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Written by October 27 2017 0

Medellin-based multinational foods manufacturer Grupo Nutresa announced October 27 that its third quarter (3Q) 2017 net consolidated profit rose 3.6% year-on-year, to COP$324 billion (US$107 million), while gross profit rose 3% year-on-year, to COP$2.8 trillion (US$930 million).

Sales in Colombia grew 3.1% year-on-year, to COP$4 trillion (US$1.3 billion), while consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) margin was 12.5%

Sales abroad -- excluding sales in “socialist” Venezuela – rose 5.8% year-on-year, to COP$2.3 trillion (US$797.7 million), representing 37% of total sales.

Consolidated revenues (not including Venezuela) rose 2.6%, to COP$6.4 trillion (US$2.1 billion), “the result of sales growth in the local [Colombia] market and a solid and sustained growth in international revenues,” according to Nutresa.

Net post-operatng expenses totalled COP$187 billion (US$62 million), “14.8% less than the same term in 2016, due primarily to the treatment of the investment in Venezuela as a financial instrument starting October 1 of such year,” according to the company.

Meanwhile, Nutresa for the seventh straight year entered the Dow Jones Sustainability Index and “continues to be the only company in the food sector from an emerging market to be part of this global index,” the company noted.

“In the economic dimension, [the company] obtained the maximum score in terms of health and nutrition, materiality, risk and crisis management, and tax management. In the environmental category, Grupo Nutresa received the highest score in environmental reporting and packaging. Finally, in the social dimension, it achieved the highest valuation in human rights,” according to the company.

Grupo Nutresa describes itself as “the leader in processed foods in Colombia (60.5% market share) and one of the most relevant players in the sector in Latin America, with consolidated sales of US$2.8 billion in eight business units: cold cuts, biscuits, chocolates, Tresmontes Lucchetti [Italian foods], coffee, retail food, ice cream, and pasta.”

The company has a direct operating presence in 14 countries and international sales in 72 countries.

 

Written by October 24 2017 0

Toronto, Canada-based PharmaCielo announced October 24 that it has become Colombia’s first medical-marijuana producer to win a license to cultivate cannabis with “unrestricted” percentages of tetrahydrocannabinol (THC) and cannabidiol (CBD) alike.

As a result, PharmaCielo becomes “the world’s largest licensed producer,” according to the company, which has its marijuana nursery, propagation and processing center in the Medellin suburb of Rionegro. The company first won a Colombian manufacturing license in 2016.

“To say that we are excited is an understatement, as to date the Colombian government has issued licenses only for the cultivation of non-psychoactive cannabis containing little-to-no THC,” said Federico Cock-Correa, CEO of PharmaCielo Colombia Holdings.

“Receipt of the dual licenses for psychoactive and non-psychoactive cannabis containing THC and CBD, combined with the fact that we have Colombia’s only fully functional cultivation and processing facility inspected and approved by the government, allows PharmaCielo the opportunity to become Colombia’s first and leading producer of medicinal-grade oil extracts.”

The cultivation licenses that enable the propagation of the full range of cannabis varietals “enables the company to develop a complete vertical offering of standardized, medicinal-grade formulations containing all active elements, including levels of THC greater than +1.0%,” according to PharmaCielo.

“PharmaCielo is now positioned as Colombia’s first unrestricted producer of medicinal-grade oil extracts and related products and is capable of providing reliable, standardized relief and wellness formulas for patients in need, including those requiring higher levels of THC.”

The Rionegro facility includes 12.1 hectares (1.3 million square feet) of open-air greenhouses ready for cultivation. “The facility has been independently reviewed and certified by the government as part of overall licensing, and in the future, will supply plant seedlings to over 1,000 hectares (2,500 acres) of contract growers’ open-air greenhouses for final cultivation,” according to the company.

“Over the past year, since we were granted our initial license, we have invested considerable effort and resources into building the infrastructure required for cultivation and processing of cannabis oils as well as working together with rural communities to help build a new Colombian agricultural sector to join coffee and flowers,” added PharmaCielo president Patricio Stocker.

