Strike spurs debate in Peru over illegal mining

Last week, the strike continued in the Madre de Dios region of Peru protesting laws against illegal mining in the country, arguing that the laws violate the informal miners’ labor rights. Protestors totally shut down the cities in the region and blockaded important highways linking Peru to neighboring Brazil.

Peruvian Minister of the Environment Manuel Pulgar-Vidal insisted that Peru will not give in to the protestors, and argued that the protesters are just looking for permission to continue to engage in criminal activity including illegal mining. He said, “What they are asking for is total freedom to engage in illicit activities, and we cannot allow this.”

Pulgar-Vidal, speaking directly to the miners, said that although illegal mining might bring immediate economic benefit, those profits would be short-lived. He added that, moreover, the Peruvian government would continue its fight against illegal mining.

On a related note, Peruvian business journal Gestión spoke with Hugo Santa María, an outside expert on the Peruvian economy and the country’s mining sector. Gestión believes that the Peruvian mining sector alone has been propping up the broader Peruvian economy, and it is important to reactivate investment in the sector and restart the large mining projects, which have been shut down.

Santa María called on the central Peruvian government to get involved. He argued, “We cannot think that this is a problem of companies and neighbors, as it is a problem with the fact that the national law is not respected. We see how projects are licensed, authorized, and with everything in order are stopped and no one does anything.”

Colapso de ingresos petroleros está afectando Colombia

El Ministro de Haciendo de Colombia Mauricio Cárdenas le dijo a la prensa este miércoles que la deuda pública de la nación aumentó de un 5,2% del PIB a 6,2% del PIB este año, o casi $18,000 millones. El Ministro llamó este nivel de deuda "insostenible," y le echó la culpa a la desaparición de los ingresos petroleros y la devaluación del peso colombiano. Explicó que "Hay una serie de factores, la mayoría de la cual son externos, en que tenemos que usar todas nuestras herramientas políticas."

Este martes, el centro de pensamiento colombiano Fedesarrollo publicó una investigación que advierte que, si no haya un gran hallazgo petrolero colombiano dentro de los próximos años, las reservas petroleras del país se agotarán dentro de 7 años si los niveles actuales de producción se mantienen. Esta transición tan rápida a ser un importador neto de petróleo sería un desastre para las finanzas de la nación y para los ciudadanos colombianos.

Aún peor, la actividad exploratoria en Colombia casi se ha paralizado por completo, con solo 28 pozos exploratorios perforado en el 2015. Fedesarrollo le echó la culpa por la falta de exploración al colapso en precios petroleros, que le disuaderon a las petroleras de invertir en exploración.

La petrolera estatal colombiana Ecopetrol no se queda inmobil durante esta crisis petrolera. Ecopetrol hizo unos ajustes a su equipo ejecutivo, llamando un nuevo vicepresidente ejecutivo y un nuevo director corporativo para auditoria interna. Además, Ecopetrol anunció que había explorado cuatro nuevas áreas en el Golfo de México. Sin embargo, estos bloques son de los Estados Unidos y no de Colombia.

Collapsing currency and oil prices bleeding Colombia dry

Colombian Finance Minister Mauricio Cárdenas spoke with the press on Wednesday, telling them that Colombia’s current account deficit ballooned from 5.2% of GDP to 6.2% of GDP so far in this year, or approximately $18 billion. Minister Cárdenas called this deficit level “unsustainable,” and blamed the problem on the disappearance of oil revenue and the devaluation of the Colombian peso. He explained, “There's a series of factors, mostly external, in which we have to use all our policy tools.”

On Tuesday, Colombian think tank Fedesarrollo published an investigation warning that barring a significant discovery of new oil in Colombia, the country’s reserves be will exhausted within 7 years if the current production levels are maintained. Such a quick transition to becoming a net oil importer would be disastrous for the country’s finances and for the average Colombian consumer.

Even worse, exploration activity in Colombia has almost completely ground to a halt, with only 28 exploratory wells drilled so far in 2015. Fedesarrollo mostly blamed the lack of new oil exploration on the collapse in oil prices, which has dissuaded oil companies from investing in exploration.

Colombian state oil company Ecopetrol is not standing idly in this oil crisis. Ecopetrol shook up its executive team, naming a new executive vice president and a new corporate director for internal audits. In addition, Ecopetrol announced that it had explored four new areas in the Gulf of Mexico. These oil blocks however are American, not Colombian.

