A Return to El Dorado: The Opportunities and Risks Presented by Colombian Gold Mining
Friday, April 26th, 2013
Global demand for gold has reached historic levels. As a result, the value of Colombia’s gold deposits has skyrocketed, leading to a modern “gold rush” reminiscent of the time when Spanish explorers searched Colombia for the mythical El Dorado. The Ministry of Mines and Energy, Colombia’s mining regulator, has granted more than 1,600 concessions since 2004 to enter the country to explore for gold. President Santos has championed this initiative and declared mining one of Colombia’s five “locomotives” of development. While this new gold rush has the potential to stimulate economic development, it also has the potential to exacerbate Colombia’s long-standing internal armed conflict.
Armed actors within the state are also capitalizing upon rising gold prices, pushing gold even further into the center of Colombia’s conflict-resource nexus. Armed actors have long operated in areas characterized by isolation, large quantities of natural resources, high levels of inequality, low state presence, and weak land rights. They use gold to finance violence by extorting companies, looting resources, kidnapping employees of extractive multinational corporations (MNC), and more recently, laundering, and replacing, coca earnings. As the Colombian government prepares for its newest round of peace talks with the Revolutionary Armed Forces of Colombia (FARC), gold mining is conspicuously absent from the agenda. Yet as this report will show, gold mining is deeply relevant to the Colombian conflict.
Five researchers from Columbia University’s Center for International Conflict Resolution (CICR) investigated how MNC investment in gold mining has affected the Colombian conflict. The researchers conducted a study in June and July of 2012 in partnership with the United Nations Development Program (UNDP) in Colombia. Research was qualitative in nature and based on over one hundred interviews with a variety of actors, including local level community leaders, government officials—at the national, regional, and local levels—MNCs, non-governmental organizations (NGO), and international organizations. The research focused on eight sites in Nariño and Antioquia. These regions were selected because they represent two of the six region implementing UNDP’s Reconciliation and Development Program (REDES); and, secondly, foreign gold mining companies have significantly increased their presence in these departments in the last ten years. Research sites were selected to paint a comprehensive picture of the socioeconomic, political, and environmental impacts of gold mining.
The MNCs examined consisted of two large and two small enterprises active in Nariño and Antioquia. The first, AngloGold Ashanti, is the largest gold mining MNC in Colombia by area of titles or subsidiaries owned. The second large enterprise, Gran Colombia Gold Corporation, owns the only active gold exploitation site that the study covered. Solvista Gold and Miniatura are junior companies that expect to sell their titles after the exploration phase is completed.
From this research, the paper analyzes the impact of MNC gold mining on peace and conflict in the departments of Nariño and Antioquia. The investigations’ major findings are:
1. An emphasis on macro-level development over local development is eroding state legitimacy and creating social fissures in Colombia. The government pursues large-scale, multinational gold mining at the expense of local interests. Conflicts exist between large-scale and small-scale miners, between agricultural and mining communities, and between environmentalists and miners. Local actors feel that the national government privileges MNC interests over their interests and are unaware of their rights regarding gold mining. State legitimacy is then diminished and causes conflict and an atmosphere characterized by widespread insecurity and fear.
2. State monitoring of the mining industry is weak. The national government functions as a passive overseer of the mining industry and lacks capacity to manage all mining concession requests and to monitor lands under concession. Furthermore, major discrepancies among different government agencies exist. Lastly, there is widespread confusion among local stakeholders regarding national mining policies and practices.
3. The mining sector is becoming increasingly militarized. Armed actors regularly finance mines, extort miners, and sell gold to launder coca money. This status quo is disturbed when MNCs begin mining in areas where armed actors are present. The entry of MNCs can further increase militarization in mining areas as the Colombian national army and the private security firms protect MNCs in unstable areas, raising the potential for violent clashes.
