Friday, November 15, 2019

Become part of our community

captcha 

Colombia-based Cemex LatAm Holdings announced October 24 that its third-quarter (3Q) 2019 sales of grey cement grew year-on-year, but profits declined.

According to Cemex LatAm – which produces and markets concrete and cement in Colombia, Panama, Costa Rica, Nicaragua, El Salvador, and Guatemala – 3Q 2019 produced a corporate-wide net loss of US$4 million, compared to net profit of US$19 million in 3Q 2018.

Operating earnings before interest, taxes, depreciation and amortization (EBITDA) in Colombia fell to US$20 million, down 25% year-on-year in U.S.-dollar terms or 12% lower in Colombian peso terms.

Net sales in Colombia year-over-year declined by 6% in U.S.-dollar terms but increased by 8% in Colombia peso terms, hitting US$127 million.

In Panama, operating EBITDA declined by 18% year-on-year, to US$14 million, while net sales fell 22% year-on-year, to US$45 million.

In Costa Rica, operating EBITDA fell 58% to US$5 million, both in U.S. dollar and local-currency terms. Net sales fell 25%, to US$25 million.

In the rest of its territories, operating EBITDA fell by 15% in U.S.-dollar terms or by 13% in local-currency terms, to US$14 million during the quarter. Quarterly net sales dipped 9% year-on-year, to US$51 million.

“In Nicaragua, the socio-political crisis continues without resolution and continues to affect the local economy including demand for cement,” according to the company. “Most of the highway projects sponsored by the government are in final stages of construccion -- and no new projects are replacing the prior projects."

For Cemex LatAm, corporate-wide consolidated prices in local-currency terms for domestic gray cement and ready-mix concrete declined by 1% and 2% year-on-year, while prices for aggregates increased by 1%, according to the company.

Commenting on the results, Cemex LatAm CEO Jesus Gonzalez said: “We are encouraged by the positive trends in Colombian cement demand and by our cement volume and price performance in this country during the first nine months of the year. Nevertheless, this positive trend in sales was not strong enough to offset the increases in coal, electricity and distribution costs in Colombia, and the much weaker markets across Central America.

“Despite this challenging environment, we are pleased with our free cash flow generation and debt reduction during the first nine months of this year. Our free cash flow reached US$50 million in this period, an improvement of 43% on a year-over-year basis. We reduced our net debt by US$62 million, from US$827 million as of December to US$765 million as of September [2019]”.


The 6th annual Medellin Bird Festival (organized by Sociedad Antioqueña de Ornitologia, SAO) kicks off October 10-14 with a colorful variety of birdwatching opportunities, expert conferences, special workshops and film festivals.


Colombia’s Agencia Nacional de Infraestructura (ANI, the national infrastructure agency) announced October 2 that the crucial “Vias del Nus” connecting Medellin’s northern suburbs to Atlantic ports will open for traffic by end-2020.

The 157.4-kilometers-long project includes 24.3 kilometers of four-lane divided highway, the twin-tube “Túnel de la Quiebra” tunnels, rehabilitation of 35.6 kilometers of two-lane highway between Cisneros and Alto Dolores, construction of a third lane along 2.7 kilometers of highway between San José del Nus and Alto Dolores and the construction of 15 bridges, according to ANI.

Once opened, “Vias del Nus” will become “ the main cargo outlet from Medellín to the ports of the Caribbean Coast,” according to ANI.

The new, COP$515.6 billion (US$149 million) tunnels will enable traffic to pass beneath the heretofore problematic Alto de la Quiebra mountain in just 10 minutes -- compared to the tortuous, 40-minutes-long climb-and-descent on the existing road.

Currently, the average traffic on the “Vias del Nus” corridor is 2,000 vehicles daily. But once the new highway is in operation, average daily traffic is expected to increase to around 17,000 vehicles, greatly improving freight movements between Medellin and the Atlantic with average vehicle speeds of about 80 kilometers per hour, according to ANI.

Each tube of the "Tunel de la Quiebra" will be 4.2 kilometers long, requiring excavation of tough batholitic rock. Linear progress is about 600 meters per month, with 7,500 meters of a total of 8,400 meters already excavated, according to ANI. 


Medellin-based power giant EPM on September 27 gave journalists a first public tour of the start of recovery work in the damaged machine room of the US$5 billion, 2.4-gigawatt “Hidroituango” hydroelectric project in Antioquia.

Having already reached crucial milestones including completion of the engineered spillway, raising the dam to its final height and draining water from the damaged machine room, EPM will by end-October 2019 open a new highway at the top of the dam -- bringing convenient mobility to residents in towns near the dam including the municipality of Ituango, according to the company.