Conflict in Peru over illegal mining

The Peruvian region of Madre de Dios has gone on an indefinite strike to protest the Peruvian government’s fight against illegal mining. Led by Madre de Dios governor Luis Otsuka, the protesters are demanding the repeal of two laws designed to combat illegal mining in Peru. According to the protestors, the laws have not achieved their objective and have only resulted in deaths and more violence.

The Madre de Dios region has been a hotbed of illicit activity. In addition to illegal mining and logging, Governor Ostuka has built public roads in the protected Manu national Park. In addition, the woodworker and anti-illegal mining activist Alfredo Vracko was murdered in his own home last week. The Peruvian police suspect that illegal gold miners are behind the murder, as Vracko had been spoken out loudly against their activities.

However, the Peruvian Ministry of the Environment rejected the strike in Madre de Dios, arguing that illegal mining has resulted in the destruction of 50,000 hectares of Peruvian forest and brings human trafficking and sex workers to Madre de Dios. Minister Manuel Pulgar-Vidal insisted that the government will not negotiate with the illegal miners, stressing, “With illegality there is no dialogue, and one should never give in to blackmail, no power of the State should ever do that when confronted with the high levels of degradation, violence, and unmet basic needs created by this illegal activity.”

Minister Pulgar-Vidal warned that if Madre de Dios continues down this path of conflict with the central government, it would plunge the region into chaos. He called on all of Peru to unite against illegal mining.

The war against illegal mining in Colombia

The Colombian ministry of the environment published a study showing that deforestation in Colombia increased by 16% in 2014, largely due to illegal mining and logging, forest fires, and the growth of cattle grazing land. The Ministry noted that deforestation actually declined in the Colombian Amazon, though it remains high.

El Tiempo also reported on illegal mining and the significant danger that it poses to the environment in Colombia. According to the newspaper’s report, illegal mining moves 7 billion Colombian Pesos every year, and is concentrated in the departments of Antioquia, Chocó, Nariño, Valle del Cauca, and Bolívar.

Ever day, illegal mining is responsible for the destruction of 1,400 hectares of forest. Because illegal mining occurs outside of environmental regulations, it destroys Colombian rivers and water resources. El Tiempo stressed that combatting this problem is key to protecting Colombia’s natural resources.

El Espectador reported on a different perspective in the battle over informal mining in Colombia – that of the small informal miners in their conflict with the large gold mining companies in Colombia. The report centers on the laundering of gold mined illegally by small-scale miners living in abject poverty, which enriches the companies that act as middlemen. Companies like Giraldo y Duque Ltda. facilitate the export of this gold and are rewarded handsomely.

Lastly, EFE reported that a raid against illegal mining in Antioquia lead to the capture of 13 illegal miners. Normally, these raids result in very few arrests, as the miners are able to see the soldiers coming and flee to safety. However, this raid was able to surprise and capture the miners, most of who are from the department of Chocó.

Peru to make its oil fields more attractive to investors

On Thursday, Perupetro announced a new initiative to shake up how it auctions off its oil fields in order to make those fields more attractive to investors. Perupetro President Rafael Zoeger explained during his inaugural address to the Peru Oil and Gas Congress that Peru’s oil fields are spread over a very large geographical area, so if they are split up, it should be easier for companies to explore and exploit the oil. Next year, Peru will solicit proposals for investment in six offshore fields and 26 fields in the Peruvian Amazon.

Zoeger also believes that there is great potential to find new oil reserves in Peru, but that it will require additional hard work from the Peruvian oil industry. He told the Oil and Gas Congress that, “The new scenario forces us to think in more possibilities than in limitations and I am convinced Peru has a great potential to discover new reserves, but potential, effort, commitment and conviction of all those involved is required to realize such potential.”

In mining-related news, El Comercio published an opinion piece by Jaime de Althaus warning that Bolivia could exacerbate the social conflicts that have already wrought havoc on the Peruvian mining industry. De Althaus explains that in order for Peru to have any chance of fulfilling Peruvian presidential candidate Alan Garcia’s promise of sustained economic growth above 5%, it must unlock the $24 billion in frozen mining projects.

He notes however that the Bolivian government recently invited the leaders of the Peruvian anti-mining protest movement to Bolivia, and wants to incite a new continent-wide uprising against corporate interests. De Althaus calls on the Peruvian government to forcibly denounce this interference in Peruvian affairs by Bolivia.