4. MNCs have tremendous influence over the stability of the areas in which they mine. The government does not have the mechanisms to sufficiently address conflicts that arise when MNCs enter contested areas nor does Colombian law mandate extensive social regulation for MNCs. Thus MNCs implement sweeping policies that drastically influence the stability of the regions in which they mine.
5. UNDP has established a strong grassroots presence and enjoys a positive reputation in Nariño and Antioquia. UNDP’s REDES program operates robust grassroots programs in areas of conflict in Colombia, has developed a strong rapport with local community leaders, and is valued by the communities it supports. While REDES works on a number of topics, at the time of writing it was not comprehensively addressing mining issues.
Nariño and Antioquia
The arrival of MNCs has been polarizing Nariño where large-scale mining is new and unfamiliar. MNCs here are in the early exploration stage and have had little-to-no communication with communities. Interviewees from these sites, which consisted of town residents and miners, thus expressed widespread confusion about the companies’ intentions, frustration with their lack of participation, and fear for the future. In an environment that is generally unstable and insecure, such feelings of confusion, insecurity, and fear have great potential to spark violent conflict.
Unlike Nariño’s nascent gold industry, Antioquia’s gold sector is well established. In fact, from 1971 to 1990 Antioquia contributed more than 73.7 percent of domestic gold production. Thus, whereas communities and local government officials in Nariño can strategize the kinds of laws and regulations needed to prevent the harmful effects of mining, Antioquia has had to act retroactively. Furthermore, the gold mining industry in Antioquia has a markedly higher prevalence of informal miners and more armed actors involved in its gold supply chain. Relatedly, here as extortion is the norm, regulations are not enforced, 80 percent of gold production is informal, and security is rarely present, making the isolation of MNC activities even more difficult.
Agriculture and Multinational Mining
Agricultural production often declines as extractive industry activity increases. For communities that depend on subsistence farming, large-scale mining can threaten, or even destroy, their livelihoods. In regions like Nariño where land tenure is largely informal or shaped by violence, land and the right to grow food have become symbols for resistance and survival. For example, community leaders in Betania have developed food sovereignty as a key strategy for addressing issues of violence and poverty. However, farmers in Betania often turn to illicit farming or mining when legal agriculture ceases to be sustainable.
In addition to stimulating conflict between local communities and MNCs, foreign direct investment (FDI) in gold mining may also stimulate conflict within communities. Because MNCs negotiate with individual landowners to obtain permittance for exploration, the community as a whole is powerless to control its fate. For example, according to one interviewee, there may be individuals in Betania who would be willing to sell their land to an MNC, yet the majority of the community adamantly opposes the entry of MNCs for mining. Thus, the decisions of one or two landholding individuals have the power to dramatically change the social fabric, economy, and security of a community. Moreover, if the companies cannot reach agreements with landowners, Colombian law allows, through easement provisions, the government to grant companies forced access or expropriation provisions. Such approaches risk displacing dissenting individuals. No company has yet used these methods in Nariño—in fact, Gran Colombia Gold stated its unwillingness to resort to such actions as their capacity “to take” causes social tension; yet the fact that law allows them to do so heightens risk of conflict in communities opposed to mining.
The very entry of large-scale mining can cause social tensions in communities. For example, in Arboleda, the entry of large-scale mining precipitated violent protests. A community activist at a departmental-level mining forum summarized a common sentiment: “With the presence of large-scale mining comes the presence of armed groups, who bring outrage, violation of human rights, threats to leaders, land dispossession, death and displacement.” Indeed, the overwhelming concern of many interviewees is that increased interest in gold correlates fairly positively with increased militarization and violence. They claimed that communities like Arboleda that were historically or recently peaceful would see armed conflict increase as their strategic value grew. Still, even in the face of violent protests, MNCs that have already launched operations are unlikely to abandon their projects.
