GREAT PROSPECTS

Colombia 2013 | ENERGY & MINING | INTERVIEW

TBY talks to Roberto Junguito, President & CEO of Cerrejón, on the demand for coal and the company's corporate social responsibility initiatives.

Roberto Junguito
BIOGRAPHY
Roberto Junguito’s professional career has spanned several international companies, including Chase Securities and McKinsey and Co. He was Executive Vice-President for Avianca’s Restructuring and Operations division and President of Copa Airlines Colombia for six years. He is a member of the boards of directors of several institutions, including the Board of Governors of the University of the Andes, where he is also a member of its Executive Committee. Junguito is an Industrial Engineer from the University of the Andes in Bogotá, Colombia, with an MBA from the Wharton School and an MA in International Relations from the Lauder Institute of the University of Pennsylvania in the US.

What are Cerrejón's short-term investment plans?

We are currently investing $1.3 billion in growing our infrastructure. Most of that investment is in doubling the size of the port, which is the most important maritime facility in Latin America in terms of coal exports. We are generating 5,000 jobs throughout the cycle of the project, which is a very important project for the region that we operate in. We are in the middle of the project.

How would you characterize the demand for coal, and how do you see it evolving in the next five to 10 years?

Coal continues to be an important element for electricity generation worldwide; 40% of electricity comes from thermal coal. All of the experts say that the coal requirements will continue to grow, however the mix is going to be reduced from 40% because renewables are growing faster. It is still a promising market because it continues to grow. However, the share of the market might decrease in terms of overall energy demand. We are very well positioned in Colombia because of the resources that we have and our proximity to the sea, with our train and our port. That's why we are investing. Our shareholders are three of the largest mines worldwide: BHP Billiton, Xstrata, and Anglo American. They feel that Colombia has great future prospects.

What main challenges is the sector facing?

We have many different challenges in this industry. Thinking about the market, I would first mention that our marketing situation is currently difficult. The US used to be our customer, but it has now become a coal exporter. It has become our competitor. Another challenge are international environmental regulations. These have led to very limited growth in new power plants fueled by coal. That's another challenge. From a local level, and it is happening in other places as well, we have regulatory challenges in the form of initiatives for increased royalties and taxes. There are social demands. Cerrejón has always been a good neighbor. It has always invested a considerable amount of money into nearby communities, but NGO activism has increased. There are more and more social demands on our production processes. We have recognized them and we have four different foundations.

“Coal continues to be an important element for electricity generation worldwide."

Which are your most successful development programs for communities?

We work with indigenous communities with water, institutional strengthening, and with alternatives to generate income, such as hotels, which is part of the work we are doing with the progress foundation. With these foundations we have one of the most comprehensive social programs worldwide for a mining operation. We are working to become the partner of the state we work in, La Guajira, to make sure that we continue to drive economic development in a sustainable fashion. We believe that tourism is one of the potential industries. We are working hard to establish a museum with the hotel. It will be the first four-star hotel in La Guajira, and will meet environmental standards. We are working very closely with the indigenous community to mix ancestral knowledge about how to develop agriculture in a desert area with technology from Israel, where they have converted the desert into a productive area. We have run very interesting pilot tests to make sure that we provide water security. With water security we provide food security, and with food security we can provide health and education for the people. Then we work on what the people do after they graduate, and that involves employment in different industries. More than 30% to 40% of my time has to do with social work, because if the community is doing well we have the opportunity to grow our mining operation.