COLOMBIA:
Foreign Firms Cash in on
Generous Mining Code
By Chris Arsenault
OTTAWA, (IPS) -
These are prosperous
times for Canadian
mining and oil companies
extracting resources
from Colombia.
"We have at least four
exploration wells to be
drilled throughout
Colombia with large
value additions for our
company," said Scott
Price, a spokesperson
for Solana resources, an
oil and gas company
headquartered in
Calgary, Alberta.
The company's Colombia
production increased
almost three-fold
between January and
September 2007 to 1,450
barrels of oil
equivalent per day, with
more lucrative
investments in the
conflict-beset
southeastern Putumayo
region, set to start
producing in 2008.
But it isn't just
untapped oil reserves
drawing Canadian
extraction companies
into Colombia. "We think
the fiscal legislation
governing oil
exploration is very
attractive, far more
attractive than what is
being offered in
Canada," Price told IPS.
The drafting of
Colombia's laws
governing oil and mining
has come under scrutiny
from trade unionists and
human rights activists,
who allege that CIDA,
the Canadian
International
Development Agency,
helped write the
legislation to advance
the interests of
Canadian companies
operating in the
country.
Beginning in 1997, CIDA
-- the international
assistance arm of the
Canadian government --
partnered with Martinez
Córdoba and Associates,
a Colombian law firm
representing several
multinational companies,
and CERI, the Canadian
Energy Research
Institute, an industry
think-tank based at the
University of Calgary,
to rewrite Colombia's
mining code.
Once the new code had
been drafted by CERI,
CIDA and Colombian
lawyers financed by
Canadian tax dollars, it
was submitted to
Colombia's Department of
Mines and Energy (UPME).
The code became law in
August 2001 after muted
opposition from some
Colombian politicians,
including the Senator
Gustavo Petro.
The new mining and
energy legislation,
completed in 2001,
constituted a "Canadian
manipulation to benefit
foreign companies to the
detriment of
Colombians," said
Francisco Ramirez,
president of
SINTRAMINERCOL,
Colombia's State Mine
Workers Union, during a
2006 interview in his
heavily guarded Bogotá
office.
Ramirez has escaped
seven assassination
attempts, which he
blames on right-wing
paramilitaries hired by
mine companies
attempting to thwart his
activism.
"The new code
flexibilised
environmental
regulations, diminished
labour guarantees for
workers and opened the
property of
afro-Colombian and
indigenous people to
exploitation," Ramirez
told IPS.
According to CIDA's
summary of its project,
"Canadian energy and
mining sector companies
with an interest in
Colombia will benefit
from the development of
a stable, consistent and
familiar operating
environment in this
resource-rich developing
economy."
"We had a five-year,
11-million-dollar
project in Colombia,
which ran from 1997 to
2002, to help Colombia
strengthen its
institutional capacity
in both the Ministry of
Mines and Energy and the
Ministry of the
Environment and the
regulatory agencies
these agencies worked
with," said a senior
official with CIDA, who
spoke by phone with IPS
on the condition of
anonymity.
While the new code came
into effect in 2001, the
impacts for Canadian
companies have been more
acute in the last few
years. "The situation
with security has
consistently improved,"
said Price, in
explaining his company's
recent lucrative
investments and the time
delay between the
passage of the code and
new investments.
One of the new code's
most controversial
changes concerns the
royalty rates paid to
the Colombian government
by foreign mining and
energy companies
exporting non-renewable
resources.
Prior to the CIDA-backed
legislation, which came
into effect in August
2001, royalties were set
at a minimum of 10
percent for mineral
exports above 3 million
tonnes per year, and a
minimum of 5 percent for
exports below 3 million
tonnes. This was set by
article 16 of law 144 in
Colombia's 1994 mining
code.
Today, under Article
227, the royalty tax for
private owners of
Colombian subsoil has
been reduced to 0.4
percent, regardless of
how much material is
extracted. Royalties are
intended to allow the
government to finance
public services like
schools and hospitals.
Critics of the mining
code say that cutting
the royalties means less
money for Colombia's
development, an ironic
assertion considering
the project was
partially financed by
Canada's development
agency.
Some officials have
deemed CIDA's activities
as "Canadianisation".
But, according to Jamie
Kneen, communications
coordinator for Mining
Watch Canada, a
union-funded advocacy
group, that wouldn't be
accurate.
"Canadian royalty rates
vary but they tend to be
more like 3-4 percent,"
or 10 times higher than
what is permitted for
many Colombian
operations, Kneen told
IPS.
"The CIDA-backed code
also contains some
articles that are simply
unheard of in other
countries," said
Ramirez. "If a mining
company has to cut down
trees before digging,
they can now export that
timber for 30 years with
a total exemption on
taxation."
The new code also
increased the length of
mining concessions from
25 years to 30 years,
with the possibility
that concessions can be
tripled to 90 years.
On a visit to Bogotá in
July this year, Canada's
Conservative Prime
Minister Stephen Harper
told reporters,
"Canadian expertise
compliments Colombian
economic strength in
areas such as mining,
engineering, and oil and
gas."
Activists are left
wondering whether
Canada's development
agency is aiding
multinational mining
companies rather than
Colombians.
In a report issued last
July, the London-based
rights watchdog Amnesty
International warned
that Colombia's
decades-long armed
conflict "provides a
useful cover for those
seeking to expand and
protect economic
interests."
It cited a long list of
labour activists who
have been the target of
attacks in the health,
education, public
services, agricultural,
mining, oil, gas, energy
and food sectors.
According to Colombia's
National Trade Union
School, 2,245 trade
unionists were killed
between January 1991 and
December 2006, while 138
fell victim to forced
disappearance and 3,400
were the targets of
threats. This makes
Colombia "one of the
most dangerous places in
the world for trade
unionists," says
Amnesty.
Another leading
international human
rights group, the New
York-based Human Rights
Watch, says that
three-quarters of the
attacks were committed
by the far-right
paramilitary groups that
are allied with
government forces.
Local trade unionists
say that 87 percent of
the nearly four million
people displaced by
Colombia's armed
conflict over the last
two decades were fleeing
municipalities in mining
regions. Eighty-nine
percent of the trade
unionists who have been
murdered were active in
those same
municipalities.
|