Indeed, no concession in Nariño is as polarizing as Gran Colombia Gold in Arboleda. In response to violence in 2011, Nariño’s governor and Arboleda’s mayor issued a joint statement declaring their opposition to Gran Colombia Gold’s mining project and other mining projects in agricultural territories: “[Potential] agricultural damages, negative economic impacts, and other general considerations have led us to oppose the continuation of [mining].” Governor Raul Delgado Guerrero has publically declared his support of small-scale mining and agricultural production, environmental resources, and the defense of rural, indigenous, and Afro-Colombian territories and culture over large-scale mining.
In Antioquia, gold mining similarly disrupts agricultural communities. San Roque and Caramanta, for example, have mixed economic traditions that rely principally on agriculture. Like Arboleda in Nariño, communities living in or close by these two cases are resistant to the introduction of mining. For example, in Tamesis, a town that neighbors Caramanta, is part of an opposition movement against Solvista Gold entering the area. While the community in Caramanta does not appear to have a sophisticated opposition movement like its neighbors, it is apprehensive about the community‘s future. In San Roque, Gramalote Gold Limited has purchased most of the land that it will use for exploitation from farmers. Individuals from San Roque pointed out abandoned farms and explained that, after receiving their compensation from the company, the former owners of those farms had left the area with their families.
Small-Scale Mining and Multinational Mining
The nature of small-scale gold mining varies widely, ranging from illegal gold mining with direct ties to armed groups, to fully legal gold mining enterprises. In practice, most miners interviewed for this report self-identified as either “legal” or “informal.”
Unable to meet the same environmental, financial, and legal obligations as big companies, legal miners sometimes resort to illicit activities like purchasing illegal explosives or selling gold through illegal channels, thereby further isolating them from the formal sector and depriving the government from royalty payments. Legal miners in Los Andes explained the difficulty of accessing legal explosives, commercializing their gold—they either have to cross the border to Ecuador or drive the dangerous road to Medellín—or accessing government support.
Communities that depend on informal mining often experience a dearth of public service delivery. Moreover, because many of Nariño and Antioquia’s mineral resources are located far from urban centers, mines usually live where state presence is weakest and armed group presence is strongest. Furthermore, the stigmatization of informal mining obstructs individuals from accessing public services with miners classified by the state as “illegal” and thus compelled to hide from the state. In some cases, however, small mining can significantly strengthen public service delivery. The mining cooperative in La Llanada, for example, has encouraged the investment of mining revenues into the funding of public services, thus reinforcing a mutually beneficial relationship between the municipal government and the mining community.
Informal and illegal miners repeatedly cited their desire to legalize, but claimed the bureaucratic process was “impossible”—often taking more than five years and requiring information impossible for peripheral economic actors to produce. Moreover, legal obstacles facing informal miners cause fear of penalization and confusion about the concession process. Very few small-scale miners in Nariño and Antioquia understand the legalization process, or have the capacity to access it. This preferential concession process amplifies existing socioeconomic cleavages between the corporations and the poor, and drives the communities’ perception that the state does not represent them.
Indeed, the national government has expressed concern that “informal” small-scale gold mining funds armed groups. Thusly, official government policies conflate mining with the armed conflict and shut down these “informal” miners. According to a mayor of a mining town, “The general position is that the state prevents the MNCs from negotiating with small-scale miners.” Shutting down these “informal miners” has driven some miners to begin growing coca. Informal miners and activists are convinced that this “criminalization of artisanal mining” is part of the government’s strategy to “turn the country into a large-scale mining giant.”  As land under concession to MNCs often includes territories already inhabited by miners, this risks increasing internal displacement.
Many small-scale informal miners, especially in Nariño, have found themselves increasingly at risk of suffering an amparo administrative—i.e. penalization under the 2010 reforms. Though none of the miners interviewed for this paper reported being directly removed or arrested, researchers heard dozens of secondhand accounts. By the end of 2011, for example, an official claimed to have closed around 330 unlicensed gold mines and arrested more than 1,230 people. Often carried out by the military, this punitive response to informal and illegal gold mining directly contrasts with the military support that MNCs receive.
