Gold rush fuels conflicts in Colombia

Published by MAC on 2011-03-14
Source: Financial Post, New York Times

Colombia says Angostura project's environmental impact unacceptable.

Colombia says Angostura project's environmental impact unacceptable

By Peter Koven

Financial Post

8 March 2011

TORONTO - Colombia's mining minister spoke out Tuesday against Canadian miner Greystar Resources Ltd., saying its environmental study on the Angostura gold project is not acceptable.

"We are completely sure that it is not the Canadian standard of quality," Carlos Rodado Noriega told reporters at the Prospectors & Developers Association of Canada (PDAC) conference in Toronto.

Water sources in páramo de Santurbán - Photo: Gabriel Aponte

The statement is another blow to the beleaguered Greystar. The Vancouver-based miner wants to develop the giant Angostura project in Colombia, but is facing major local opposition.

The conflict boiled over into a confrontation with angry locals at a public hearing last week. Greystar was forced to bring it to an early end after only 28 of the planned 470 statements were heard.

The project is located at elevation of more than 3,000 metres, and is just 55 kilometres away from Bucaramanga, a city with more than one million people. It holds more than 11 million measured and indicated ounces of gold.

Greystar proposed developing Angostura as an open-pit mine using a heap-leach process, in which a cyanide solution is used to extract the ore.

And therein lies the problem, sources say.

Serafino Iacono, co-chairman of Colombian energy giant Pacific Rubiales Energy Corp., said the heap-leach process has not been used in Colombia, and there is a great deal of fear about it. That fear is compounded in the case of Angostura, he said, because locals source their water supply from the project area and are afraid of contamination. Greystar has worked very hard to convince them that they have nothing to fear.

"People don't understand the consequences of heap-leaching in an area where it rains 60% of the time," Mr. Iacono said.

He suggested that Greystar should re-design its mine plan and get rid of the heap leaching. While the deposit may shrink with a different development plan, it would still hold millions of ounces, he said.

Greystar has already indicated a willingness to re-evaluate its mine plan, saying in a statement that it would work with Colombian authorities to determine "whether modifications are possible."

"We expect the company will continue its efforts to advance the project through the [environmental] approval and permitting phase, although the potential time frame has become clouded," BMO Capital Markets analyst John Hayes wrote in a note to clients.

While Greystar has faced many challenges moving Angostura forward, Ventana Gold Corp. owns a deposit right beside it and has had a much smoother ride. The company is being sold to Brazilian billionaire Eike Batista for $1.2-billion.

Greystar shares have dropped about 30% so far this month as investors worry that government approval is not imminent.

While Mr. Noriega criticized Greystar, his overall message at the PDAC conference is that his country is secure and eager for more Canadian investment. Security concerns re-surfaced this week after 23 oil workers employed by Talisman Energy Inc. were kidnapped. They have since been freed.

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In Colombia, New Gold Rush Fuels Old Conflict

By Stephen Ferry

New York Times

3 March 2011

Thousands from across Colombia have flocked to mining sites in Antioquia, where armed groups vie for control of operations.

Photos: http://www.nytimes.com/slideshow/2011/03/04/world/americas/colombia-gold-rush.html

CAUCASIA, Colombia - Officers pored over intelligence reports describing the movements of two warlords with private armies. Then the helicopters lifted off at dawn, carrying an elite squad armed with assault rifles to the newest front in this country's long war: gold mines.

Seizing on the decade-long surge in gold prices, combatants from multiple sides of the conflict are shifting into gold mining, among them leftist guerrillas from the Revolutionary Armed Forces of Colombia, or FARC, and fighters from the shadowy armed groups that rose from the ashes of right-wing paramilitary squads.

Their move into gold underscores the many difficulties of ending Colombia's devilishly complex four-decade war. Even as the Colombian authorities claim victories in bombing top rebel commanders and eradicating vast tracts of coca - the plant used to make cocaine, long the financial lifeblood of the insurgents - resilient factions are exploring new sources of money.

"These groups are metamorphosing to take advantage of the opportunities they see," said Jeremy McDermott, a director based in Medellín of InSight, a research organization that focuses on criminal enterprises in Latin America. "They know there's a huge new revenue stream within their grasp, and they're grabbing it."

The result is a gold rush unlike any now under way in South America, both feeding off Colombia's evolving conflict and keeping it alive. Up and down the sweltering river basins around Medellín, miners from across Colombia are flocking to sites where backhoes are tearing up forest and tree canopies, leaving behind lunaresque landscapes.

