement for the involved parties to demonstrate that the requisite levels of due diligence are attained. You should be very cautious when doing business or getting into transactions which entities that may be linked to corrupt deals.

6. Fulfilment of Obligations With the State

You should comply with contractual obligations as per the chronological origin and by the relevant stage of the mining title to meet the obligations of the state. It is whether at exploration, construction or assembly stage. There is no better person to advise you on such than a reputable mining lawyer Colombia.

7. Communities

All the mining assets that may be in settlement areas comprising of national ethnic groups also have to be verified. Information on such is easily available from the ministry of interior. If there are such settlements, the concession holder must complete a process of prior consultation with the community for the implementation of the project, and the consultation between the concession holder and the community must be verifiable.

8. Technical Management

This process of mining due diligence should be done independently by reputable technical audit personnel. The general rule for this process is that there should be no contact between the technical audit personnel and the legal team tasked with the mandate of carrying out the due diligence of the operation. The technical review involves the development of the technical phase as per the documents approved by the oil or mining authority. It must also include satisfactory technical management of mining operations and the reasonable use of mining resources.

The final stage is to check if the evaluated operation or the new project can meet the threshold of the prior authorization given by the management of the industry. Consequently, it important to start by notifying the SIC about your intended operations.
 

Conclusion

The Colombian government is keen on weeding out illegal mines and to strengthen the legal process of setting up a mining company in the country. This is why it is of vital importance to consider the due diligence process before you decide to pump in your money in the Colombian mining sector. With proper mining due diligence, your company will be in a position to make the right investment decisions and to help you manage all the associated risks more effectively.

If you have any concerns or questions about the mining due diligence in Colombia or you would like to get in touch with a reputable mining lawyer Colombia, get in touch with 3E Accounting. The company have what you need to for independent and reliable legal mining due diligence in Colombia.