National government officials, mining executives, and some miners see MNC presence as a way to mitigate the legal, economic, and functional difficulties that face small scale and informal miners. A spokesperson for AngloGold Ashanti Colombia stated, “In the Department of Nariño, AngloGold Ashanti Colombia has built a good relationship based on support and collaboration with legal mining cooperatives…” Some miners similarly espoused the advantages of MNC presence. One miner explained that because MNCs have relatively more rights, money, and security, “they can support the illegal miners, who are currently being investigated.” This miner emphasized the ways in which MNCs could help the local community, citing promises to fix the roads, provide education, preserve the environment, and offer employment.”
Despite such sentiments, companies’ failure to communicate with small-scale miners causes opposition to MNC mining. A miner opposed to current MNC mining in Los Andes indicated, “We, the small miners…don’t want to sell, but we are open to what the MNCs have to say. We want to be consulted with, we want a real dialogue…” This statement appears to demonstrate that many miners may have been willing to sell to AngloGold Ashanti, but the company’s failure to engage in negotiation or communicate the advantages of multinational mining to small-scale miners has driven this possibility even farther afield.
In Antioquia, informal economic activities like drug trafficking, illegal mining, and illegal logging are commonplace. The arrival of the guerrillas in the 1970s and paramilitaries in the 2000s placed these illegal economies within the larger context of the armed conflict. Furthermore, mining zones have high levels of informality in land tenure, putting individuals who mine or inhabit gold rich lands at high risk of displacement. In Anorí and Segovia especially, mining has had a direct influence on all economic development; in many municipalities in this gold mining region, the murder rate is among the highest in the world. Police protection and judicial capacity are still weak and largely complicit in local war economies. Unregulated small-scale mining causes many problems, including environmental degradation, high levels of corruption, and violence.
Small-scale miners in this region struggle to formalize their mining activities. For example, miners in Bajo Cauca cited a variety of reasons for the relative underdevelopment of small-scale mining including high degrees of multinational influence, punitive national laws, weak state presence, weak regulation, high levels of violence, isolation from the political space, centralized regulatory collection, illegal mining legislature, distrust of the state, and a military build-up against small-scale mining all inhibited growth of the small-scale mining sector. Miners expressed widespread distrust of the national government, which is largely perceived as illegitimate. One miner in Segovia said, “The reality in Bogotá is not the reality in these mining zones.” Thus, few miners understand the government’s preference towards criminalizing and militarizing mining zones in Antioquia over providing public services, investment, and regulation. Again, the prevalent concern is that, “The national government wants to get rid of [small-scale mining] for MNCs.”
Unions in the extractive sector and community level activists opposed to mining are particularly vulnerable to threats, intimidation, and murder. Recent reports suggest that at least twenty trade unionists from the mining and energy sector suffered attacks or attempted assassinations in 2010 and 78 percent of the crimes against trade unionists were committed in mining and energy areas.  In Segovia, the assassination of Rafael Tobón Zea, president of the Regional Union Mining and Energy Workers in 2011, coupled with continued violence and threats against union leadership, have led many to assume that the corporation may be directly or indirectly responsible. Although Gran Colombia Gold vehemently denies complicity in Segovia’s violence, its preponderance of force though “both public and private security mechanisms” to protect their mining sites contributes to the increasing militarization of the region.
Afro-Colombian and Indigenous Communities
While a procedure for Free Prior and Informed Consent is incorporated into Colombian law, this law is extraordinarily complicated, and very few individuals interviewed for this report properly understood their rights under it. An indigenous leader interviewed for this report claimed, “if the government says that the project is important to the country and communities say no, the companies get to go ahead anyway.” Though company officials deny that they have violated previous consultation laws, and though the researchers found no direct evidence of it, there is a pervasive perception that violation is commonplace.
