Echeverry takes the reins at Colombia's Ecopetrol

On Monday, Juan Carlos Echeverry, the new president of Colombian state-owned oil company Ecopetrol, signed his contract and started his new job. Portafolio noted that, over the last month, Echeverry has met with the presidents of other large oil companies around the world to determine Ecopetrol’s strategy in light of the crash in global oil prices. Echeverry also visited Ecopetrol’s oil fields in Colombia and met with the company’s partners and suppliers. Semana argued that the most important things that Echeverry will need to be a success are credibility, independence, character, austerity, recruitment, and leadership.

Echeverry is a leading Colombian economist who previously served as the head of National Planning and as Colombian Finance Minister. He takes the helm at Ecopetrol during a very difficult time for the oil company, as it desperately needs to increase the country’s reserves at a time when investment in exploration is almost impossible to come by. The Colombian government is counting on Echeverry to turn Ecopetrol around, but he can’t do anything about the price of oil.

In other oil-related news, oil transportation halted on Colombia’s Caño Limón oil pipeline on Monday, the country’s second-most important pipeline, after an unidentified group bombed a section of the pipeline in the department of Boyacá. The Caño Limón had previously been free of attacks thus far in 2015, so hopefully this latest incident does not signal a return to attacks against Colombia’s oil infrastructure.

In mining sector news, the Colombian Mining Association will meet later this month in April for its annual assembly. The main topics of discussion at the conference include the future of the global commodities industry, the relationship between mining resources and public finance, the environment and environmental management for the mining industry, and competitiveness to attract investment to the mining sector.

Peru - a mining leader

Over the weekend, Peruvian daily El Peruano published an editorial lauding the Peruvian government for its commitment to the country’s mining industry and in its leadership and progressive policies regarding the industry’s governance. The article argues that mining profits are key to growing the Peruvian economy, and praises Peruvian president Ollanta Humala for having made the mining industry the centerpiece of his economic policy. El Peruano believes that the central government has an important role to play as a facilitator between private investors, local communities, and the state.

The editorial goes on to praise the Peruvian government’s establishment of quality controls to ensure that the Peruvian mining sector remain competitive internationally but also protect the country’s environment. In addition, Peru’s social licensing program builds a conversation and a bridge between mining companies and the local communities that are affected by the mining projects. El Peruano points to the examples of Tigre, Corrientes, Pastaza, Marañón, Satipo, and La Convención as areas where the social licensing process has gone well.

In other mining-related news, Peruvian business journal Gestion reported that the Federation of Candian Municipalities will start working with its regional governmental counterparts in Peru to improve their ability to manage the impacts and benefits of mining projects. The article quoted Canadian officials who were excited about the opportunity for Canada to share its lessons learned regarding mining governance with Peru. Interestingly, though, the article did not quote a single Peruvian official. Ultimately, the success of the program will rely on the Peruvian regional governments’ receptiveness to the messages they are given.

MSN reported on the Peruvian government’s crackdown on illegal mining in the country’s Madre de Dios region. According to Marco Ortega, the mayor of the town of Huepetuhe in the Madre de Dios region, more than 22,000 people have left the area since the government began its crackdown. 

Colombia keeps a close eye on global oil prices

It’s been a quiet few days for the oil and gas and mining sectors in Colombia. Experts and observers have mostly kept their attention fixed on the international negotiations regarding Iran’s nuclear program, and the effects that the partially negotiated settlement has had on global oil prices. Oil industry observers expect oil prices to fall even further than their already-low levels if the negotiations continue to progress. Not only would prices plummet in the short-term thanks to an influx of oil that Iran currently has in storage, but foreign investment would also bolster the Iranian oil industry and allow it to fully take advantage of the country’s massive oil reserves.

This news would disappoint the Colombian oil industry, as it hopes that oil prices will rebound and stimulate increased investment in exploration in the country. The Colombian oil industry had initially hoped that investment in the country’s shale oil potential could grow its meager oil reserves, but a prolonged period of a sub-$50 price per barrel would do just the opposite. It would decimate the Colombian oil industry, which has been one of the key drivers of the country’s economic growth over the last 15 years.

In other news, Mammoet USA announced that it had completed a large heavy lifting and transport project at the largest oil refinery in Colombia, the Reficar Refinery. Mammoet managed all overland transportation, inland shipping, and on-site lifting.

Peruvian authorities launch new offensive against illegal mining

The Peruvian authorities launched their latest offensive against illegal mining when they raided a wildcat mine in the country’s Loreto region on Tuesday. The Peruvian Navy, police, and prosecutors raided the gold mine on the River Marañon, near the towns of Saramiriza and Borja. According to reports in the local press, the Peruvian security officials seized and destroyed dredging equipment used in the gold mining operations.

Separately, the Peruvian National Institute for Statistics and Information announced that production in the mining and hydrocarbons sector fell by a combined 2.4% in February. The decline was driven largely by steep falls in copper, molybdenum, tin, and oil extraction.

Anglo American, the fourth-largest mining company in the world, added to the bad news on Wednesday when it said that it would abandon its Michiquillay copper mining project in Peru. Nonetheless, Anglo stressed that it is still committed to the larger of its two copper projects in Peru, Quellaveco. The report noted however that Quellaveco “is the kind of complicated project shareholders mostly hate: It is remote, could cost over $6 billion and … is likely to take three to four years to build.”

Lastly, Peruvian mining company Buenaventura approved operations financing of up to $500 million, which may include the company’s first ever bond sale. Though Buenaventura, the largest Peruvian-owned mining company in the country, posted a $188 million loss in Q4 of last year, it still plans to launch the $200 million Tambomayo gold and silver mining project by 2016 and the $500 million Chucapaca gold and copper mining project by 2018.

Only 5% of Colombian territory titled for mining

Today, Colombian business journal La República discussed the most recent report issued by the National Mining Agency (ANM) of Colombia regarding the extent of mining activities in the country. According to the ANM report, “of the 114 million hectares in the national territory, just 5% are titled for mining activity, of which 2.3% is in exploration, 1.6% in construction and building, and 1.1% in exploitation.” This data was obtained after the ANM spent four years exhaustively reviewing 85% of the applications for a mining concession.

Somewhat surprisingly, mines for construction materials make up 57% of the titles, followed by coal mining at 17%, and precious minerals at 11%. The goal of this study was to be able to segment the mining sector in terms of taxes and preferential treatment. This way different mining operations can be charged different fees in accordance with their size and revenues.

In oil-related news, Portafolio reported on oil companies’ problems in Colombia, unrelated to the collapse in global oil prices: the first oil development project in Colombia’s Chocó department, of the CHO1 block, has been halted by the inability of Cleanenergy Resources to negotiate a contract with the National Hydrocarbons Agency of Colombia.

Portafolio theorized that this might be because Cleanenergy was asked about its investment plan for the local communities around the CHO1 block, in addition to its oil development plan, which made the company realize that this project would be much more complicated than it had originally anticipated. Nonetheless, a preliminary study done by the National University in Colombia indicated that the Chocó department could contain as much as 76 billion barrels of oil. This recent news shows that developing that oil potential will not be easy or straightforward.