Global gold production reached 171,300 tonnes through human history, Colombia added 1.1% to this stock but Colombians have not enjoyed this production as it must, Colombia exported 98.7% of her total gold production and there is no productive project from this extraction for Colombians, the main firms that extract gold are from abroad and they work as as enclave economies. This note shows a summary about gold production in Colombia.
Author: Humberto Bernal,
Economist,
e-mail: zhumber@gmail.com
Twitter: Humberto_Bernal
It can be download @ PDF
World gold production is about 171,300 tonnes through human history. Since 1900 to 2012 the World gold production is about 147,000 tonnes (see U.S. Geological Survey) and Colombia gave 1,629 tonnes since beginning of XX century as figure 1 shows, it means 1.1% of total gold production in the World. Nowadays, the main countries that produce gold are China, Australia and the United Sates, the last country has given about 10.0% of total gold stock in the World. Although conquerors did many expeditions to find El Dorado in South America (they though that a secret region in Colombia was full of gold), there was an unsuccessful expedition.
World gold production is about 171,300 tonnes through human history. Since 1900 to 2012 the World gold production is about 147,000 tonnes (see U.S. Geological Survey) and Colombia gave 1,629 tonnes since beginning of XX century as figure 1 shows, it means 1.1% of total gold production in the World. Nowadays, the main countries that produce gold are China, Australia and the United Sates, the last country has given about 10.0% of total gold stock in the World. Although conquerors did many expeditions to find El Dorado in South America (they though that a secret region in Colombia was full of gold), there was an unsuccessful expedition.
Figure 1. Gold production in Colombia, stock since 1917 to 2012
(tonnes)
Colombia has faced three Gold Waves (Gold Rushes) since Colombia independence, Colombia proclaimed independence between 1810-1819 and the first gold wave came in 1860 when most of Latin American countries took economic openness as main target, foreigners thought that Colombia was full of gold but the reality was that Colombia counted with few tonnes of gold but enough to develop industrial projects, this last fact was not developed unfortunately. The main firms came from the United Kingdom, France, Germany and the United States, there were about 75 firms working in gold and silver extraction between 1860 to 1914 in regions called Antioquia, Choco, Cundinamarca and Tolima. Unfortunately, there was few mining firms belonging to local entrepreneurs, one of them was Empresa Minera del Zancudo. This wave finished at the beginning of XX century due to many civil wars through 1880 to 1903; the segregation due separation of Panama and government fines due to wrong decisions against foreign firms.
The second Gold Wave came in 1923 as figure 2 shows. This wave is due high economic activity in Colombia and Latin America. Through 20‘s, Colombia had the Crude Oil Rush and high foreign investment (it was mainly loans for Real Estate activities, the United States payment of 25 million due to separation of Panama and FDI into crude oil activity), these period is called “The Dance of the Millions”. Colombia enjoyed this Gold Rush until War World II (WWII) when most of foreign capitals were taken to finance the war, of course there were firms extracting gold through war period, at the beginning of 1939 there were 46 mining firms extracting metals and 40 at the end of 1945.
Figure 2. Gold production waves 1913 to 2011
(Data smoothing)
The last Gold Wave started in 1973 and it can be explained by Coal and Nickel extraction, by that time there were discoveries of huge amount of coal and nickel in Colombia, then Colombia was the focal point abroad due to her mining activity, moreover Colombia promoted FDI into these sectors under her new Law (Decree 444 of 1967), since then the local gold production has faced a positive growth. Nowadays Colombia counts with 11 firms that extract gold, most of them are from Canada.
Colombian gold production is mostly exported, the volume exported reached 98.7% of total gold extracted since 1913 to 2012, it means that Colombia does not produce high added products made of gold. Gold is taken by Colombians to make jewelry and to increase her Central Bank reserves. Gold price has faced a positive trend in the last 10 years as figure 3 shows, this high value can be explained by 2008 crisis, nevertheless its value can be overvalued and its price can go down in the next years, it depends on how World Economic Activity goes.
Colombia has extracted 1,629 tonnes since beginning of XX century, it can be evaluated in US$89.4 billion in 2012 that means 24.0% of her Gross Domestic Product (GDP) in 2012. The FDI into mining sector since beginning of XX century is accounted in US$24.5 billion in 2011 (23.0% of total FDI as stock in Colombia in 2011), it looks a profitable business which does not give high real value added to Colombians. Government has not broadcasted projects financed by gold firms and the uses of gold’s royalties, it will great that government promotes firms that uses gold as inputs to produce high added value goods in Colombia, this type of projects will bring unemployment down.
Figure 3. Gold price 1917 - 2012
(Real price base year: 2011, Troy Ounce*)
Source:Historical Gold Prices to Present. http://www.kitco.com. Own calculations.
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