The risks of mining operations in politically unstable regions, such as Colombia, made headline news in late August when a Canadian mining executive was released from captivity after 221 days.
Gernot Wober, vice-president of exploration for Braeval Mining Corp., was taken captive by the National Liberation Army, a leftist group of rebels known by its Spanish acronym, ELN. He was released after months of negotiations involving his company, the government and religious leaders. The Colombian government said he must be released before ELN could enter into peace talks and his company eventually abandoned the gold find he was working on when taken captive.
The ELN is opposed to foreign exploitation of resources and was against Braeval’s mining project in northern Colombia, where Wober was kidnapped. The group offered Wober’s freedom in exchange for Braeval handing over the four mining titles still in the exploration stage in the area.
ELN sees itself as a protector of traditional miners who feel they have been squeezed out of their livelihoods as the government grants mining concessions to foreign companies in an area plagued by decades of disputes over land rights. Another rebel group, FARC, has already agreed to peace talks with the government and the participation of ELN lends hope that Colombia may eventually end its history of internal conflict.
“We have to remember where Colombia has come from. It has come a huge distance in a short time – conditions used to be much worse,” Eric Farnsworth, vice-president of the Council of the Americas told CBC’s Lang & O’Leary Exchange.
“And frankly, mining companies and extractive industries are not risk averse — they’re used to dealing in inhospitable environments with risky governments in different countries so this isn’t going to kill mining in Colombia by any stretch, but it is a reminder that it can be dangerous.”
Colombia has been working hard over the past decade to reverse its image as a dangerous place to do business. Improvements in the mining and petroleum sectors were expected to lead to four percent growth in GDP in Colombia in 2013.
There are almost 50 Canadian mining companies in Colombia, and several have gold claims.
Farnsworth said Colombia is considered a “frontier economy” but the government has conditions in place to attract investment, particularly in oil and gas exploration.
“Oil and gas is an area a lot of companies are looking into because the government has made the environment for investors so favorable and they’ve done that because they think there is a lot of energy in the ground, but nobody’s really found it yet so they’re hoping to get companies to come in and explore and hopefully produce on the energy front,” Farnsworth said.
Mining and extraction industries always have to make tough decisions balancing risk and reward in a market like Colombia, he added.