“We intend to immediately begin cultivation, processing and scientific testing of highly standardized, premium-quality cannabis oil extracts and related products demanded by the international marketplace. We expect to initiate sales and distribution of finished products to the global marketplace in 2018, to the benefit of all stakeholders,” Stocker added.

Earlier this year, the company announced a partnership agreement with Cooperativa Caucannabis (comprised of 63 indigenous farmers), based in the department of Cauca, which separately applied for a cultivation license for a new greenhouse facility to be jointly operated with PharmaCielo.

“The members of Cooperativa Caucannabis have since been certified by the government as independent small growers and expect the government’s response to their application in the coming days,” according to PharmaCielo.

Written by October 18 2017 0

The U.S. Agency for International Development (USAID) announced October 18 that it’s teaming-up with European-based gold buyers to promote environmentally, economically and socially responsible gold mining in Antioquia specifically and Colombia generally.

Noting that gold production in Colombia is up year-on-year -- and development projects underway are expected to triple output -- USAID nevertheless cited discouraging statistics indicating that only 12% of Colombian gold currently is produced safely and legally.

But new projects such as the European “Better Gold Initiative” (BGI) spearheaded by the Swiss Better Gold Association (SBGA) and the Swiss Secretary of State for Economic Affairs (SECO) could help boost safe and legal production – while also bringing greater benefits to more miners, according to USAID.

Switzerland hosts Europe’s four biggest gold refineries, which produce an estimated two-thirds of global finished gold, the agency noted.

The BGI would complement the USAID-sponsored “Oro Legal” (Legal Gold) program, which aims to convert many small, artisanal, illegal miners to legal mining, according to the agency.

“We establish contacts between small producers of legal gold and the gold refiners,” explains BGI director Thomas Hentschel. “Once they agree on a price, we move to the export phase, and with partners in the supply chain we seek companies that pay a special price and offer an additional incentive of up-to-US$1,000 per kilo, which [miners] can invest in social infrastructure, technical assistance and technology to substitute for the use of [toxic] mercury,” Hentschel added.

BGI already works with certification organizations including Fairtrade, Fairmined and the Responsible Jewelry Council.

However, SBGA is developing a parallel gold-buying strategy that includes 16 criteria for mining responsibility -- including environmental protection, labor rights, social responsibility and community relations.

Miners that comply with these criteria are considered “responsible gold producers” via a certification scheme that’s “less demanding and more flexible than existing certification systems,” Hentschel added.

In Colombia, the BGI scheme is already advancing toward certification with two companies in the department of Caldas, while BGI officials expect to see more miners in the Bajo Cauca region of Antioquia joining soon.

The goal is to achieve BGI certification and export of at least one tonne per year of qualified gold over the next four years, according to USAID.

Legal Gold More Profitable: USAID Study

Meanwhile, USAID noted that while Colombia has exported an annual average of 60 tonnes of gold in recent years, only 12.5 tonnes/year (20%) have been produced by legal miners. The other 80% of production by illegal miners fails to pay required royalties, taxes or obey environmental and labor-protection laws, USAID noted.

What’s more -- contrary to popular belief -- illegal miners lose between COP$18 million (US$6,000) to COP$30 million (US$10,000) per kilo of gold produced, compared to what they would earn via legal mining, according to a new USAID study.

The study examined a more-or-less typical illegal underground mining operation with seven employees working 25 days per month, extracting one kilogram of gold per 300 tonnes of rock mined each month.

That study employed baseline data including current international gold prices, the relative inefficiency of artisanal mining, the price paid by illegal versus legal gold buyers, and the relatively high price of mining explosives in the black market. Eliminating the high cost of illegal explosives would by itself cover much of the cost of converting to legal mining, the study found.

