Emeralds Regaining Their Gleam : Minerals: Canadian group becomes first foreign interest to sink money into Colombian mines. Industry had been as well known for its violence as for its gems.

Five centuries after Spanish conquistadors plundered the riches of Colombia, foreigners are returning to the country to mine emeralds near the mountain village of Chivor.

This time around, the outsiders are more welcome than their marauding European predecessors in this mining town, located about 90 miles northeast of Bogota.

A group of Canadian investors has agreed to spend as much as $10 million for an 80% stake in a Colombian emerald company, becoming the first foreign company to ever invest in Colombian emerald mines.

The group also plans to go public early next year as the Chivor Emerald Mining Co., offering investors the first pure emerald play ever in shares to be listed on the Canadian Dealing Network in Toronto.

“This is an important step for us,” said Orlando Alvarez, president of Mineralco, the state agency that regulates mining in Colombia. “It shows there is interest among foreign investors.”

In the process, they hope to improve the reputation of an industry that last decade became known as much for violence and bloodshed as for the prized jewels it unearthed. The violence has deterred foreign investors in the past.

“We’re hoping to change this image,” said Miguel de la Campa, who is leading the group of Canadian investors in the purchase of Colombian emerald mining company Empresa Chivorena de Minas Ltda. “We see a good opportunity here.”

During the 1980s, an estimated 4,000 people were killed in the western emerald zone as two main emerald kings battled for turf. The area was lawless, with police and the military unwilling to step in to end the feud.

Peace appears to be restored in the area, now that Victor Carranza has won the power struggle and become the undisputed emerald baron in the Muzo area, about 135 miles northwest of the capital, Bogota.

Making things safer too are the actual mining concessions the Canadian group is buying, located in the eastern zone that has been largely spared by the violence.

“Traditionally there has been this myth, that foreigners can’t invest in the emerald industry in Colombia because of the problems we had,” Alvarez said. “Now there are no problems.”

To be sure, guerrillas roam several parts of Colombia, bombing oil pipelines and kidnaping ranchers and business executives.

The manager of a Colombian gold mine owned by Toronto’s Greenstone Resources was shot and killed in May by the army as he was being sped through a roadblock by guerrillas who had kidnaped him, according to a report in Toronto’s Globe & Mail.

The mine is a long way from Chivor, but the incident is an example of what foreign companies must deal with in Colombia.

Still, Colombia remains the world’s top producer of precious emeralds, accounting for 60% of the world supply.

Emerald exports are soaring, in part because the industry is starting to become better regulated, industry officials said.

Shipments of emeralds were valued at $288 million in the first half of the year, an increase of 89% over the same period in 1994. Mineralco is forecasting exports of almost $600 million this year, from $435 million in 1994.

And there may be many more emeralds left to uncover. Emerald mining is being done in 65 concessions covering 800 hectares of land, yet Mineralco has designated 622,000 hectares with potential for emeralds. (A hectare is 2.47 acres.)

Mining emeralds is a hit-or-miss business because of the inconsistent geological formations in which they’re found, making it difficult to predict the yield of a given plot of land.

Still, De La Campa, a director of Canadian gold mining company Bolivar Goldfields Ltd., said production at the eastern Chivor mine could as much as double in the next few years with the new technology and equipment his group will bring to the region.

While De La Campa is leading the investment group, Bolivar Goldfields is not directly involved in the emerald venture.

The Chivorena emerald company has three concessions in the area and is talking with other owners to buy 19 more. If they buy all the other areas, the company will have 70% of the region’s production and 20% of the national output.

The Chivorena company had production worth $6.6 million in 1994, though this figure was as high as $40 million in 1991, the Canadian group said.

Emerald mining remains a primitive process, with hunched-over miners dragging drills into narrow tunnels carved into the sides of the Andean mountains.

To bring the process into the 20th Century, the Canadian group will invest in new drilling equipment to reach deeper into the mountains. It will also introduce new seismic equipment, to help geologists better detect formations likely to contain emeralds.

“Up to now, the emerald industry has been managed very rustically,” De La Campa said. “We plan to bring a whole series of new equipment to considerably increase production; equipment that has never been used here before.”

Alvarez said he’s confident the investment by the Canadian group will lead to more foreign investment in the industry, and encourage the development of the world’s first emerald bourse in Bogota.