Colombian oil workers decide to strike

The USO, the largest labor union representing workers in the oil sector, decided on Wednesday to go on strike. The decision of exactly when the strike should begin was delegated to a special committee, but the strike must start no later than March 26^th. This date was not selected at random, as Colombian state oil company Ecopetrol’s board is meeting until March 26^th. The main reason for the strike is to protest the massive layoffs – USO president Edwin Castaño called them a “massacre of labor” – which have already affected some 10,000 oil sector workers.

Labor Minister Luis Eduardo Garzón said that a strike would be “suicide given the current situation. He added, “If there is a strike, it would not just affect Ecopetrol and employment, but also oil production in Colombia, which finances the government’s social programs like Families in Action, Greater Colombia, and victims programs.”

In mining-related news, the Colombian Minister of Mines and Energy, Tomas Gonzalez, told the Prospectors and Developers Association of Canada conference in Toronto that Colombia intends to maintain its oil, gold, and coal production output in 2015 despite significantly lower global prices for these commodities. He added that it’s also vital that the country maintain exploration levels, a goal that will likely be impossible to fulfill.

In other news, Greenpeace demonstrated outside the Environment Ministry in Bogota dressed in biohazard suits. The Greenpeace activists were protesting the environmental damage to Colombia’s high-altitude paramos, specifically the Pisba paramo en the department of Boyaca, caused by mining. The activists called on the Environment Ministry to revoke the environmental permits given to Hunza Coal.

Peruvian government urged to intervene in social conflicts

Carlos Gálvez, president of the Peruvian National Society of Mining, Petroleum, and Energy (SNMPE), called on the government to intervene and help resolve conflicts between local communities and mining companies. He told reporters, “The state must guarantee compliance with accords between mining companies and communities, just as the miners do.”

Rosa María Ortiz, the recently-appointed minister of Energy & Mines admitted that sometimes these conflicts stem from a lack of governmental services in the areas. She said at an international mining investors’ conference in Toronto on Tuesday, “Often social conflicts are not due to problems with the investors or the mine, but rather to demands dating back many years, which is the state's responsibility.” Minister Ortiz is confident that the economic reforms that Peru has implemented in recent years make the country one of the most competitive in the world for attracting investment in the mining sector.

During the conference in Toronto, a panel of international mining experts offered advice to interested investors on how to invest successfully in Peru. One panelist recommended that investors must be committed for the long term, as projects customarily take 4 to 6 times longer to develop than is initially estimated. All of the panelists agreed that the key to a successful mining project is the support of the local community.

In news related to illegal mining, Peruvian business journal El Comercio reported that the 45 mining companies that operate in the Lambayeque region in Peru, are doing so illegally, entirely without approval from the Ministry of Energy and Mines. The report explained that officials in Lambayeque have been very slow to organize and legalize its mining industry. The local officials however blame the miners for not being interested in formalizing.

Colombian oil workers prepare to strike

Since last year, the Colombian oil industry has been bedeviled by the twin problems of plummeting global oil prices and dwindling national oil reserves. It’s time to add labor issues to that list, as the USO, the largest union in the Colombian oil industry, is preparing to go on an indefinite strike. USO president Edwin Gonzalez told Reuters that the USO is protesting that massive layoffs of oil sector workers, adding that the labor union is ready and willing to negotiate with the government and halt the strike. The Colombian Labor Minister, Luis Eduardo Garzón, countered by saying that if the protesters’ goal is to improve the employment situation in the country, going on strike will only cause greater harm.

Also on Tuesday, Colombian state oil company Ecopetrol announced that its net profits fell 42.7% in 2014, due to the collapse in global oil prices, lower sales volumes, increased costs, and attacks against oil infrastructure. Though this announcement did not come as a surprise, the fall in profits creates a gaping hole in the Colombian government’s budget.

Colombian Finance Minister Mauricio Cardenas however said that through higher taxes, cutting expenses, and a higher national debt, the country would be able to weather the period of depressed oil prices. He focused in particular on that last tool, raising debt levels, explaining that the devaluation of the Colombian peso has allowed the country to take on more debt, and has stimulated domestic industries for which a weaker peso is a great help.

In a separate interview, Minister Cardenas expressed optimism regarding the country’s GDP growth for 2015, predicting that Colombia’s economy would grow by more than 4%, even though most analysts have pegged it at less than 3%.

Peruvian officials confident in country's mining industry

On Monday, Peruvian Minister of Energy and Mines, Rosa Ortiz, said that Peru holds a very unique place in the world in terms of its high mining potential and attractiveness for investment in the mining sector. According to Ortiz, the country has its strong economy, skilled labor force, and judicial stability to thank for its privileged position. The minister made these remarks during a presentation on the future of mining in Peru before a group of international mining investors at the Prospectors and Developers Association of Canada conference in Toronto.  She also highlighted that, at the end of last year, the Peruvian government approved new regulations to speed up and streamline the environmental permitting process.

Andina News Agency also reported that the Vice Minister of Energy and Mines, and ex-president of the Institute for Peruvian Mining Engineers (IIMP), Rómulo Mucho, attributed January’s growth in the Peruvian mining sector to investors’ improved expectations for the Peruvian economy in 2015. He added, “There is a sense of optimism in the sector thanks to good governmental decisions. During the previous year, there was a lack of confidence, but today it is reversed.”

Peruvian daily El Peruano reported on Minister Ortiz’s comments regarding the value of the pipeline of mining projects in Peru. She said that Peru has $64 billion worth of copper, gold, and silver mining projects in the pipeline, with which to attract investors. She did this to assuage concerns that the Peruvian mining sector, the engine of the country’s economy, might begin to slow down, due to lower metal and mineral prices.

Colombian officials pessimistic on oil prices

The British Telegraph reported on an interview with Colombian finance minister Mauricio Cárdenas. He told the paper that the Colombian government is not counting on oil prices returning to their previous high of $115 per barrel any time soon, adding, “We're making everything that is necessary to adjust in a small and gradual way to prices between $60 and $70.” This urgent and prudent action is a welcome sign that Colombia will hopefully be able to weather this oil crisis and emerge with a stronger, more diversified economy. Minister Cardenas pointed out that, at this stage, higher interest rates in the U.S. would be even more damaging for Colombia’s economy than sustained low oil prices.

El Espectador, one of the leading Colombian dailies, published an article over the weekend that tentatively asked the question whether the recent rally in oil prices could signal a broader recovery for the sector. Ultimately, the report concluded that due to structural factors in the oil industry, primarily OPEC’s decision not to cut production, oil prices for the next year will likely end up between 60 and 75 dollars per barrel.

On Friday, the Colombian and Peruvian mining ministries announced a bilateral program of cooperation in the areas of gold, silver, and copper mining. The two countries will work together and share best practices on issues like formalizing miners, encouraging investment, and the resolution of social conflicts. Colombia and Peru are battling many of the same issues and concerns in regards to their mining industries, so this initiative is a positive sign that they can share successful case studies and improve the efforts of both countries.