Some of these small mines have existed for decades, echoes of frenzies that stretch back centuries to the plundering by conquistadors in search of fabled gold deposits. Newer mines emerge on almost a weekly basis, reflecting efforts to find gold while its price remains high. Gold futures climbed this week to a noninflation-adjusted record of $1,441 an ounce.

The gold rush here is just a part of a broader mining boom in Colombia, with gold production climbing more than 30 percent last year and attracting an array of fortune seekers, from multinational corporations to farmers who have left their fields and picked up shovels.

Guerrillas and their paramilitary adversaries have long been involved in mining, often using it and related businesses like cattle ranching to launder money and to extract extortion payments. But military intelligence officials and residents here say that new factors, like the success of American-financed coca eradication projects and the price of gold, have pushed rivals in Colombia's long drug war to focus elsewhere.

The role of guerrillas and the new criminal syndicates in the pell-mell opening of new mines has made Antioquia - the department, or province, whose capital is Medellín - one of Colombia's deadliest and most environmentally devastated regions.

Miners in lawless backlands use liquid mercury to separate gold from river sediments, giving Antioquia one of the highest levels of mercury pollution anywhere, according to United Nations researchers. An estimated 67 tons of it are released into the province's environment each year, by about 30,000 miners taking part in the gold rush.

"Colombia has the shameful first position as the world's largest per capita mercury polluter from artisanal gold mining," said Marcello Veiga, a mining engineer who led a United Nations study of mercury contamination in Antioquia.

More than 60 grenade attacks were carried out last year in Caucasia, a city of about 100,000 with a downtown district of gold-buying shops. They largely involved two armed groups, the Urabeños and the Rastrojos, vying for control over gold mines and, to some extent, the cocaine trade.

Both groups are thought to have more than 1,200 fighters in their ranks. Each emerged from the paramilitary groups that were supposed to have demobilized years ago. At times, these heirs to the paramilitaries work with FARC, illustrating the post-ideological nature of today's conflict.

But score-settling between these groups and urban FARC operatives also takes place, lifting Caucasia's homicide rate to 189 per 100,000 inhabitants last year, compared with a national average of only 35 per 100,000, according to federal officials.

"It's hard for anyone to say this out loud, but one reason why the guerrillas and criminal gangs are moving into gold is because it is not just profitable," but because it deals with a legal product, unlike cocaine, said Leiderman Ortíz, the publisher of a small newspaper here who survived a grenade attack on his home last year after he described the new dynamics of the region's gold trade. "It's a way for them to keep their war alive," he said.

In January, President Juan Manuel Santos said communications intercepted from FARC showed that gold mining had become a source of financing for rebel group.

Mr. Santos said that FARC had named a commander with the nom de guerre Mauricio to oversee the group's gold mining activities, which include outright ownership of some mines and extortion at other mining sites.

In a new strategy, Mr. Santos has ordered raids on more than 50 illegal mines in recent weeks. In one day of coordinated raids in February, security forces fanned out in helicopters from Caucasia into Antioquia and the neighboring region of Córdoba. Members of an elite police squad descended on a mine near the village of Cargueros, where about 100 miners labored under the hot sun.

Wearing sandals and ragged clothing, they watched the helicopters land. Sweat dropped from their brows. They shrugged when asked about the risks of mercury exposure, which damages the brain and central nervous system.

"It's now much harder to grow coca because of eradication, so what are my options?" said one miner, Elkin Jiménez, 30. In a good month, he said, he could earn $1,000, about three times Colombia's minimum wage.

In hushed tones, several of the miners said that they had to pay protection money to work at the mine. Exhibiting palpable fear, none came forward to name the group that controls the site, which military officials say is located in an area disputed by two warlords, Sebastián Chancí of the Urabeños and Luis Enrique Calle of the Rastrojos.

Clinging to their work, the miners reacted fiercely when soldiers tried to arrest one of the men at the site. Grasping sticks, they rushed toward soldiers armed with machine guns, demanding his release.

Military helicopters buzzed like angry wasps above the scene. Soldiers pointed their rifles at the miners, who shouted demands in return. Tension hung in the air until the soldiers released the man.

South of here, more than 5,000 peasants marched to the town of Anorí in January to protest military operations against gold mining and coca cultivation. Protesters said that while FARC had forced them to go, their complaints were real.

Miners and security consultants describe how the area has emerged as a FARC bastion, with the guerrillas charging extortion fees with an accountant's precision: $3,800 a month for each backhoe in operation, $141,000 a month for permission to mine a certain site, and so on.

One miner in Anorí, Octaviano Hernández, put in simple terms how power functioned in the region as the gold rush continued: "All I can say is that he who has the gun gives the orders."