Nariño has one of the largest indigenous and Afro-Colombian populations in Colombia. According to a local indigenous leader, a particular problem faced by these populations in Nariño is that approximately only 49.45 percent of the department’s collective territory is legally guaranteed prior consultation. This problem is amplified by the fact that collective territory itself covers 63.12 percent of the department. According to local officials, the discrepancy in the lack of protective titling is the result of bad census information, a weak information register, and incomplete maps.
Indigenous communities can protect themselves from the entry of MNC mining by becoming an indigenous reservation—i.e. a resguardo. In Betania, for example, the indigenous community is trying to legalize itself as a resguardo in order to “protect the earth” from incoming mining companies. According to the law, communities retain the prerogative to petition the government to declare an area as indigenous, black, or mixed as appropriate. When legalized, the communities living within the boundaries will receive the rights guaranteed to legal owners of communally-owned land—namely, the right of prior consultation. Still, indigenous leaders are skeptical that resguardo status would bar MNCs from entering Betania to mine. As an indigenous leader expressed, “In many cases the government doesn’t follow laws, I think there are many government laws but not in reality…the moment they find [gold] they won’t respect any laws.” Thus, despite the fact that laws exist to nominally protect indigenous communities, individuals feel so abandoned by the national government that they do not believe its laws would offer protection.
This research has revealed that FDI in the gold industry is a driver of conflict and substantial reform is needed to ameliorate the situation on the ground. One of the most important observations is that the nature of the conflict differs according to an area’s cultural and geographic background. This observation may be reduced to one simple question: does the area at issue have an agricultural or mining history? This investigation has shown that in agricultural areas, such as Arboleda in Narño, conflict occurs when companies arrive and perform exploration because mining is not a part of the culture and is viewed with suspicion and hostility. However, in areas with a history of mining, such as Segovia in Antioquia, conflict transpires between small artisanal miners and large companies who have received concession rights from the government on this very land.
This paper has shown that conflict is driven by the national government’s pursuit of FDI at the expense of local communities, a poorly designed and shortsighted mining law, an overzealous desire to cater to the needs of large companies, weak government monitoring capacity, an increasingly militarized mining sector, and MNCs’ deficient understandings of the social situation on the ground. The proposed solutions include reforming the Mining Code, making changes in the government both administratively and philosophically, greater action on the part of the international community, and improved CSR on the part of mining companies. Colombia has suffered from the “natural resource curse” for several hundred years—this has caused the displacement of millions and the deaths of tens of thousands. As the country looks forward, it should be careful not to pursue development at the expense of local individuals and communities. If Colombia avoids the negative social impacts of mining, FDI has the potential to lead to peace.
Julien Barbey is a second year MIA student concentrating in International Finance and Economic Policy and specializing in International Conflict Resolution.
Aly Jiwani is a second year MIA student concentrating in International Security Policy and specializing in International Conflict Resolution. A native of Mumbai and Atlanta, Aly is an avid fan of cricket and hopes to enter the field of political risk.
Pushkar Sharma is a second year MIA student concentrating in Human Rights and specializing in International Conflict Resolution. Born to Indian parents but raised in Skokie, Illinois, he was the team leader for this report and brought his previous consulting experience into managing the project.
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Delaney Simon is a second year MIA student specializing in International Security, Conflict Resolution, and Gender Policy. Delaney has worked at the Saltzman Institute of War and Peace Studies for the past three years and, along with co-author Pushkar Sharma, was a Fellow and Departmental Research Assistant for the Center for International Conflict Resolution during the 2012 to 2013 school year. Delaney holds a BA from Barnard College, Columbia University where she graduated cum laude and as a member of Phi Beta Kappa.
Tory Webster is a second year MIA student concentrating in Human Rights and specializing in International Conflict Resolution. She was the heart of this study and her unquenchable thirst for knowledge infected her co-authors. Tory arrived to Colombia one month before the rest of the team and spent time in high security risk areas with an NGO.