Investment opportunities in the Mining sector

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Abel Hunter
5 years ago
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1 Investment opportunities in the Mining sector

2 Content Current panorama Mining Potential Tax incentives how to invest?

3 Current Panorama

4 Institucionalidad Minera

Improving governance and transparency in revenues from mining activities.

5 Initiatives for Transparency Colombia is committed to promoting responsible mineral supply chains, in accordance with OECD guidelines. Improving governance and transparency in revenues from mining activities. "Colombia is a member of the International Board of Directors." Colombia promotes adherence to guiding principles of business and human rights and Voluntary principles in security and human rights

6 General data of Colombia BBB BBB- Baa2-

7 $ Billions of pesos Data from the mining sector MINING GDP * 17,000 16, % % In the GDP 26% of exports 18% of the FDI in ,000 15,000 14,669 15, % 1.9% 14, % 15, % 2,1 billions of royalties. 14, % 1.9% Carbón Production 91 Mill Tons 13, % Gold Production 42 Tons 350 thousand Jobs 12,000 1,7% 1.8% 11, * PIB MINERO PIB MINERO EN % 1.7%

USD Millions FDI Total vs Mining Sector 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 18% 2,000 0 7% -2,000 2010 2011 2012 2013 p 2014 p 2015 p 2016 p 2017 p 2018 p Suma de of TOTAL total

8 USD Millions FDI Total vs Mining Sector 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 18% 2, % -2, p 2014 p 2015 p 2016 p 2017 p 2018 p Suma de of TOTAL total 6,430 14,647 15,039 16,209 16,167 11,723 13,850 13,956 8,270 Suma sum de of mines Minas and y Canteras quarries (incluye (include carbón) coal) 1,838 2,480 2,474 2,977 1, ,527 Source: Bank Of The Repúblic, Deputy Manager of Economic Studies - Balance of payments Author calculations *pr: Preliminary *2018 includes until the third quarter of 2018

9 Mining titles Source: ANM Cartilla : Colombia explorando oportunidades

10 Mining Potential

Mining Potential The Cesar department contributes approximately 60% of the country's coal production. Guajira department has approximately 36% of the national coal production.

11 Mining Potential The Cesar department contributes approximately 60% of the country's coal production. Guajira department has approximately 36% of the national coal production. Small and medium-sized mining are located in the departments of Cundinamarca, Boyacá, Norte de Santander, Santander and Antioquia. Source : ANM Presentación: Colombia tierra de Oportunidades Mineras

Colombian Coal Colombia is one of the most important coal exporters in the world.

3rd largest exporter of metallurgical coal in the Americas 4th producer at LATAM level and 12th worldwide

sulfur and humidity which reduces its polluting emissions to final consumers.

12 Colombian Coal Colombia is one of the most important coal exporters in the world. 4th place in the global ranking. 3rd largest exporter of metallurgical coal in the Americas 4th producer at LATAM level and 12th worldwide Characterized for being of high quality and having a high calorific power, low in ash content, levels of sulfur and humidity which reduces its polluting emissions to final consumers. Rank 11 in quantity of coal reserves Production for 2017 of 89.4 million tons Of the mining titles in force in Colombia, 16% correspond to coal and its industry. Source : ANM Cartilla : Colombia explorando oportunidades, PORTAFOLIO, SEMANA.

Colombian Coal Recently, Boyacá, Cundinamarca and Santander were the object of research and discovery by the SGC as areas with new reserves of

characteristics similar to that produced in countries like Australia or the United States considered of better quality.

13 Colombian Coal Recently, Boyacá, Cundinamarca and Santander were the object of research and discovery by the SGC as areas with new reserves of metallurgical coal, stimulating economic growth due to the export capacity of the coal produced in this area and the desire for this mineral in several parts. of the world. Colombia is a producer of this type of mineral with a high quality chemical composition, one hundred percent of export type and with characteristics similar to that produced in countries like Australia or the United States considered of better quality. In Latin America Colombia is one of the only three countries that produce this mineral with high quality characteristics Coke-type coal exports are mainly made to countries in Europe, America and Southeast Asia Source : ANM Cartilla : Colombia explorando oportunidades, PORTAFOLIO, SEMANA.

On the other hand, our metallurgical coal, distinguished ambassador of regions such as Boyacá,

14 Colombian Coal The main destinations are: Turkey, Holland, United States, Spain, Israel, Brazil, Chile, Portugal, Korea, Italy, Guatemala, India and the United Kingdom. On the other hand, our metallurgical coal, distinguished ambassador of regions such as Boyacá, Cundinamarca and Norte de Santander, goes mainly to Brazil, Turkey and Japan. Source: ANM Primer : Colombia exploring opportunities, PORTAFOLIO, SEMANA.

15 Tax Incentives

16 Incentives FDI in Mining Discount of the Income Tax. The value of the sales tax paid for the acquisition or importation of heavy machinery for basic industries may be deducted from income tax. Discount of 25% on the investments made in control, conservation and improvement of the environment, with prior accreditation of the environmental authority. Discount of 25% of the value invested in research projects, technological development and innovation. Foreign direct investment in mining (CERT) For increasing investments in exploration It will constitute an income that does not constitute an income or an occasional gain Public works in lieu of taxes Companies in exploration and exploitation of minerals will be eligible for the mechanism of payment of works for taxes, up to 50% of the value of the rent. Amortization by straight line method (5 years) For investments in assets for evaluation and exploration of nonrenewable natural resources that take place between January 1, 2017 and December 31, Health and payroll taxes. The parafiscal contributions and contributions to the contributory health regime are exempted from income tax and supplementary tax filers Source: ANM Primer : Colombia exploring opportunities Consult requirements necessary for the application of incentives

17 How to invest?

18 Mining cycle

19 Authorities

2) If you are going to carry out activities in Colombia you must: Constitute company

20 Authorities 1) For the Mining sector, FDI requires authorization or recognition because it is a special regime. 2) If you are going to carry out activities in Colombia you must: Constitute company RUT Regulate by the rules of the Exchange Market Have a Mining Concession Contract Comply with environmental requirements Considerations (Royalties)

21 Mining Concessions

Construction and Assembly: The value equivalent to the last canon paid during the

22 Economic Obligations and Royalties 1. Exploration: A surface rental fee must be paid, called Canon Superface: 2. Construction and Assembly: The value equivalent to the last canon paid during the exploration stage will continue to be canceled. 3. Exploitation: Royalties must be paid as financial compensation for the right to exploit mineral resources:

EXECUTIVE SUMMARY EITI REPORT

EXECUTIVE SUMMARY EITI REPORT COLOMBIA 2013 ENT TERRIT DIRE rillion COP) to Central resources o el 92, corresponde Gobierno Naciona 2010 47,9% 16,9% 32, $14.648 2011 5 a a umayo 5% FDI OTHER SECTORS OIL