At the same time, the company continues to make progress toward final installation of a second, crucial water-closure gate for the auxiliary diversion tunnel (GAD in Spanish initials), whose collapse last year forced temporary diversion of Cauca River water through the machine room, causing hundreds of millions of dollars of losses due to lost power revenues and infrastructure damages.

Meanwhile, opening of the main access tunnel to the machine room has now been completed, enabling heavy machinery to enter for repair work, according to EPM.

“To date, 80% of the caverns around the machinery, transformers, beacons and adjacent tunnels have been cleared,” according to EPM.

“Civil-works damage to infrastructure has been found in 20% of these inspected areas. As of December 31 of this year, we expect to have 100% of the complex of caves inspected and damages calculated, in order to continue with repairs.”

A nearby technical monitoring center meanwhile enables real-time evaluation of the behavior of the dam and the other works of the project.

“Currently the indicators show that the works and the rock massif [adjacent to the dam] are stable,” according to EPM. “All the typical leaks found in such projects are evaluated permanently and to date all remain within the ranges contemplated in the project design.”

The company continues to expect that initial power production from Hidroituango will start by end-2021, then gradually expand until reaching its full 2.4-gigawatts output capacity by 2024.

According to EPM, among the project’s enormous fiscal and environment benefits include:

Emissions reductions of the order of 4.4 million tons of carbon dioxide (CO2) per year -- 94% of the goal of Colombia’s entire electricity sector by 2030. “This represents a significant contribution to meeting the goals of Colombia in the commitments of COP21 [Conference of the Parties to the United Nations Framework Convention on Climate Change],” according to EPM.

“It will deliver about COP$85 billion (US$24.6 million) each year for transfers to Colombia’s regional environmental agencies [such as Corantioquia and Cornare in Antioquia] and 153 municipalities, including those in the area of the dam’s influence, which includes the Cauca River basin.

“Additionally, via regional taxes and other contributions to other entities, the project will generate approximately COP$10 billion (US$2.9 million) per year. During the operational life of the project, resources will be generated of the order of COP$8 trillion (US$2.3 billion).

“Colombia will receive national income taxes of approximately COP$240 billion (US$69 million) annually, which will correspond during the operation of the project in resources for the nation totalling about COP$18 trillion (US$5.2 billion).

“The project includes compensation and recovery of about 19,000 hectares of tropical dry forest and tropical rainforest in the 12 municipalities of the area of influence, which becomes an opportunity for [protection of] biodiversity of the territory.

“Within the framework of the environmental and social management plan and regarding connectivity, about COP$1.9 trillion (US$550 million) have been invested in the 12 municipalities in the area of influence, which has resulted in a valuable contribution to the progress of its inhabitants and to the transformation of a territory that has historically suffered from national government abandonment and violence by of illegal armed groups.”

Once in operation, “the energy supply from the project will allow a reduction close to 30% in the [national] cost of power during its first five years of operation,” according to the company.

In addition, “power generation from Hidroituango -- interconnected to the Caribbean coast -- will enable a more-than-20% reduction in power costs paid by users of the current thermoelectric power in that region.”

National power reliability also will improve -- without causing an increase of global-warming emissions that result from “firm” power plants running on coal, oil or natural gas, the company noted.

Hidroituango has a firm energy output capacity of 5,708 gigawatt-hours per year – “energy that can be produced even in the worst drought in history,” according to EPM, and without any CO2 emissions.

If not for Hidroituango, Colombia otherwise would need to build another750-MW thermal power plant to ensure reliable, 24 hours/day power-- with a consequent carbon footprint that would violate Colombia’s commitment to meeting CO2-reduction goals under the COP21 agreement, the company added.

What’s more, because “green” solar or wind power are only intermittent – they don’t work when the sun isn’t shining and when the wind isn’t blowing -- Hidroituango’s constant 2.4-gigawatts power capacity is equivalent to installing about 5 gigawatts wind power or 3.8 gigawatts of solar energy, EPM added.


Medellin-based electric power giant EPM on September 25 issued a bulletin pointing out that nothing in the latest Colombian Controller General’s report about the US$5 billion “Hidroituango” hydroelectric project in Antioquia finds any instances of corruption.

Nor does the Controller’s report point to any criminal or disciplinary actions that would result from the April 2018 collapse of a diversion tunnel that has forced a three-year delay in power sales from Hidroituango, along with many millions of dollars in infrastructure damage.

As for the Controller’s findings that the tunnel collapse is likely to cost EPM roughly US$569 million in lost sales and infrastructure recovery -- and possibly as much as COP$2.9 trillion (US$852 million) in loss of net present value – those calculations remain hypothetical, according to EPM.

“For legal reasons in the fiscal responsibility process, EPM explanations can only be delivered to [the Controller General] later; that is, during the fiscal investigation process. The company is convinced that, by that time, it will resolve satisfactorily all the doubts and concerns contained in the report,” according to EPM.

