Colombia could be 'very good gold frontier' in near future

Monpirri says on Feb 14, 2008, 07:11:

This is the second business venture where Brazil shows interest in Colombia despite all the negative press that fallows Colombia.

Annette Taddeo for US Congress 2008

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jh816 says on Feb 14, 2008, 08:09:

Things are going to get real interesting in about 4-5 years. The production from the newly discovered deposit will start coming out (it's supposed to be one of the top ten largest in the world) and the production from these projects will be close to sale.

Since gold is priced in dollars, I'm not quite sure how the mechanics will work. Any ideas? The companies that mine the gold sell it for dollars or pesos directly? At any rate, Colombia's gold exports will skyrocket. I imagine much of the gold will be paid for in dollars and this will play huge games with the exchange rate.

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pedro says on Feb 14, 2008, 08:44:

Nothing to do with Brazil, Monpirri, except that their COO happens to be Brazilian and was interviewed there.

Anglogold is a South African company.

They were talking about 500k oz per year. Sold at $900 per oz, that gives $450 million per year in revenues.

I doubt this will have much effect on the exchange rate. Revenues go to the producing company which is South African, so they will not be repatriated to Colombia (except that portion which pays for the cost of production). There will surely be a government royalty on the gold production, but 5% or 10% of the sales receipts is not that material, considering Colombia's population ($450mm * 10% royalty = $50mm / 40 million population = $1.25 per head).

What it will do is provide jobs, infrastructure and technical know-how. And encourage more exploration. With modern techniques and lots of exploration drilling, there is the possibility of finding more huge deposits.

que nota!

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ColombianoGringo says on Feb 14, 2008, 09:40:

Great! Another natural resource to be stolen by the Colombian oligarchy and multinational mining companies . Of course, the local people will benefit from those great low paying jobs in dangerous conditions and all the environmental damage sure to be caused by the mining companies.

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podborski says on Feb 14, 2008, 09:46:

yeah, better let the government develop the mines, like they did in the USSR, those miners were never in danger and lived like kings.

(just in case you're not sure, that's sarcasm)

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ColombianoGringo says on Feb 14, 2008, 09:51:

I am not for government control of industry, nor am I anti-capitalist. However, this situation will end up in a giant cluster fuck where the local community will get nothing while whoever bribes the right people will end up making a killing off stolen royalties. Meanwhile, any occupational safety and environmental standards will be completely ignored by those running the operation. Sadly, this is pretty much business as usual in Colombia and most of the third world when it comes to natural resources.

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slguy says on Feb 14, 2008, 09:57:

I just LOVE when people start ranting about the "oligarchy". if someone would just toss in a few "bourgeoisies" I'd feel free to have a 60's-style flashback to the glory days.....1914, St. Petersburg

Before you throw me out, make sure I pay my bar tab

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ColombianoGringo says on Feb 14, 2008, 09:59:

slguy. The very rich familes in Colombia that control most of the resources are often referred to as "Oligarcas" because they effectively are. It is a very common and widely used term in Colombia.

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Monpirri says on Feb 14, 2008, 09:59:

Pedro, "Proposed Pipelines
In 2004, Brazil's Synergy Group announced that it would build a $700 million, 435-mile pipeline linking its Rubiales field to the Ocensa pipeline. The company hoped to complete the 80,000-bbl/d project by 2008. The Colombian government has also held discussions with Venezuela about a proposed oil pipeline to export that country's crude oil to Colombia's deepwater Pacific ports. The plan, backed by Chinese oil companies, would include 620 miles of new pipelines and utilize unused capacity on existing ones."
http://www.eoearth.org/article/Energy_profile_of_Colombia

Annette Taddeo for US Congress 2008

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slguy says on Feb 14, 2008, 10:05:

en espanol, posible.....but you were writing in english, no? not such a common term outside of france, or some of those similar bastions of capitalism. But- sorry I said anything.

"Of course, the local people will benefit from those great low paying jobs"

I'm curious about the qualifications of these folks you think are damaged by the creation of jobs where there were none, before. figure they'll be MBA's lining up to work the mines?

Before you throw me out, make sure I pay my bar tab

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Monpirri says on Feb 14, 2008, 10:11:

Colombia charms oil and gas investors
http://www.ft.com/cms/s/2/d7bb2ae2-3854-11db-ae2c-0000779e2340.html

Here a bit more: ... "Brazil and the Llanos Basin of Colombia. Brazil Projects ... gas marketing and business development including successful new ventures and acquisitions.

Texada Provides Update on Qualifying Transaction and South American Oil and Gas Concession Interests"
Friday February 8, 9:30 am ET
http://biz.yahoo.com/ccn/080208/200802080440944001.html?.v=1

Annette Taddeo for US Congress 2008

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ColombianoGringo says on Feb 14, 2008, 10:20:

"figure they'll be MBA's lining up to work the mines?"