In the legal market, a package of “Indugel Plus” mining explosives including 154 sticks, 100 initiators and 200 meters of cord today costs about COP$700,000 (US$235), whereas the black-market cost oscillates between COP$2.5 million (US$830) to COP$5 million (US$1,600), the study found.

“With the money saved by buying legal explosives, miners could pay social security to their workers and make advances in environmentally responsible and safe mining,” explained Beatriz Duque Montoya, USAID’s “Oro Legal” coordinator.

Buyers of legal gold today pay miners 97.5% of the London gold reference price. But miners lacking certificates-of-origin get only 82% of the London reference price, the study found.

“If we assume that a small legal miner produces one kilogram of gold per month and the international reference price is COP$120,000 [US$40] per gram, then this miner would receive COP$117,000 [US$39] per gram or 97.5% of the reference price,” Duque said.

“On the other hand, the illegal miner would get, optimistically, COP$98 milllion [US$32,000] per kilo or 82% of the reference price. In a more realistic scenario, the illegal miner would obtain only 70% of the reference price, or COP$84 million [US$28,000] per kilo, which means that in the process of commercialization, the illegal miner would lose between COP$18 million [US$6,000] and COP$33 million [US$11,000] per month,” she concluded.

Besides losing money from illegal commercialization, the illegal miner also cuts net gold yield by using toxic mercury, the study found.

“It is proven that by using [mercury], losses of 40% to 50% of gold are realized,” according to the study. In contrast, when mercury-free processing is employed, then gold losses are only 8% to 15%, according to the study.

What’s more, if miners can achieve BGI certification, then they could earn a bonus up-to-COP$3 million (US$1,000) per kilo of gold -- and if they further achieve Fairtrade, Fairmined or Responsible Jewelry Council certifications, then bonuses could rise to as much-as-COP$12 million (US$4,000) per kilo, the study added.

Written by October 07 2017 1

Avianca – Colombia’s biggest airline – hailed an October 6 decision by a District Court Tribunal in Bogota declaring a strike by some 700 pilots belonging to the Asociacion Colombiana de Aviadores Civiles (ACDAC) labor-union as illegal.

ACDAC-- the smaller of two unions representing Avianca pilots -- represents a tiny fraction of the more than 22,000 Avianca employees that work in 26 countries. The ACDAC union said it would appeal the Tribunal decision to Colombia's Supreme Court.

About half of Avianca’s daily flights have had to be cancelled because of the ACDAC strike -- stranding thousands of travelers and hurting many businesses in Colombia that depend upon business-and-pleasure tourism.

In its lawsuit against the strike, Avianca contended that airlines are a “public service,” which under Colombia’s constitution forbids “public” union strikes.

However, Avianca also pointed out that even if such strikes conceivably could be allowed under the constitution, the 700 members of ACDAC shouldn’t be allowed to dictate labor terms to the 21,000 other employees of the company.

“After 17 days of illegal cessation of activities by the ACDAC pilots, which has gravely affected travelers, the economy, competitiveness and connectivity of our country, the Tribunal recognized the illegality of the strike pushed by this union,” according to Avianca. “Avianca hopes that given this court decision, the ACDAC pilots will now return to work at the earliest moment.”

In parallel to the court action, an arbitration panel organized by Colombia’s Labor Ministry would require ACDAC pilots to return to work while negotiations over contract terms would continue, Avianca pointed out. However, ACDAC has rejected this contention.

“As pilots return to work, we will continue to operate under contingency plans, aiming to serve our passengers without delays and with the security that has always characterized our operations,” added Avianca CEO Hernán Rincón.

Avianca pilots are already among the best-paid employees in all of Colombia and enjoy numerous perks. The ACDAC union, however, is pushing for a wage-and-benefits package equivalent to a 60% hike in pay – wildly in excess of the wage increases realized by all other workers’ unions in Colombia, and vastly in excess of the national 4% annual inflation rate.

One contract change proposed by Avianca but opposed by the union is usage of cell-phone messages to notify pilots of flight delays or cancellations. Today, pilots get such notices via motorized couriers, an archaic and costly system.