“Regarding the recognition of the costs derived from the contingency, it is necessary to wait until the amount [of insurance coverage] that the insurer will recognize and the corresponding schedule of insurance payments, which, as EPM reported [last week] will result from a rigorous analysis of the quantification of damages according to the conditions established in the policy.

“The company will promptly inform the nation of the results when the disbursed [insurance payment] resources enter EPM and go into the financial statements of the project.

“The [Hidroituango] works have met the technical specifications, construction plans and construction programs using technical rigor and administrative measures that are demanded of a megaproject of this size.

“In fact, at the time of the April 28, 2018 [tunnel collapse] contingency, project execution was on-schedule and within the estimated budget.

“The Hidroituango hydroelectric project remains technically viable and financially. It is indispensable for the energy security of Colombia and, just as important, has a note of insurance coverage issued by insurance company Mapfre [as noted last week] based, among other considerations, on not having evidence of negligence or malintention during construction of the project.

“For EPM, Hidroituango is a crucial infrastructure project for the development of the country. Its entry into commercial operation, which according to the current forecast will be a at the end of 2021, will generate 17% of the country’s energy, with clean, reliable, safe and low-cost technology, and will bring multiple benefits for Colombians.”

What The Report Actually Said

Colombia’s Controller General on September 20 first unveiled a report that questioned management decisions by EPM during construction of the Hidroituango plant. Those decisions ultimately could cost EPM at least US$246 million in infrastructure damages and another US$323 million in lost power sales, accodring to the report.

However, the actual costs of physical damage could rise by another COP$423 billion (US$124 million) if EPM ultimately discovers more damages to machinery and equipment, the report cautions.

“In addition, there are some [cost issues] whose amount is yet to be determined, such as the repair of cavities, the fracturing of rock, the installed steel shields, the civil works in the machine room and additional elements to be written off,” according to the report.

On the other hand, the Controller’s report fails to include trillions of pesos of damage-coverages that EPM now expects to recover following a decision by insurance giant Mapfre (see September 17, 2019 Medellin Herald).

Bottom line: Hidroituango’s actual infrastructure-damage and power-sales losses – covered by insurance – presumably could be excluded from the Controller’s current net-present-value calculations, now estimated at a negative COP$2.9 trillion (US$852 million).

One curious figure in the Controller’s report finds that EPM spent an extra COP$484 billion (US$142 million) to accelerate completion of the dam and the engineered spillway in the wake of a diversion-tunnel collapse last year. That tunnel collapse forced EPM to divert Cauca River water through the machine room in order to avoid a catastrophic dam collapse.

However, since EPM was going to continue building the dam and spillway in any case, it’s unclear how much of that US$142 million would have been spent no matter the impact of the tunnel-collapse contingency.

Another puzzling item in the report states that the Controller partly based its findings upon a heretofore-secret Universidad Nacional study on financial impacts of the tunnel collapse. But EPM has noted publicly thatt it had never seen this study and hence hadn’t been able to respond to its supposed conclusions.

According to the text of the Controller’s report, “one of the decisions taken by EPM that had the greatest impact on the project was the non-construction of the guides for the closing gates of the diversion tunnels.”

In addition, “the construction of the auxiliary diversion gallery [the water diversion tunnel that later collapsed] was contrary to the recommendations of the EPM Advisory Board, which always pointed out the need to conform to the original designs,” according to the Controller's report.

“On repeated occasions, the EPM Advisory Board expressed its disagreement with the so-called ‘Acceleration Plan’ and the construction of the Auxiliary Deviation Gallery [diversion tunnel], indicating that ‘the technical risks associated with acceleration are not acceptable for a project of this magnitude’ and, in addition, ‘there is still uncertainty that the multiple and delicate tasks remaining to achieve the diversion are executed in a timely manner.’

“The Board of Advisers always recommended adjusting [the project] to the original design [for diverting the Cauca River] in the first half of 2014 and, if necessary, recover [project construction] time by speeding up the construction of the dam, which was an alternative with much less risk than the acceleration of the diversion tunnel,” according to the Controller’s report.

Four years prior to the tunnel collapse, EPM had fallen behind in the original construction schedule, the report noted.

To compensate, EPM decided to invest about COP$1 trillion [US$293 million] in alternative measures aiming to recoup lost time and hence ensure timely capture of future planned electric-power sales. But when the diversion tunnel collapsed, those alternative measures turned into a costly failure, the Controller noted.

As a result, “the consolidated loss of profit from the project is estimated at COP$1.1 trillion [US$323 million]; and a presumed detriment to public equity was established at COP$2.9 trillion [US$852 million], corresponding to what is estimated as the destruction of value due to the greater investments made without entering into [timely] operation,” according to the Controller.

