BUENAVENTURA, Colombia — Over the last three years of economic turmoil, markets have been predictable in one respect: When bad news hits, gold prices skyrocket. So when stock markets around the world plummeted on Monday, Aug. 8, reacting to the sovereign debt crisis in Europe and one rating agency's downgrade of the United States, gold futures hit a record high. By the close of business Monday, they had surged to a record $1,782.50 an ounce, up 4.3 percent -- almost as much as the S&P 500 stock index was down.
COMMENTS (7)
More...
Some 2,500 miles away from Wall Street, the gold boom has fueled a different kind of crisis: a crisis of opportunity. From 2006 to 2010, Colombia -- Latin America's largest gold producer since 1937 -- more than tripled its production to 59 tons per year. Next year, it intends to double the amount mined in 2009, attracting investment from top international firms such as AngloGold Ashanti and Cambridge Mineral Resources. But multinationals aren't the only ones getting in on the action: Leftist rebels, drug cartels, and regular old criminals are also edging for a piece of the multibillion-dollar annual trade. As commodity prices have gone up and up, and as drug trafficking has gotten more difficult, gold has become the new cocaine.
Armed groups of every sort are leaping at the chance to control Colombia's latest booming business. The sector has grown so fast that regulations and monitoring efforts are struggling to catch up. There are simply too many applications for new operations and too few trained eyes to scrutinize their legality. Local authorities can often easily be co-opted for a profit. And best of all, the product -- gold -- is not illegal; it can be exported freely through front companies or middlemen.
"The mines attract all manner of armed actors," says Victor Hugo Vidal, a leader of the local chapter of the Process of Black Communities in Colombia, a regionwide organization that promotes social justice and monitors the mining sector on the Pacific Coast. "The same guy who runs the narcotics trafficking [in the area] probably runs the mine."
Colombia is hardly the first country to see its armed groups diversify into the mining business. In Central Africa, the Democratic Republic of the Congo's low-level civil war has long been funded by the export of copper, gold, and other precious metals. Diamonds funded the Sierra Leonean civil war, and timber fed years of Liberian strife. But for Colombia, a vastly more developed state that in recent years has racked up impressive victories against narcotraffickers, the gold boom represents a new threat to the country's hard-won stability.
The Colombian government is well aware of the danger. Last September, President Juan Manuel Santos announced that leftist guerrillas were infiltrating the mining sector. The Revolutionary Armed Forces of Colombia (FARC) and the smaller National Liberation Army (ELN) were using illegal mining as a "means of funding" their operations, he warned. Emails discovered on the computer of FARC military chief Mono Jojoy, seized this January after his death at the hands of Colombian security forces in September 2010, confirmed the rebels' participation.
The government responded quickly to the news by shutting down its overburdened mining license system in February. In May, the mining minister announced an investigation into corruption in the sector. And in June, the hold on new titles was extended through 2012. Santos has promised to try to pass a new law in coming months to improve mining regulations and redistribute mineral profits to local governments.
SUBJECTS:
(7)
HIDE COMMENTS LOGIN OR REGISTER REPORT ABUSE