AngloGold Ashanti project in Colombia hit by court-backed mining ban

AngloGold Ashanti’s (NYSE: AU) stalled La Colosa gold project in Colombia faces another setback after a local court upheld a mining ban. 

The 10th Administrative Court of Ibagué, the capital city of Colombia’s western Tolima department, ratified a mining and exploration prohibition in Cajamarca municipality, upholding the result of a 2017 referendum. 

The poll organized by the Cajamarca Committee Promoting the Popular Consultation voted two-thirds in favour of rejecting all mining in the area. Since then, La Colosa has been under force majeure.

“It is impossible to ignore a citizen participation mechanism that was adopted under previous regulations, despite the fact that the court has changed its stance,” the Judicial Coalition for the Defence of Cajamarca said in a release.

Discovered in 2006, La Colosa holds an estimated 12 million oz. of resources. Mine construction was expected as early as 2014 with production scheduled to start by 2017. However, a study by human rights group Colombia Solidarity Campaign said the development would pose serious threats to the environment and locals, jeopardizing a river basin and reducing water supply for agriculture and consumption. 

Constitutional court

The ruling was issued in response to a lawsuit filed by lawyer Wilson Alexei Vallejo, who sought to nullify the results of the consultation.

Vallejo argued that rulings by Colombia’s Constitutional Court after the 2017 poll, namely SU-095 of 2018 and C-053 of 2019, limited the scope of popular referenda and invalidated the local town’s mining ban. 

According to the judge, Vallejo’s lawsuit failed to prove false motivation and a violation of the rules.

In the coalition’s view, the ruling protects the citizen mandate and acts as a call to national authorities to effectively implement the results of the consultation, thus updating public policies related to environmental assessments and mining concessions. 

Shares in AngloGold Ashanti closed 4% higher on Monday in New York at US$28.40 apiece, valuing the company at US$10.4 billion. They’ve traded in a 52-week range of US$14.91 to US$30.26