Prior to issuing the report, the Controller’s audit of the Hidroituango project took place between March 4 to July 17, 2019, involving “a multidisciplinary team of auditors composed of lawyers, civil and systems engineers, economists, accountants and geologists, among other professions, and all with more 15 years of association with the Controller,” according to the agency.

“Projects such as Hidroituango must comply with high design and construction standards, given the social, environmental and economic impact they produce, but the Comptroller's conclusion is that this has not been the case,” according to the report.

“There are weaknesses in the [engineering] technical studies both in initial logistics works, as well as in the main works, which resulted in modifications to the contracts due to larger amounts of works, inclusion of new items, redesigns and changes in construction techniques, which generated more time and costs for the project,” according to the report.

In addition, “EPM's economic valuation of the project currently contemplates that in subsequent years it will recover, through insurance policies, [physical] damages and lost profits that, if not received, will affect negatively the economic expectations that are had on the project in the medium and long term,” the report concludes.

 


EPM general manager Jorge Londoño de la Cuesta revealed in a September 17 press conference here in Medellin that insurer Mapfre just issued a letter of coverage worth trillions of Colombian pesos for damages at the under-construction, US$5 billion Hidroituango hydroelectric plant in Antioquia.

The exact amount of payment won’t be known for months, as a technical panel must now prepare a detailed, itemized report on the exact value of each area of the dam works and machinery damaged by a diversion tunnel collapse last year, Londoño explained.

While EPM has insurance coverages totaling about COP$8 trillion (about US$2.5 billion) for physical damages as well as US$628 million for lost power sales, EPM likely won’t be getting the maximum amount, as the damages (as roughly estimated to-date) probably will come-in at below that total, he estimated.

EPM expects that the first sales of power from Hidroituango will be in December 2021, rather than the initially planned start-up in December 2018 -- a date that was forcibly postponed by the April 2018 tunnel collapse.

So, until the company has an exact startup date -- and an exact market quote for Colombian power prices matching that start-up date -- it can’t yet quantify the value of the insurance coverages for lost and delayed Hidroituango power sales. But the payment likely will be less than the US$628 million policy-coverage maximum for lost power sales, he estimated.

“The positive response of the insurer to the efforts made by EPM to obtain the coverage for the incident was based on the investigations and findings advanced by the insurer autonomously, which concluded that the cause of the contingency is framed in the terms and conditions of the policy and therefore we will have coverage,” Londoño said.

“In this sense, once the value of the incident has been quantified, and taking into account the conditions and limits established in the insurance policy, the [insurance payment] resources will be reimbursed to EPM and will enter into the financial statements of the project.

“It is important to highlight that the insurer appointed a series of national and international experts including engineers, geologists and geo-technicians specialized in dams and underground works, as well as lawyers, among others, to review the technical information of the main fronts of project work including tunnels, caverns, dam and landfill. Likewise, they reviewed the designs, plans, technical specifications, construction processes, work logbooks, risk matrix and pre- and post-contingency studies.

“The work of this group of experts also included 12 visits to the project, multiple meetings and in-depth interviews with the EPM technical team, the main contractors and the board of experts,” he added.

The letter from Mapfre confirming insurance coverage for Hidroituango is a huge step forward, because “if we’d done something wrong, then they wouldn’t agree to pay us” for damages, he explained.

“The causes of the [tunnel collapse] are covered by this policy. This was an unpredictable accident, not negligence,” Londoño added.

“Now we’re entering the second phase, where the experts will adjust the amount of payment and determine when they pay. This involves a detailed inventory of all the damages and the value of each,” up to a maximum US$2.5 billion in insurance coverage for physical damages.

Medellin Mayor Federico Gutierrez added at the press conference that the insurance coverage announcement not only is good news for EPM but also for the city of Medellin, which gets about 25% of its annual revenue from the city-owned utility.

Chile Asset Sales

On a related financial front, EPM announced September 17 that it inked a US$138 million sale of its Chile wind-power unit to AES Gener SA and its Norgener Renovables SpA subsidiary, following a plan announced last year to sell “non-strategic” assets -- aiming to boost liquidity as a result of the Hidroituango project delay.

Combined with EPM’s continuing sale of its 10% stake in shares of Colombian power transmission giant ISA, its sale of Chile assets, its successful US$1.3 billion bond sale this year, and now the upcoming multi-trillion-peso Hidroituango insurance payment, EPM’s financial outlook has improved dramatically when compared to market worries in the aftermath of the Hidroituango tunnel collapse last year, Londoño added.

 


Colombian music star Carlos Vives first gained international fame in 1993 by bringing traditional vallenato music to the whole world, via the sensational hit-single, “La Gota Fria.”

Ever since, Vives’ pioneering group “La Provincia” has frequently topped the Latin American pop-music charts -- as well as popular music-video internet links.

