Colombian Gold: Structuring the Middle of the Value Chain

In 2025, three-quarters of the 118,410 hectares of alluvial gold mining detected by satellite in Colombia fell into the category of illicit exploitation, according to the latest report by the UNODC and the Ministry of Mines and Energy. That satellite survey covers alluvial workings. Hard-rock mining, which produces ore rather than free gold, escapes detection, meaning these figures describe only part of the sector. Behind these numbers lies a paradox familiar to every gold-producing country with a large small-scale sector: thousands of miners produce gold that the formal market wants, yet much of it reaches buyers through channels that nobody can verify. What can change this equation?

BEYOND ENFORCEMENT: WHY REGULATING IS NOT ENOUGH

Colombian public policy has long combined two levers: operations against illegal mining—involving the seizure or destruction of machinery—and successive formalization procedures. 2026 adds a third. The national mineral traceability system becomes mandatory on 19 November 2026, and Bill 117 of 2026 proposes a gradual pathway to formalize subsistence and small-scale mining with government support.

These tools are necessary, but they work best alongside something more. They govern the actors who already operate within the formal channel, while the individual miner still chooses whether to enter it. Many choose to sell to informal buyers who pay in cash, ask for little paperwork, and are located closer to the mine. A registry records the gold that enters the formal channel; by itself, it brings little more of it in. The formal route has to become the most attractive option, and that depends on what happens between the mine and the refiner.

THREE CONDITIONS AND WHERE COLOMBIA STANDS

Our experience in Peru through our subsidiary, Soleil Metals, suggests that a responsible small-scale gold chain rests on three structural conditions: a regulatory framework, a manageable exposure to organized crime, and a network of centralized processing plants (CPPs) able to buy, process, and trace small-scale ore. Every country meets these conditions imperfectly—Peru included, where the model coexists with a large informal economy. Colombia meets the first, can meet the second, but still lacks the third.

A regulatory framework in progress. A public registry of miners in the process of formalization is a necessary foundation, despite its limits. In Peru, REINFO opened the formal channel to miners who were still formalizing, though some registered operators rented their status to illegal miners. The registry itself is currently under review: extended until the end of 2026, it is due to give way to a new law on small-scale and artisanal mining currently under debate in Congress. Colombia is assembling its own foundation with its national traceability system and a three-phase formalization pathway. The details of the bill will matter, particularly regarding the treatment of miners still in transition.

An exposure to crime that can be mapped. According to the UNODC and the Ministry of Mines and Energy, illegal armed groups are present in 85.6% of the Colombian municipalities where alluvial gold is mined, and that reality must be stated plainly. However, exposure varies strongly from one region to another. Hard-rock districts differ from alluvial basins, and a careful choice of zones—combined with an assessment of every route from mine to plant—keeps this risk within bounds.

A missing network of CPPs. This is the real gap, and it concerns hard-rock mining above all. A miner who extracts ore, rather than free gold from a riverbed, depends on someone else to process it, since that step requires capital, industrial equipment, and engineers. Without a plant within reach, he continues using mercury and sells to whoever comes to the mine. In Colombia, independent plants remain rare, held back by a legal framework built around title holders and the security exposure of a fixed installation. For hard-rock miners in Antioquia, Bolívar, Caldas, Cauca, or Nariño, the formal market for ore remains narrow.

TWO PATHWAYS IN ONE PLANT

Peru counts dozens of these plants, known locally as plantas de beneficio. They buy raw ore from small-scale miners, extract the gold using industrial methods, and sell doré to refiners. Their performance varies widely. The model holds true regardless of the country, while the discipline applied to it belongs to each individual operator. Our own operations offer one illustration of what that discipline can look like. At Soleil Metals, our two plants—Yacarí and Victoria—work along two parallel pathways. The first produces the metal, and the second proves that it is responsible.

The industrial pathway. The plants gather ore from some 450 small-scale suppliers in one controlled place, process it with mercury-free methods, and recover more than 90% of the gold, compared to just 30 to 40% with mercury amalgamation. The doré bars produced go to LBMA Good Delivery refiners, with around one ton of gold equivalent expected to be produced in 2026.

The compliance pathway. This second pathway applies banking-grade compliance to every supplier and every lot, executed in four steps: No ore enters the chain before we fully know the supplier. A banking KYC process, adapted for mining, requires a comprehensive list of documents from each supplier. This covers areas such as legal registration, mining titles, beneficial owners, tax positions, sanctions screening, and an initial improvement plan. We verify the mine through a field visit conducted by a mining engineer, a geologist, a topographer, and a technician. We trace every lot. Each one is weighed, referenced, and stored separately. Its xTrace fingerprint is matched to the specific miner, its tonnage is verified against the capacity of the mine, and a mercury reading flags any concentration inconsistent with the declared geology. We pay and document like a bank. Payments are made exclusively via bank transfer to the supplier’s own account, with all records meticulously kept for audit.

Together, the two pathways produce four outcomes: an origin documented against money laundering, mercury kept out of the chain, safer working conditions for miners, and a formalization process that pays off.

THREE LESSONS FOR COLOMBIA

Structural conditions open the way, but an operator still has to build the value chain. Our Peruvian operations offer three lessons that seem transferable to Colombia.

1. Trust comes before volume. Small -scale miners have historical reasons to distrust formal operators: low prices, contested assays, and financial advances that turn into dependence. A miner sells his ore—and keeps selling it—when the price follows a public reference, when he can inspect the assay, and when payment arrives quickly. Many initially come for the technical visits, where our mining engineers advise them on critical topics like ventilation, protective equipment, and safety.
2. Verification happens before crushing, and external parties check it. Once ore is mixed, its origin disappears, so every control must take place at the gate. Independent accreditation and audits then give final buyers a reason to believe the results.
3. Compliance is an investment. Operators who treat traceability as a constraint apply the bare minimum. Those who treat it as a structural requirement gain access to LBMA refiners, institutional buyers, and the confidence of regulators.

A WINDOW FOR COLOMBIA

The global context favors this transition. International buyers are tightening their sourcing policies, refiners are demanding documented chains, and central banks in the region have committed to principles for responsible domestic gold purchases. Colombia’s own rules now point in the exact same direction.

For these reasons, untraceable gold will become increasingly difficult to sell. Colombia has already completed the more challenging part by drafting the rules and winning a measure of political consensus around formalization. However, what Peru has taught us is that the middle of the gold value chain takes just as long to build.