Colombia court ruling will help extractives sector

Subject

Mining referenda.

Significance

The Constitutional Court on October 11 ruled that popular consultations held by local municipalities or regions do not have veto power. This ruling is important as a series of popular consultations since 2016 have voted to suspend or cancel extractives projects, concerning both current and potential investors. The new ruling should provide greater stability for such projects but is likely to spark renewed frustration in the most affected regions.

Impacts

• The ruling may encourage more companies to invest in the extractives sector, with positive implications for economic activity.
• Social unrest around extractives projects may increase with the removal of an electoral outlet for popular opposition.
• Environmental activism may increase with mining opponents using environmental concerns as an alternative means of halting projects.
• Non-state armed groups will present a continuing threat of violence and extortion for mining firms, particularly those with gold mines.