INCHING TOWARD A STATE OF RIGHT

Colombia 2020 | ENERGY | FOCUS

Mining companies have a unique opportunity to help improve Colombia's health, education, and transport infrastructure, something they must do without pause if they are to help the government and industry gain the country's trust.

The battle for the future of Colombia, including its soul, soil, economy, and so much more, is tied up in the country's booming mining industry. The fifth-largest coal exporter in the world, Colombia also has important reserves of gold and nickel. As the price of oil continues to drop and the country's reserves dwindle to merely six or seven years' worth of consumption, many policymakers and private sector players, both foreign and Colombian, want mining to fill the 'gap.' With fears, not unwarranted, that environmentally damaging mining holds the key to saving the currency, too, the Duque government, in league with some of the world's biggest mining companies, has been at loggerheads with environmental activists and local governments the nation over to determine the right mix between mining and preservation.

It is not, however, as if a long-time consensus already existed: a 2018 paper from the United Nation's Office on Drugs and Crime (UNODC) showed that 66% of all gold mining in the country was illegal, while another paper from the same body in 2019 reported that 48% of all illegal mining activity was happening within the country's national parks. With 84,000ha across the country affected by illegal mining, an uptick of 6% on 2014, the UNODC reported, illegal activity also deeply affects indigenous reserves and black community lands, areas where mining is in theory strictly prohibited. Thought to generate at least USD2.4 billion per year—some three times more than the cocaine industry—illegal gold mining alone is present in 14 of Colombia's 32 provinces, though the bulk is in the west of the country, chiefly Antioquia (37%) and Chocó (39%).
While total gold production was up 3% in 2019, nickel was down by 6% to 89.4 million pounds that year, according to the National Mining Agency, and coal down by 2% as a result of drought and a series of judicial rulings, especially one that prevented the extension of operations at Cerrejón in La Guajira, a major mine jointly owned by BHP Group, Anglo America, and Glencore. But the price of thermal coal also fell drastically, from USD82.50/ton in 2018 to merely USD51.40 in 2019, according to Silvana Habib, president of the National Mining Agency, causing further tensions with the Sintracarbon and Sintracerrejon unions onsite at Cerrejón, both of whom were mulling whether to strike in early March 2020 before fears over COVID-19 caused the mine's operators to halt most operations until the virus is better contained. Some 15,000 workers directly employed in the industry will thus cease working, the Colombian Mining Association (ACM) said in a statement, as will another 18,000 indirectly employed.
Given the importance of the industry as Colombia's second-largest generator of foreign currency, what have major firms done to alleviate the burden of mining on local communities? With such a huge percentage of the industry done under the table, bringing operations into the open is a crucial first step. This not only generates critical tax revenue for the government, but, more importantly, also legitimizes small miners, plugs workers into the country's social security system for the first time (GranColombiaGold, for example, has now added 12,000 workers to its books and gotten another 3,000 to open bank accounts), and helps extend the critical transport, health, and educational infrastructure into previously unserved areas.
In addition to helping bring clean drinking water and new roads to far-flung parts of Antioquia and Chocó, GranColombiaGold has also helped develop one of the most important plant nurseries in northeast Antioquia to reforest areas degraded by illegal mining. Great, then, are the initiatives that can be taken by the country's largest miners; however, until they unify and coordinate their efforts in conjunction with the government and give illegal miners enough of an incentive to go legit, they are unlikely to act as more than temporary band-aids across a scarred and battered landscape.