Illegal mining Colombia’s new bane – by Paul Harris (Globe and Mail – May 9, 2013)

Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Canadian junior miners on front lines as criminal gangs, demobilized paramilitaries and guerrilla groups mine gold outside the law

MEDELLIN, COLOMBIA — In Segovia, a prosperous Colombian town of 50,000 people in northeastern Antioquia, the shops are closed by 6:30 p.m. and the streets empty. Segovia is a boom town, one of the country’s richest gold production centres, but tension is in the air as criminal gangs, demobilized paramilitaries and guerrilla groups flock to the area to mine gold illegally.

In Colombia, gold is the new cocaine as outlaw groups increasingly move into mineral-rich parts of the country on their own terms to take advantage of the metal’s strong price.

“The relatively high price of gold, the fact that the final product is legal and its production sources cannot easily be traced, means that illegal groups can operate large, profitable operations without the risks involved in the drug trade,” said Daniel Linsker, vice-president of global services for Latin America, at Control Risks, an international business risk consulting firm.

It’s estimated that illegal mining accounts for most of Colombia’s gold production. Production was an estimated 66 tonnes in 2012, according to the country’s National Mining Agency. About 10 tonnes comes from legal mines and about 10 tonnes from scrap such as old jewellery, meaning more than 40 tonnes is produced illegally, estimates CIIGSA, one of Medellin’s gold refineries.

For the many Canadian and international junior mining firms operating in Colombia, illegal mining threatens the development of a legitimate, modern gold mining sector. At least 50 Canadian-listed juniors are exploring for gold in Colombia and several said they have seen illegal miners invade their exploration properties.

“The excavators got closer and closer and then overran the property,” said one executive with a Canadian junior operating in Bolivar department who requested anonymity due to safety concerns. “We counted over 200 excavators. You have to leave because you get no support from the government,” he added.

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