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Colombian Town Chooses Farming Life Over a $35 Billion Gold Mine

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03/31/2017 | 05:45am EST
By Kejal Vyas 

CAJAMARCA, Colombia -- There is $35 billion in gold under the lush mountains near here, and the national government says mining is critically important as the country emerges from its long war with Marxist rebels.

But this farming town of 22,000 people has voted to leave it there. They say they would rather continue to cultivate their beans, bananas and arracachas, the carrot-like vegetables they regard as gold of their own. On Sunday, in a binding referendum, they opted to ban all mining, fearing it will contaminate the water, destroy the mountains and hurt their community.

The referendum throws into doubt South African miner AngloGold Ashanti's proposal for one of the world's largest open-pit excavations -- more than twice the size of Central Park -- along with Colombia's embrace of the role of multinationals to advance remote regions once torn by decades of violence.

Three other towns rich in minerals now say they will replicate Cajamarca's anti-mining campaign and referendum. The national government is playing down the impact of Sunday's vote, but the stage is set for legal battles that will likely play out across Colombia's multiple, competing courts.

"This is the greatest dilemma facing the country: How are we going to promote foreign investment if the rules of the game aren't clear?" said Santiago Angel, president of Colombia's mining association, which advocates for mining companies.

The central government, which granted AngloGold an exploration license a decade ago, controls what is underground. Local officials rule above the surface. Referendums such as the one held here are legally binding under a 2015 decision by the nation's Supreme Court.

Cajamarca is a town of modest tin-roofed houses, and its people are fiercely proud of their farms nestled in a valley surrounded by cloud-covered, green mountains. The residents say they represent the rest of Colombia.

"The good in all of this is that Cajamarca is now the focus of the whole country," said Felipe Sanabria, who was hauling a wheelbarrow full of beans as he spoke. "Maybe we'll sell more beans."

Mines and Energy Minister German Arce said the result of the voting can't take away previously authorized licenses granted to AngloGold. He said AngloGold, which is the world's third-largest gold miner and has invested $900 million into Colombia since 2002, still could apply for a permit to begin extracting.

At a gathering of mayors Wednesday, Mr. Arce's deputy, Carlos Cante, urged them to marshal support for mining projects because they generate royalties and tax revenues. "There are no anti-mining communities in Colombia," Mr. Cante said, "only people scared and misinformed by the political activism that has been generated against mining."

The mine isn't coming soon to Cajamarca, if it comes. Colombia's lengthy licensing and construction process means that AngloGold cannot begin large-scale mining until 2026.

Residents such as Sandra Hernandez, a 33-year-old cattle rancher who lives across the mountain from where AngloGold is working, said the will of the people needed to be respected. In the referendum, 98% of the 6,241 who voted supported the ban.

"If we have to block the roads, we'll block them," she said. "We don't want multinationals here."

The battle here is focused on a project dubbed La Colosa, or the colossus, one of three the company has in Colombia, and named after a waterfall that runs down a steep mountain.

Here, a mile and a half above sea level, company technicians are drilling holes to assess the size of a deposit that AngloGold calls its biggest untapped lode -- one that can generate 28 million ounces of gold. The benefit for the central government: $180 million in annual royalty payments plus tax revenues.

"This means technology, schools, hospitals," Carolina Perez, a geologist who has been working for 10 years with AngloGold in Cajamarca.

For each ton of rubble pulled from the earth, AngloGold is expected to extract 0.8 grams of gold, leading many people here to question the destruction of the terrain.

"I understand that the idea is to generate riches, but at what cost?" said Robinson Mejia, a 28-year-old forest engineer who leads an activist group in Cajamarca that ran the anti-mining campaign.

Company workers say AngloGold plans to treat any water that runs off from the 2,186-acre project so it doesn't contaminate other local waters.

The government argues that AngloGold's regulated operation would be better for Colombia than the wildcat miners who operate across much of the country without state oversight and who are blamed for wreaking environmental damage. An estimated 85% of the nation's gold output comes from unlicensed producers, officials say.

Sometimes the outfits work with violent, drug-trafficking gangs that provide protection for a fee. Other times, they can only mine by paying extortion to such groups.

Cajamarca itself once had its own informal tunnel mining until it was abandoned about 20 years ago. But the townspeople now say they want nothing to do with the business. Boosted by their victory, activists like Mr. Mejia are pushing for similar referendums against extractive industries in other communities.

"The big error here," he said, "is trying to put up a mining operation in a territory where people really value the land they have."

Write to Kejal Vyas at kejal.vyas@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
FEEDER CATTLE?FUTURES (GF) - CMG (ELECTRONIC)/C1 -0.06% 135.95 End-of-day quote.-3.53%
GOLD -0.53% 1644.6 Delayed Quote.9.78%
LIVE CATTLE (LE) - CMG (ELECTRONIC)/C1 0.13% 117.15 End-of-day quote.-3.99%
LME TIN CASH 0.30% 16600 End-of-day quote.-3.21%
RANDOM LENGTH LUMBER?FUTURES (LBS) - CMG (ELECTRONIC)/C1 -0.18% 442.3 End-of-day quote.9.33%
SILVER -2.25% 18.1749 Delayed Quote.4.76%
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