Besides winning numerous Grammy awards, Vives and La Provincia have over the past 25 years garnered huge followings at live performances in many countries far beyond Colombia.

Now, with his brother Guillo and Mexican multinational restaurant investor Mera Corporation, the Vives brothers just brought a traditional-foods “Gaira Café” to the international departures area at Medellin’s Jose Maria Cordoba (JMC) international airport – with a second, Medellin-city “Gaira Café” location on the horizon, brother Guillo told Medellin Herald.

In a September 9 press conference at JMC attended by scores of TV, radio and print journalists, the Vives brothers lectured, sang and showed-off their newest Gaira Café location here -- their third nationally, and all featuring traditional foods from Colombia's Caribbean coast, where the Vives brothers were born.

The brothers first launched Gaira Café 20 years ago in Bogota -- initially as a restaurant -- and then later added a third-floor musical auditorium, which continues to feature some of Colombia’s top emerging pop-rock artists.

While the JMC location is only open to ticketed international passengers -- hence not ideal for attracting spectators to concerts like those at the Bogota city location – it will nevertheless on occasion bring trios or other music groups for impromptu performances at JMC, according to the Vives brothers.

Following the press event here, Mera Corporation president Rafael Aguirre explained to Medellin Herald that his company is investing US$10 million in several restaurants (including slots at JMC) – of which about $1 million went into the latest Gaira Café.

The Mera investments at JMC also include a new Juan Valdez café, an Amazonia Café, a Petit Gourmet restaurant, a Guy Fieri Burger Joint outlet, a Mondongo’s café, and a craft-beer service.

Mera is also eyeing the possibility of opening a Mexican restaurant in the under-construction balcony section at the international-departures area at JMC, Aguirre told us.

The first collaboration between the Vives brothers and Mera came in 2018 at Bogota’s El Dorado airport, involving the second-ever Gaira Café. Along with a Guy Fieri restaurant, a Wolfgang Puck restaurant, an Amazonía Café and a Guacamole Ándele restaurant, all these outlets together form what Mera calls the “Zona R” food court at El Dorado.

In a related presentation at the JMC press event, Colombia’s Transportation Minister Angela Orozco praised Mera's growing investments here. Mera and other investors at JMC have now transformed the international-departures area with a dizzying array of colorful shops and a wide variety of consumer enticements.

The new investments would seem to have favorable prospects, as not only has Medellin seen a huge surge of international tourist numbers (especially in the last five years), but also Colombia nationally now expects that its airports will see some 100 million tourists annually by 2030, Orozco revealed.

Such tourist numbers -- staggering by Colombian historical standards – will require billions of dollars of continuing investments in airport and highway infrastructure, including the “fourth generation” (4G) highways now under construction in Antioquia and nationwide, Orozco added.


Big corporate fleets in and around Medellin and across Colombia increasingly are turning to sophisticated vehicle technologies in order to avoid accidents, cut fuel costs, avoid merchandise damage, monitor driver behavior and improve routing.

Among local fleets employing and/or evaluating novel “Mobileye” and “Ituran” systems are insurance giant Sura, cement maker Cemex, supermarket leader Exito and soft-drinks maker Postobon.

These advanced vehicle/driver/road-status technologies -- created and developed in Israel -- are being marketed in Colombia by Medellin-based Eletech SA.

In an interview with Medellin Herald, Eletech SA operations director Victor Meir Avraham explained the evolution of these technologies -- and their growing applications here in the Colombian market.

While many Colombian fleets employ relatively simple global positioning system (GPS) technologies to track individual vehicle movements, the Mobileye and Ituran technologies go far beyond those.

The more-advanced technologies incorporate sophisticated cameras, warning lights-and-sounds, facial recognition technology (detecting driver distraction and drowsiness), two-way telecom systems for emergency communications, and computer programs that automatically digest and analyze vast amounts of crucial data for relatively easy fleet-management evaluations of driver and vehicle behavior.

Bringing advanced Israeli technology to the Colombian fleet-vehicle market has proven to be a “perfect match” -- with huge growth opportunities on the horizon, Avraham explained.

Mobileye – bought by U.S. computer-technology giant Intel in 2017 for US$15.4 billion (the biggest-ever corporate acquisition in Israeli history) – gave Intel a key entryway into the vast global vehicle market, including the futuristic “autonomous vehicle” business, Avraham said.

The Mobileye technology being offered in Colombia can be used by any sort of vehicle, including cars, trucks, buses and motorcycles, he said.

Mobileye systems for distracted-driver alerts include lane-departure warning, headway monitoring and warning (to avoid tailgating and rear-end crashes), pedestrian collision warning, speed-limit detection and warning, and driver fatigue warnings, he showed.