So I guess uneducated people deserve to work for low pay in unsafe conditions while their surrounding environment is destroyed. Unfortunately, the people that would develop and run such an operation will likely have that attitude.

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slguy says on Feb 14, 2008, 10:31:

despite what folks like to believe, jobs have intrinsic value in almost any real-world economy. No matter what shade of rose your glasses are, pushing a shovel or swinging a pick is not an intrinsically valuable form of labor. It's worth what most jobs are worth - whatever people are willing to do them for.

I'm not addressing safety issues. Seperate discussion altogether.

I'm just saying that one shouldn't put perfume on a pig. Manual labor is what it is, and will always be. If a strong back is all that's required to do a given job, the intrinsic value of that job is pretty low. Why is this such a difficult concept to grasp?

Before you throw me out, make sure I pay my bar tab

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ColombianoGringo says on Feb 14, 2008, 10:46:

I am not so concerned about the fact that they will pay manual laborers poorly, but swinging a pick is not the only job at a mine. Machine operators, engineers and all sorts of other skilled laborers will also be paid poorly. Even so, that is not my only beef.

I don't see why safety and environmental issues are a separate discussion as they are central to this topic. Even ignoring those supremely important issues, the main problem is that while the mining companies and a few Colombians will make millions, the local community will see very few financial benefits. I am not sure how mining works in relation to royalties in Colombia, but when it comes to Oil, the local departments and communities are entitled to certain royalties. Sadly, these are usually stolen before they ever reach their intended recipients. So on top of the likely environmental and health problems they will have to deal with, the local communities will receive little to none of the compensation to which they are entitled. That sounds like a negative outcome to me.

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Monpirri says on Feb 14, 2008, 11:45:

Pedro, more interest in Colombia from our neighbor:
Avianca today!
http://poorbuthappy.com/colombia/post/will-avianca-actually-get-me-the...

Annette Taddeo for US Congress 2008

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jh816 says on Feb 14, 2008, 11:46:

ahhhh, gotta love the debates between the free market capatalists and reformists. Though I do agree that a level of social control is good, I've got to agree with slyguy here. Sure sometimes the system sucks and people get abused, but what's the next best alternative? Socialism didn't work too well for the Soviets, hasn't done much for Cuba, and we're starting to see that maybe Chavez's revolution isn't so great either.

Colombia's problem is that there are so many people unemployed or underemployed that this keeps supply and demand from increasing wages. There are just too many people out there willing to do the job for less. Hopefully, with good economic growth and foriegn investment, the country can lower the unemployment rate and wages will naturally come up.

Capitalism "is the worst system of government, except for all the others" (before anyone makes a fuss about misquoting Churchill, I think 'capitalism' goes rather well in the space)

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ColombianoGringo says on Feb 14, 2008, 12:01:

I have never suggested socialism or stated that capitalism is bad. However, capitalism and fairness to workers and local communities do not have to be mutually exclusive. If the mines were run in a manner that responsibly deals with environmental, workplace safety and local economic concerns, I would be all for it.

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slguy says on Feb 14, 2008, 12:43:

" I am not sure how mining works in relation to royalties in Colombia, but when it comes to Oil, the local departments and communities are entitled to certain royalties. Sadly, these are usually stolen before they ever reach their intended recipients. "

And this is the fault of who, exactly? Those evil mine operators? This is an issue that you need to take up with whoever misappropriates the royalties, in your opinion.

I don't mean to say that environmental responsibility and workplace safety are irrelevant- only that I was not addressing them. I was speaking to your "low paying jobs" complaint, only.

BTW- you can't have it both ways. You can't be in favor of capitalism, then complain that it doesn't utilize socialist precepts. "Fairness to workers" is what the market says it is, with respect to wages.

As I have said several times- Colombia could certainly benefit from broad unionization - but until the Colombian people make BROAD changes to their justice systems, and effect changes that raise the value of life in Colombia, it ain't gonna happen. As long as a $200 sicario can eliminate a union organizer, the problems will continue for unions.

Before you throw me out, make sure I pay my bar tab

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pedro says on Feb 14, 2008, 15:17:

CG -- "Sadly, this is pretty much business as usual in Colombia and most of the third world when it comes to natural resources."

CG, haven't you been paying attention to the news? Business as usual in third world countries lately is to

1) Invite a foreign resource company in who'll invest heavily and find your resources for you. Then
2) A socialist government comes in, rips up the contract and stakes a claim to the value created by the foreign company (cf Bolivia, Venezuela).

