Colombia's conflict minerals: re-inventing the "terror wheel"?

Published by MAC on 2012-12-17
Source: Mining.com

Colombian armed rebels tighten control over gold mining 

Cecilia Jamasmie

Mining.com

13 December 2012

Revolutionary Armed Forces of Colombia (FARC) and a new generation of drug gangs (known locally as "Bacrims") are increasingly turning to gold mining to finance their terrorist acts, reveals a report released Thursday by political risk firm Exclusive Analysis.

"FARC and drug gang involvement in gold mining increases extortion and property damage risks, particularly in Antioquia and Putumayo," said Carlos Caicedo, head of Latin America forecasting.

The expert says that funds coming from mining operations are now the main income source for the revolutionary groups. In some provinces, he added, it has overtaken drug trafficking, especially in areas controlled by the FARC.

Caicedo said the lack of security presence in some of Colombia's remote areas is fueling confrontations between the FARC and Bacrims, who often "fight each other for the right to extort."

According to the report there is also evidence of armed groups controlling coltan and tungsten operations in the eastern provinces of Vichada and Guainia.

"The rail line between the Cerrejon coal mine in La Guajira and its Caribbean port tends to be bombed by the FARC several times a year. Mining and power equipment at the site has also been targeted," said Caicedo.

Since the Colombian government and FARC representatives began face-to-face peace talks in November, those who live in the areas controlled by the rebels have been following the negotiations closely.

"Mining and forestry are controlled by the FARC and other criminal gangs," said Richard Moreno, a legal adviser to an NGO that advocates social development in the Choco department, known for its large Afro-Colombian population. "If you don't hand over extortion payments, you can't work there."

Colombia's economy, Latin America's fifth largest, has grown four times faster than Canada's in recent years, with foreign investment quadrupling between 2002
and 2008.

The country holds vast and, until now, untapped natural resources of coal, gold,  silver and oil. The government has been taking a number of measures to boost the sector, which currently accounts for only 2% of Colombia's economy. However, much of these are in areas where the FARC has a strong presence.

What if the peace talks succeed?

The question of what will become of the FARC's mining activities should the peace talks with the government succeed, is linked to the broader issue of Colombia's approach to regulating the entire mining sector.

Since 2002 the government has stimulated the industry, increasing the distribution of mining permits in the country. Yet, some estimate that nearly half of all mining in Colombia is illegal, or conducted by small-scale mines without formal permits.

The government has vowed to make it easier for explorers to acquire legal permits, but there are still at least 6,000 mines in Colombia currently considered illegal, according to a report by Insight Crime.

In early November, President Juan Manuel Santos presented a package of measures, including a proposed bill before the Congress, aimed to make illegal mining a crime punished by the country's Penal Code.

Apart from the bill, Colombia's government will issue two executive decrees aimed at defining the concept of illegal mining.

These actions could be key to weakening the FARC's hold on mining. If the proposed reforms become a law, it would grant miners the means to report extortion without fearing terrorist or legal consequences.

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Colombian rebels like gold

Northern Miner

13 December 2012

Income from gold mining has overtaken drug trafficking in some provinces for the Revolutionary Armed Forces of Colombia, or FARC, according to a new report from political risk firm Exclusive Analysis.

In some cases, the rebel groups and a new generation of drug gangs known locally as Bacrims, are carrying out their own gold mining operations, and, in others, they are collecting protection money for equipment owned by mining companies, Amanda Russo, the intelligence company's head of corporate communications, elaborates in an email from London.

"The scant security force presence in some of these remote areas permits the FARC and Bacrims to latch on to this and often fight each other for the right to extort," Carlos Caicedo, head of the agency's Latin American Forecasting and author of the report, outlined in a press release.

It is a similar situation in the departments of Cauca, Choco and Valle Del Cauca, the report claims. Caicedo also noted that FARC and drug gang involvement in gold mining increases the risk of extortion and property damage, particularly in places like Antioquia and Putumayo.

There is evidence, too, he said, of armed groups controlling coltan and tungsten operations in the eastern provinces of Vichada and Guainia.

But Robert Carrington, president and chief executive of Colombian Mines Corporation (CMJ-V), who has worked in Colombia for two decades, says the FARC have been doing this for some time and the government is battling it, and the report doesn't break any new ground.

"Every once in a while someone reinvents the terror wheel about Colombia," he says. "They try to bring out how dangerous a place it is, and the drugs, and it's almost shock value to get people to read whatever it is they're trying to say."

Carrington says the FARC has engaged in illegal mining activity and extorted small Colombian miners for years, adding that he doesn't know of any multinationals that are grappling with the issue.

Extortion is usually a problem for Colombian nationals who are operating small placer operations, he explains, where one man with an excavator hires five or six men to help him. "Some times the guys will get a knock on their door at midnight and someone sticks a gun in their mouth and collects what they call a war tax; it's protection money."

Some of the guerrillas are also mining placer gold themselves, he adds.
They will get equipment, either by stealing it or buying it, and find an area rich in placer gold and mine it themselves.

According to Carrington, guerrilla bands can show up almost anywhere but that, for the most part, they avoid highly populated areas that have good road networks because that is where they can be cornered by police and the military.

He also points out that gold mining has been part of the country's culture and its economy since pre-Colombian times, and, as a result, all the roads are in some of the more prospective gold regions and generally these areas have pretty high levels of security.

"What I tell all of our investors is, it's just like working in Los Angeles," he says. "If you go into the wrong neighborhood you are going to have trouble, but there are a lot of people who work in L.A. every day and never have a problem with crime or gangs and all of that."

Having said that, however, Colombia is a country where you want to be careful and companies that choose to operate in more remote guerrilla-held territory are taking risks, he says. "There are some foreign companies operating in some parts of Colombia and I don't know how they're operating unless they're paying protection money," he says.

"There are some companies working in parts of Colombia that I still elect not to work in. And whether it's because they have military security there or maybe they pay protection money, I don't know."