In-development is a newer Mobileye system that eventually will detect and report potholes in roads, broken traffic lights and other highway infrastructure problems – following which these detections will be sent wirelessly to government highway departments, in real time. The same system eventually will create highway mapping systems that will be useful for the next generation of autonomous vehicles, he added.

Ituran: Telematics, Fleet-Management Analysis

While Mobileye is a stand-alone system on the vehicle, Eletech pairs it with Ituran technology, which (among various features) enables fleet managers to analyze driver and vehicle operations, with dozens of possible plug-in options.

Among the systems that can be run by Ituran is a “pin-type” keyboard that enables recognition of each individual driver of a fleet vehicle.

Yet another system -- termed “safety” -- is like an airplane “black box” that can record all safety issues, accidents and even automatically call the fleet manager operations center to report an accident (if for example the driver is knocked unconscious and hence unable to call).

Another aspect of this technology is a loop-cycle camera system that records what happened inside and outside a vehicle immediately before and after an accident. Those recordings, automatically uploaded to the cloud, can be useful for determining fault in any accident.

A plug-in cell-phone system also can be incorporated for hands-free, two-way communications between the driver and fleet management.

Yet another novel option is a cargo-bay thermometer system for refrigerated transport, which alerts the driver and fleet management of temperature anomalies that could damage goods in transit. This is especially useful for food and dairy transporters, for example.

Another system records fuel consumption, oil consumption and vehicle refueling behavior that can detect poor driving habits -- or possible diversion of fuel into a portable fuel container or another vehicle.

Yet another technology feature issues a mild warning sound for a moderate excess of vehicle speed, and a harsher sound for greater excess speed -- combined with an “eye flash” camera that monitors traffic cameras so that the fleet can avoid costly speeding fines.

The telematics system in these technologies enables a fleet manager to monitor every vehicle in real time, as well as to receive periodic, automated reports on driver and vehicle behavior, including reckless driving, excessive stop-times at pickup/delivery points, questionable refueling, prohibited stops, prohibited routes or prohibited openings of cargo doors.

“Ituran is ‘big data,’ what many call the ‘new gold,’” Avraham explained. “This is what differentiates Israeli technology” from other competitors, he added.

“Every vehicle can generate 10 gigabytes of data each month – every braking event, every acceleration, every turn, every speed, every traffic violation. But most of that is too much data” for practical fleet-manager evaluation.

“So, Ituran turns that 10 gigabytes into 40 or 50 megabytes of useful data, sent to the cloud. Not many companies can do this; it’s high-level telematics and analysis.”

For example, the recent “Vision Zero” pedestrian-accident-reduction initiative (in Europe and especially in Sweden) has been a “huge success” because of telematics analysis, he said.

These technologies gather and analyze city-wide accident data, by day and time-of-day -- and then show the high-risk areas on a computerized, interactive map, so that fleet managers can help design routes to avoid such high-risk areas at certain hours.

These technologies also identify the highest-risk and lowest-risk drivers among the fleets, by automated scoring systems showing which driver too-often drives at excessive speed, or tailgates, or aggressively brakes and steers.

The end-result: computerized “report cards” on each driver, with “green,” “yellow” and “red” computerized colors used to indicate good, mediocre and dangerous behavior. Such reports can help managers coach drivers on better behavior -- and if coaching doesn’t work, then justifiable firings can result.

Since some fleets may employ dozens or hundreds of drivers, such a computerized system can vastly improve over-all fleet operations-- and save vast amounts of management time by enabling early detection of driver-behavior trends that could lead to costly safety problems later.

On a related front, a cell-phone application available with the Ituran telematics system not only enables fleet managers to monitor and evaluate fleet-vehicle drivers, but also could enable individual car owners (such as a parent loaning a car to a son or daughter) to monitor behaviors.

Such technology is already being used in fleet applications here, but it could spread to the general population in future.

Eventually, the Ituran system also potentially could help bring about “usage-based insurance” (UBI) for individual car drivers here --still a novel concept in Colombia, in contrast to its common usage in North America, Europe, Israel and elsewhere, he said.

Colombian car insurance typically is based upon the vehicle value rather than the driver’s actual behavior, he said. In contrast, UBI analyzes personal driver risk, which could prompt insurance companies to offer premium discounts to good drivers, or penalties for poorer drivers.

“We’re trying to implement this with Sura in Colombia – it’s a six-month project, to see what best fits Sura needs for Colombian conditions” for individual car drivers, Avraham said.

“This would revolutionize Colombian transport if it applies to individual car drivers, and not just fleet vehicles,” he added.

 


Antioquian coffee growers, marketers, cooperatives, trade associations, educators, governments and the Medellin Chamber of Commerce for Antioquia (“CCMA” in Spanish initials) are brewing-up a remarkable initiative that aims to percolate a more-profitable “specialty coffee” business -- both locally and world-wide.

