Cocaine Dethroned by Colombian Gold Rush

Unable to turn to the state to protect their interests, informal miners have turned to the guerrillas and the criminal bands.

LATINVEX SPECIAL
Tenacitas International

BOGOTA -- As foreign mining companies in Colombia become bedeviled by increasingly widespread extortion, kidnapping of workers, and growing union and community demands, only the very bold are continuing to pump money into the country’s gold sector – the very bold and, of course, Colombia’s illegal groups, for whom gold in many regions is becoming more lucrative than cocaine.

For international, legal investors, gold mining in Colombia is ever more challenging. During eight years under the former president, Alvaro Uribe, the area granted for mining and oil concessions tripled to an estimated 22 million hectares. But the garrison and protection capacity of the security forces, already stretched to the limit when Uribe came to power in 2002, increased by a fraction of that.

Today, the army simply cannot guarantee security in all the areas where exploration and mining are underway. As a result, Colombia’s illegal armed groups have moved in. Leftwing guerrillas and new-generation drug-trafficking paramilitary gangs – called the BACRIM or “Bandas Criminales” by the government – are earning and laundering enormous sums of money as they exert a growing hold over the gold mining sector.

So successfully did the Uribe administration sell its claim that its Democratic Security Policy defeated the guerrillas, that corporations bought concessions in areas that had been under guerrilla domination for many years.

Global producer AngloGold Ashanti, for example, is sitting on concessions where there are proven, and significant, gold reserves, but where the social turbulence and dire security threat make extraction almost impossible.

However, it is the informal miners, a significant force in Colombia, who are the focus of the armed groups. This July, the informal miners launched protests across the country, provoking road blockades, criminal damage and general mayhem.

They are protesting at the rejection in May by the Ministry of Mines and Energy of 90 percent of all applications made to legalize mining operations. Many of these informal mining operations, of which there are at least 9,000 in more than 150 of Colombia’s 1,119 municipalities, have been operating for decades.

In certain departments, such as Chocó, Norte de Santander and Cauca, the protests of the informal miners have been supported, and perhaps even instigated, by illegal groups.

Some international corporations looking to mine for gold in departments such as Antioquia, Bolívar, Cauca, Chocó and Cordoba are not only facing threats and extortion demands from the armed groups, but are also encountering opposition from local miners and communities who have been working in the concession areas for years – creating a community relations nightmare.

While happy to sell concessions to mining companies, the Colombian government has been less adroit at regulating and legislating the mining industry, verifying existing concessions and recognizing the rights of local miners.

This chaos has created unlimited opportunities for Colombia’s illegal groups. Unable to turn to the state to protect their interests, informal miners have turned to the guerrillas and the BACRIM.

In the region of Bajo Cauca, which sits between the departments of Antioquia and Cordoba, there are more than 1,000 mechanical diggers working alluvial gold deposits. Almost all these operations are in the informal sector, and therefore in the eyes of the government, illegal. For the operation of each machine, either rebels or BACRIM demand a monthly fee of between $2,000 and $5,000.

Many mines also have to pay the illegal groups a percentage of gold production, while buyers of the metal are charged “sales taxes”. Refusal to pay results either in the destruction of the machinery or the murder of personnel.

In this way, the Revolutionary Armed Forces of Colombia (FARC), the National Liberation Army (ELN) and the BACRIM groups of the Urabeños or Rastrojos, are earning anything between $3 million and $10 million a month from gold mining in just nine municipalities in and around Bajo Cauca. In an area renowned for its coca crops, this dwarfs the revenue from cocaine.

Sales of gold in Colombia attract scant state vigilance. The gold extracted during illegal mining operations can be sold as easily as that from state-registered operations. And gold companies are perfect conduits for money laundering. Many small, legal mining operations have been taken over by illegal groups which claim the mine is producing far more gold than it actually does. Drug money is laundered through this phantom income.

Informal gold mining operations are not the only ones to fall victim to illegal armed groups. Some of the legal operations suffer a similar fate: at best they may be obliged to pay extortion money and at worst they are taken over by criminal enterprises seeking to launder money.

Although the government has set up specialized prosecutors to tackle illegal gold mining operations and the funds these provide to illegal groups, their numbers are few. And the problem is huge, and growing.

The protests by informal gold miners, many grouped under the Confederation of Miners in Colombia, have forced the issue to the top of the national agenda. However, the government has so far proven unwilling, or unable, to give the Ministry of Mines and Energy or the National Mining Agency sufficient funding and backing to investigate and process all the claims being filed to register and legalize gold mining operations.

Nor has there been any success in updating obsolete mining legislation and incorporating the informal mining sector into the economy, ensuring taxes are paid, and environmental standards and labor rights respected. This, in spite of the fact that the informal mining sector makes up 78% of all identified mining operations in Colombia.

Instead, in areas such as Bajo Cauca, Chocó and Bolivar, gold is either level-pegging with or has overtaken cocaine to become the top earner for illegal groups.

Republished with permission from Tenacitas International.