Falling gold prices hurt small miners in Colombia

On Wednesday, Colombian business journal Portafolio published an article exploring the effect that falling gold prices have had on the Colombian mining industry. Gold prices have fallen to their lowest levels since February 2010, and analysts predict that prices could fall all the way to $1,000 per ounce.

Portafolio explained that while the shift in prices has affected the profit margins of large mining companies, it has hit small miners especially hard. These small miners have much slimmer profit margins than the large companies, so any shift in prices can immediately affect the viability of their mining operations. Nonetheless, some of the collapse in prices has been made up for by the shift in value of the Colombian peso against the U.S. dollar.

In related news, Contagioradio reported on five recently-released documentaries that explore issues related to the mining industry in Colombia. French journalist Remeo Langlois made “For all the gold in Colombia,” a movie about illegal mining and the multinational mining company Gran Colombia Gold.

In oil-related news, the Colombian statistics institute DANE announced that Colombia’s 12-month rolling trade deficit had grown from 3.5% of GDP in May to 3.1% of GDP. The report noted that the main driver of this imbalance was the declining value of the oil exported by Colombia, which fell 29.3%. Analysts worry that the deficit could grow to 5.8% of GDP if oil prices do not recover soon.

Uncertainty continues over Tía María mining project

Another deadline passed in the long-running social conflict over the Tía María copper mining project in the Peruvian province of Islay. On Tuesday, the 60-day state of emergency declared by the Peruvian government on May 23^rd expired. Although the state of emergency achieved its immediate purpose of calming the violent protests that had raged in the area, all signs indicate that the Peruvian government will extend the state of emergency.

According to the Peruvian Minister of Energy and Mines, Rosa María Ortiz, the governor of Arequipa, Yamila Delgado had asked that the state of emergency be extended “because there were not the conditions to lift it.” Minister Ortiz added, “El Council of Ministers will evaluate this request, together with the reports solicited from the police, and later will make its decision known.” The police director for Arequipa warned that intelligence reports show that, as soon as the state of emergency is lifted, the protests will start back up again.

In Peruvian oil-related news, the consultation with the local indigenous community over the auctioning of the rights to Lot 192 was suspended earlier this week. According to the Ministry of Culture, local indigenous leaders are asking for a concrete commitment from the Peruvian government to put together a $1 billion 30-year development fund, lasting the duration of the new operating agreement for Lot 192. The government however only offered a normative initiative.

Another FARC attack against Colombian oil infrastructure

Colombian authorities announced that the FARC on Sunday again attacked Colombia’s oil infrastructure. This time the bombing took place in Palmera, located in the Norte de Santander department. Though the bombing did not result in any casualties, it destroyed an oil storage facility.

Hopefully, once the unilateral ceasefire declared by the FARC goes into affect in the next week, these attacks on Colombia’s oil infrastructure will finally come to an end. In addition to jeopardizing the fragile negotiations going on in Havana, these attacks have also dealt a severe blow to a Colombian oil industry undergoing one of its worst crises of the last 20 years.

In other oil-related news, international oil prices finally started to stabilize on Tuesday thanks to a decline in the US dollar. Oil prices had fallen 10% in July due to the Iranian nuclear agreement and concerns over economic trouble in China and the EU.

In mining-related news, Colombian daily El Espectador profiled a new Canadian mining project in the country in the area of Santa Rosa de Osos, in the northern part of the Antioquia department. The development of this project is the closest Colombia has to an example of a truly participatory process in which the local community determined the conditions under which mining could occur in their area. Construction on the mine will start in August, with future gold production projected at 50,000 ounces per year.

Peru assembles regional alliance to combat illegal mining

On Monday, the Peruvian government announced that it had established a regional alliance with Colombia, Ecuador, and Bolivia to coordinate the countries’ activities in their fights against illegal mining. Peruvian High Commissioner for mining formalization, illegal mining interdictions, and environmental remediation Antonio Fernández Jerí told reporters, “As with drug trafficking, illegal mining is very large. As a result, we need to look for strategic allies, and this is what we have done. We have a technical working group with Ecuador, and with Bolivia and Colombia. We need to complete the deal with Brazil.”

As part of the terms of the alliance, the various countries are exchanging data on illegal and informal mining, and best practices regarding mining formalization and artisanal mining. Fernández explained that, despite these recent advances, the countries still have not been able to carry out large joint operations against illegal mining because “an identical normative framework” still needs to be created.

In oil related news, the Federation of Native Communities rejected the proposed extensions of Pluspetrol’s presence in the Peruvain Amazon. The Peruvian government is auctioning off the rights to operate Lot 192, which for years has been run by the Argentine oil company Pluspetrol. However, the indigenous groups of the Tigre River have accused Pluspetrol of ignoring its environmental and social responsibilities, and asserted that they would not allows Pluspetrol to operate any longer in their territories.

The rising costs of FARC attacks on Colombia's oil infrastructure

Attacks by the FARC have dominated headlines in Colombia so far in 2015. An attack in the Putumayo region caused one of the largest environmental disasters in Colombian history, and the attacks have caused further damage to already-shaky investor confidence. To add insult to injury, the 55 attacks against Colombia oil infrastructure so far in 2015 have come with a total price tag of $1.5 billion Colombian pesos, including repairs, decontamination, loss of oil, etc. A study by Campetrol estimates that, by the end of the year, the final cost associated with these attacks on Colombian oil infrastructure could exceed $142 million Colombian pesos.

In related news, the Colombian military denounced a new FARC tactic to avoid military action in response to the oil spills caused by the FARC oil infrastructure attacks. According to the Colombian Army, the FARC has begun installing bombs that can be detonated remotely. On Thursday, the Army was able to find and deactivate several bombs before they could be detonated.

These attacks could not come at a worse time for the Colombian oil sector. The Colombian government’s revenues have been severely affected by the collapse in global oil prices. As a result, Colombian Finance Minister Mauricio Cárdenas called the 2016 national budget that he recently submitted a policy of austerity. Public investment in agriculture, housing, and mining and energy were particularly hard-hit.

In mining-related news, the Colombian ministry of the environment announced the establishment of six new natural protected areas in the country. As a result, the National Mining Agency will be unable to issue new mining concessions in these protected areas. However, the borders of the protected areas have yet to be fixed, and a number of mining concessions have already been issued for these areas. Resolving these conflicts will be a tricky issue for the Colombian government.