Think about how you'd feel if you bought a block of land and built your own house to live in. Once the house is complete, a government guy shows up and says "You're doing OK and there are so many homeless people. How about you find somewhere else to live, cause we need this house more than you do." How would you feel if that was your house?

que nota!

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ColombianoGringo says on Feb 14, 2008, 15:30:

Whoever said I supported nationalizing industries? I don't think that is a good idea. I simply pointed out the realities of these kinds of projects.

I am not against exporting natural resources, but simply believe that it should be done in a responsible and fair manner which benefits Colombia's economy and people. If that makes me a socialist or whatever other label anyone may want to throw at me, then so be it.

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durito says on Feb 14, 2008, 15:32:

I am an economist and capitalist at heart, but sometimes it doesn't work out best for the people. Some of the contracts signed by past Bolivian govt's were unbelievably beneficial to the multinational company. Now, those contracts gave gov't officials lots of stock in the companies, so they did wonderfully. For all the rhetoric Evo Morales has said (and I'm really starting not to like Evo), it's to be noted that as opposed to Venezuela, the oil companies in Bolivia mostly renegotiated their contracts and stayed.

The big oil companies clearly have expertise that developing countries need in order to maximize their profits -- but, they also have a long history of drawing up agreements with corrupt governments that don't benefit any of the people at all. Obviously, there is a middle ground that can accomplish both -- the profits are generally that good.

The fucked up thing about the Chavez regime that will come to light here as their economy implodes --- is that with a moderate capitalist gov't in recent years, Venezuela would be having perhaps the biggest economic boom in the world right now. Given that situation, surely even Exxon Mobil would have been easily willing to re-negotiate their contracts for the betterment of the Venezuelans as it'd be a win win situation for everyone.

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pedro says on Feb 14, 2008, 15:35:

CG, never attributed those words to you.

But you claimed that foreign companies are "stealing" resources. And asserted that was business as usual for third world countries.

I am just pointing out that several third world countries pulled some dishonourable tactics recently. They welched on their agreements and did genuinely steal foreign companies' assets.

que nota!

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bopenyan says on Feb 14, 2008, 19:16:

Colombiangringo is right. Gold extraction now basically involves the heap leaching process, in which vast parts of a mountain are blasted out, the ore (usually a 1/10 oz. per ton or less) is crushed and then a cyanide-arsenic wash is poured over a small hill of the crushed ore. The leach is collected and then electrochemically treated to extract the gold. Then, somehow, the cyanide-arsenic leavings are disposed of...er, safely. Usually the children of the locals suffer from this "safe" disposal, while the royalties go to the benefit of the children of those well connected. Gold is almost as bad as oil for its adverse impact on both local and national social norms. Colombians have suffered for centuries as a result of the lust for gold, from conquistadors to unrepetantly greedy politicos - time for the Colombian people to say no.

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pedro says on Feb 14, 2008, 19:27:

Bopenyan -- "Usually the children of the locals suffer from this "safe" disposal"

"Usually"... what percentage of the time would you say? I am interested in large scale commercial projects, not itinerant individual miners in Colombia. Could you cite some evidence to back up that percentage? Thanks.

que nota!

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gold digger says on Feb 14, 2008, 22:07:

Also, any birds or animals that drink the water die and there is always a spill. This can be human error or too much rain etc.

http://www.rainforestinfo.org.au/gold/spills.htm

Has anyone seen the oil leaks in Ecuador? One guy lit a cigarette while fishing and there was a big explosion that killed one guy and seriously burnt the other. All the Indians in the area have rashes and other strange things happening to them.

I have nothing against big mining companies but I wish they would put a few thousand dollars towards safety and environment.

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bopenyan says on Feb 15, 2008, 09:21:

Pedro

Newmont's operations and dumping of waste in Buhart Bay (reported in the New York Times and by many environmental activist groups) is just one. You may also want to google Cajamarca, as the New York Times has reported on unrest, demonstrations and barricades initiated by local villagers protesting the devastation caused by mining operations there.

For further information on the devastating impact of large scale mining, google "environmental impact large scale mining".

Also, in British Columbia, a proposed large scale goldmine using heap leachate process was sidetracked after environmental and first nations groups were able to provide convincing evidence that the proposed containment of tailings ponds was insufficient and would release toxins into rivers that provided an important source of food for the First Nations peoples residing there.

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pedro says on Feb 15, 2008, 10:23:

Bopenyan.

I asked you to justify your statement that there is "usually" environmental contamination, by giving some percentages and evidence of those percentages. You haven't done that.

It's as if I suggested that passenger flights "usually" end in a plane crash. When asked for evidence, I cite a couple of plane crashes. That's not convincing at all.

If you want to say there is a risk of environmental contamination, then obviously there is. If you want to say there is "usually" environmental contamination, I think you are wrong.

que nota!

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