At the third “Café Fina Experiencia” conference August 28-29 at CCMA-Poblado here in Medellin, more than 300 attendees -- including coffee growers, processors, marketers, cooperatives, researchers, roasters, consultants, exporters, importers and international experts -- delved into the challenges and opportunities in specialty coffees.

That’s about triple the number of attendees to the first edition of “Café Fina Experiencia” -- an encouraging sign, indicating a potentially brighter future for an emerging class of more-sophisticated, more-entrepreneurial growers and marketers.

Given the tremendous growth of “Café Fina Experiencia,” 500 or more attendees probably will participate in the next edition, as “Café Don Tulio” owner Juan Leonardo Garzon Restrepo predicted in closing remarks here.

Numerous experts here cited a dead-end ahead for those producing “commodity coffees” that generate only about US$1 per pound (often less) for the “commodity” grower – or less-than half of today’s actual cost of production here in Colombia.

On the other hand, the specialty coffee market by some estimates is on pace to hit nearly US$40 billion/year globally, with the U.S. and Europe accounting for the bulk of that, as San Francisco-based coffee roaster specialist Floy Andrews of Bay Area Co-Roasters explained here. A recent analysis by Dallas-based Adroit Market Research added that the global specialty coffee business likely would hit more than US$83 biliion by 2025, up from an estimated US$36 billion in 2018.

Meanwhile in Germany, 900 local roaster operations and 72,000 specialty coffee shops have sprung-up around the country – and 82% of those shops are independent rather than chain outlets (such as Starbucks or Peets), as Ally Coffee market representative Nicole Pilz explained here.

The challenge is for Colombia's specialty coffee growers to get a bigger, sustainable share of those dollars. “People will pay for quality and brand and fair trade – but it’s very difficult to know how much is paid to the farmer,” Andrews pointed-out here.

'Circular Integration'

What local coffee growers need to create is what Selvadentro coffee consultant Arturo Arevalo termed here as “circular integration” – that is, cooperative alliances between specialty coffee growers, buyers, marketers, exporters, importers, roasters and retailers.

Such “circular integration” potentially could enable local growers stand-up to the “big five” global coffee traders who have gradually developed “vertical integration” – including strict cost and price controls from farming to processing to transport to roasting to retailing.

Today, it’s not enough to put “organic” or “rainforest” or “French roast” or “dark roast” or “mild” or country-of-origin labels on packaged coffees -- and then expect to see profits pour-in to coffee growers, who usually get the smallest portion of each dollar spent on a cup of coffee, as experts explained here.

Even the traditional “Juan Valdez” marketing image created over decades to promote Colombian coffee by itself isn’t delivering enough extra margin today to ensure the survival of "commodity" Colombia coffee farmers, according to the experts.

However, many more consumers -- especially in Europe, Japan, North America, and even in China -- increasingly are becoming aware of the many different flavors of different specialty coffees, which result from different types of coffee beans, different types of processing and different types of roasting, as experts explained here.

In addition, more younger-generation consumers are starting to demand to know what price is being paid to the coffee grower, as Ally Coffee's Pilz explained in a presentation here.

While traditional coffee-grower trade associations continue to lobby major retail marketers and giant international coffee buyers to pay higher, “fair trade” prices for all coffees (with insufficient results to date), there’s another pathway out of the “commodity-coffee” dead-end: convert more production to higher-margin, better-defined, better-branded specialty coffees, according to experts here.

That’s why CCMA and the “Coffee Cluster” of Antioquia are in the process of developing an initiative that ultimately aims to launch specifically recognized Antioquian specialty coffee brands -- along with new marketing opportunities -- for potentially thousands of formerly “traditional” coffee growers.

Too many smaller coffee growers today are stuck in the “commodity” coffee cycle, producing perhaps only one or two varieties at too-cheap prices, according to experts.

On the other hand, some more-sophisticated Antioquian growers already produce more than a dozen specialty varieties, including (for example) the ultra-high-margin, but relatively low-volume “Geisha” variety.

What’s more, some of these advanced growers are combining specialty coffee production and marketing with eco-tourism, as for example “La Virgen de Oro” (near Tamesis, Antioquia); “Café Don Tulio” (near Ciudad Bolivar, Antioquia); “La Palma y El Tucan” (in Cundinamarca); “Hacienda La Pradera” (in Santander); and the new “Red Ecolsierra” farm-and-ecotourism network (in the mountains above Santa Marta).

Bird Tourism Pairs With Specialty Coffee

“La Virgin de Oro” owner Jorge Mario Correa told Medellin Herald that besides the 16 specialty coffee varieties he’s producing and marketing, he’s now seeing ever-more growth in bird eco-tourism at his novel eco-farm, which attracts the threatened Cerulean Warbler (Setophaga cerulea)-- along with dozens of other species -- during the spectacular northern boreal migratory season to Colombia (October to April).

