MAC: Mines and Communities

Colombian minister calls BHP Billiton's Matoso social investment offer "a joke"

Published by MAC on 2012-08-21
Source: Business News Americas

In August 2011, Reuters reported that the world's biggest mining company, BHP Billiton, had agreed to pay US$19. 6 million in back royalties to the Colombian government.

This was in return for its being allowed to continue operating Latin America's biggest nickel mine and ferronickel operations, at Cerro Matoso. See: Royalty and rights issues in Latin America

A year later and, according to the country's mining minister, BHP Billiton is offering to cough up only US$1.5 million - less than a 12th of its previous offer

Minminas calls BHP Billiton's Cerro Matoso social investment "a joke" - Colombia

Harvey Beltrán

Business News Americas

16 August 2012

Colombia's mines and energy (Minminas) minister Mauricio Cárdenas said that the US$1.5mn social investment proposed by Anglo-Australian BHP Billiton to continue operating the Cerro Matoso ferronickel mine in Córdoba department is "a joke" when compared with the sales figure of over US$800mn/y.

BHP Billiton is currently negotiating a contract extension with the Colombian government to continue operating the mine for another 30 years. The current contract expires on September 30.

However, there is discord within the government regarding the contract extension arising from alleged irregularities surrounding royalty payments. Cárdenas was speaking on day two of a debate being held by the senate's fifth committee to discuss the contract.

"The government is taking into account, first and foremost, the legal framework within which the government operates and makes decisions that benefit the country," Cárdenas said.

The minister also called on supervisory bodies, such as the public prosecutor, the environment ministry and the national tax agency, to take part in the negotiations with the company which seek to increase royalty payments.

On day one of the debate senator Jorge Robledo, of the Polo Democratico party, proposed the mine be returned to state hands.

Cerro Matoso produces ferronickel, iron alloys and nickel at a rate of 9.5Mlb/m (4,309t/m), or about 4% of global sales.

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