In response, the ACDAC pilots are demanding that Avianca buy them new iPads or laptops -- just to receive company messages and do telecommuting work.

The ACDAC pilots also are demanding a 40 hours/month cutback in work hours – meaning they’d work 160 hours/month instead of 200.

They’re also demanding a COP$2 million (US$680) payment for upgrading personal office spaces, a COP$300,000 (US$100) per month subsidy for internet and phone connections, and extra pay for telecommuting work -- equivalent to 300% of what they’re paid while flying.

The pilots also are demanding unlimited free vacation flights for themselves and their families, free medical insurance for family members, lifetime free medical care upon retirement, a 70% reduction in income tax payments, and a COP$500,000 (US$170) monthly bonus if planes occasionally transport “dangerous” materials.

Finally, the pilots are demanding a COP$6 million (US$2,000) contract signing bonus.

Entry-level copilots at Avianca start out with salaries of COP$9.4 million (US$3,200) per month but can reach COP$17 million (US$5,790) per month after several years of seniority. Avianca pilot captains start out at COP$18 million (US$6,000) per month but salaries can go as high as COP$28 million (US$9,540) per month with more seniority.

Written by October 04 2017 0

Medellin-based FCM Global announced October 3 that it has become the first Colombian medical-marijuana producer to win all four required licenses for cultivation, processing, manufacture and export of “low-THC” cannabis-oil extracts.

“Recently issued by the Colombian Ministry of Justice, this export license complements FCM’s existing regulatory approvals, granted to the organization in August 2017, to legally cultivate, process, and manufacture low-THC medical cannabis oil extracts,” according to FCM.

FCM is “well-positioned to create CBD [cannabidiol hemp oil] extracts at a low cost of production and to distribute finished oils for domestic and international markets with legalized medical/research frameworks,” according to the company.

“Our purpose is to serve as a collaborative partner to pharmaceutical firms, research organizations, and other wellness-focused companies, and to help develop new scientific formulations and extracts that meet our clients’ specific needs within these critical sectors,” added FCM CEO Carlos Velasquez.

Colombia’s regulatory framework, “ideal equatorial growing location, and deep talent pool of medical cannabis experience makes it the best place on Earth to produce scalable volumes of terpene-rich cannabinoid extracts in an environmentally-friendly way,” according to the company, which has offices in Medellin and operations in the nearby suburb of La Ceja, Antioquia.

FCM’s “co-sourced Colombia” model “enables finished goods manufacturers globally to benefit from Colombia’s comparative advantages in medical cannabis (accelerated and lower-cost research, cultivation, and oil extraction) without sacrificing levels of control, efficiency, or quality,” according to the company.

PharmaCielo Update

Another Medellin-based medical-marijuana company that’s well-along in obtaining all required licenses is PharmaCielo (see "PharmaCielo Buys Marijuana Farm, Nursery in Rionegro," Medellin Herald, July 25, 2016.)

Aside from PharmaCielo and FCM Global, other Colombian companies obtaining some (but not all four) licenses include Cannavida, Ecomedics, Cannalivio, Econnabis and Pideka, while 22 other companies have petitioned for licenses, according to a recent report from Colombian business newspaper Portafolio.

The proposed licenses are for operations in Antioquia, Cauca, Casanare, Magdalena, Meta, Santander, Cundinamarca, Tolima and Valle del Cauca, according to that report.

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SILLETEROS PARADE 2016 by JOHN AND DONNA STORMZAND (click to enlarge)

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About Medellin Herald

Medellin Herald is a locally produced, English-language news and advisory service uniquely focused upon a more-mature audience of visitors, investors, conference and trade-show attendees, property buyers, expats, retirees, volunteers and nature lovers.

U.S. native Roberto Peckham, who founded Medellin Herald in 2015, has been residing in metro Medellin since 2005 and has traveled regularly and extensively throughout Colombia since 1981.

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