Canadian Mining Company Gran Colombia Gold Reportedly Files $700 Million USD Lawsuit Against Colombia

According to Canadian publication the Financial Post, Toronto-registered mining company Gran Colombia Gold has filed a $700 million USD lawsuit against Colombia. The firm is reportedly alleging damages under the free-trade agreement that exists between Canada and Colombia.

The grievances of the company have been related to the illegal gold mining on its holdings in Colombia and a recent court decision requiring local residents to have an opportunity to weigh in on the effects that the operations at its Marmato project will have on the community and environment.

The decade-old Marmato project in the department of Caldas has been beset by controversy essentially since its inception. This ramped up earlier this decade when Gran Colombia unveiled plans to level a mountain to turn the site into a massive open-pit mine in order to extract gold more efficiently.

The company — which maintains a larger mine project, Segovia, where it generally uses contractors to extract its precious metal — has also had to deal with ongoing concerns over illegal mining and has suffered operational shutdowns due to violence, and threats of violence, from local armed groups.

Traditional mining families, whose presence in the area pre-date Gran Colombia’s acquisition of the mining titles, are also reportedly among those the firm has wanted removed from the sites, according to various media outlets, particularly those around the El Burro hill area that it has in the past sought to make into an open-pit mine.

Representatives of these families, who have long maintained that their rights were violated when they were ordered off the land, have sought protection under a grievance filed with Colombia’s Constitutional Court. The court ruled earlier this year that Gran Colombia must perform “prior consultation” with local residents who would be impacted before any mine expansion plans can move forward.

This is the matter at the core of the lawsuit, according to the Financial Post. “Gran Colombia’s suit alleges that the local government failed to evict illegal miners from their sites of operations in Marmato and Segovia, and didn’t stop the Marxist armed guerrilla group, the ELN, from interfering with efforts to extract gold in the province of Antioquia,” reported the Financial Post.

Gran Colombia Gold may now spend up to six months trying to solve the issue with Colombia’s Ministry of Commerce, Industry, and Tourism, per the Financial Post. If the two sides cannot reach a resolution, the paper says that the World Bank’s arbitration committee is expected to hear the dispute in accordance with the free-trade agreement stipulations.

Last month, when releasing its 2016 results, the firm reported the best year of gold production in its history, reaching nearly 150,000 ounces — and exceeding its annual goal of 138,000 ounces. Gran Colombia sold nearly all of this production at an average price of $1,218 USD per ounce, according to company documents, and hit $66 million USD in total earnings in 2016 (adjusted EBITDA).

Its Segovia site produced 36% more gold in 2016 compared to 2015, and the company also completed a large 10,000-meter drilling program at the mine. It hopes to drill another 20,000 meters there this year. The gold production at Maramato, of 23,447 ounces, was 2% lower than the total seen in 2015.

“We recently announced some encouraging drilling results at both properties and expect to have new mineral resource estimates available for Segovia and Marmato Underground in the second quarter this year,” said Lombardo Paredes Arenas, chief executive officer of Gran Colombia Gold in a statement in late March. “As we look ahead to 2017, we see another year of steady performance with gold production expected to be between 150,000 and 160,000 ounces.”