However, not every coffee farm should be considered suitable for eco-tourism, as upscale hotel infrastructure investment can be prohibitive for many farmers, as experts explained here.

Nor would it be wise for every farm to abandon production immediately of all “traditional” coffee and attempt a wholesale switch to exclusive production of certain higher-margin specialty varieties, experts warned. Not only would such a switch take years until first harvest (and first revenues), but also future margins on certain “trendy” varieties could be unpredictable -- and might not pay-off the original investment.

However, the new Antioquian specialty-coffees education, branding and marketing initiative spearheaded by the Coffee Cluster aims to help more traditional coffee farmers gradually dedicate more production to specialty coffees -- in order to boost profitability and sustainability, while also including dependable buyers.

While the Antioquia specialty coffee initiative is gaining steam, remaining challenges can include recruiting more specialty coffee retailers in higher-margin export markets, as Jerico, Antioquia coffee grower Sandra Castaño explained to Medellin Herald.

One successful example Castaño cited is the “Devocion” Colombian specialty coffee retailer in Brooklyn, New York, founded by Medellin native Steven Sutton.

Another challenge: developing the next generation of Antioquia specialty coffee growers, which explains the emergence of the “PEC” (Programa Educativa del Café) initiative, first organized in 2018 by CCMA along with the Café Cluster, Comfama, SENA, the Antioquian Coffee Committee (Comite Cafetera de Antioquia), the Laboratorio de Cafe and others.

As “PEC” program coordinator Liceth Meneses (CCMA) explained to Medellin Herald, the program aims to help the next generation of Antioquian coffee farmers learn about specialty varieties, as well as help them improve their entrepreneurial and technological skills -- which will include environmental sustainability methods.

On a parallel front, too many Antioquia coffee producers still have much to learn about boosting productivity, as “Solidaridad Network” consultant Carlos Isaza explained in a presentation here.

While labor represents more than 70% of the operating cost of coffee farming, just having cheaper labor -- as in Nicaragua, where coffee-farm day-labor is about one-third the cost of Colombian day-labor –  doesn't guarantee success, he showed.

Ironically, coffee farming is drastically declining in many cheap-labor Central American countries -- except for Costa Rica and Panama, where specialty coffee production and marketing rather than cheap labor has become a salvation for many farmers, he pointed out.

20 Antioquian Coffee Varieties

For the “Café Fina Experiencia” conferences, CCMA so far has catalogued some 20 different varieties of coffee produced in Antioquia, including Borbon, Castilla, Caturra, Variedad Colombia, Pajarito, Chiruso, Cenicafe1, Geisha, Matra Gojo, Catimor, Moka, Sudan Rume, Typica, Margogipe, Java, Arabica, Wush Wush, Catuai, Sl28 and Variedad 2000.

While most coffee farmers might produce only one variety, Medellin’s remaining rural districts still host more than 520 coffee producers, as Medellin’s secretary of economic develop Paula Andrea Zapata Galeano pointed out in a presentation here.

What’s more, another 93,000 coffee farms continue to operate in other areas of Antioquia, producing about 1.5 million bags (154 pounds per bag) per year.

Now, the challenge for many of these traditional farmers is how to convert to specialty coffee production -- and climb aboard a “circular integration” train to higher profitability.


A growing list of major local and international companies operating in and around Medellin and throughout Colombia are turning to a novel “Portafolio Verde” (“green portfolio”) consultancy here for projects that are both “green” environmentally as well as financially.

“Portafolio Verde” finds, designs and jump-starts innovative, sustainable environmental and social projects -- some of which can serve as legally required “offsets” to environmental impacts from certain industrial developments.

In a presentation to the recent Proantioquia forum here on sustainable development, Portafolio Verde executive director Alejandro Zapata cited numerous such projects over the 14-year history of the organization.

Among the newest projects are under the umbrella of Portafolio Verde’s one-year-old “Animal Bank” initiative.

“Animal Bank” helps find, develop and finance -- tapping corporate or individual-donor seed money -- suitable biodiversity projects, and then helps train local people and organizations to continue executing such projects.

Also under the “Animal Bank” umbrella is the “Tierras Con Proposito” (“Lands with Purpose”) program, which finds and then matches willing landowners with corporations seeking suitable environmental-impact “offset” projects.

“Through Animal Bank, we seek to support projects focused on conservation and biodiversity, in this way supporting social, environmental and economic development in our region and in our nation,” Zapata explained in his Proantioquia presentation here.

Candidate lands for “Tierras Con Proposito” must have biodiversity and conservation potential.

Such lands would (for example) host natural springs or wetlands; serve as “buffer zones” adjacent to environmentally protected areas; have some strategic importance such as location in highland paramos or tropical dry forest; serve as homes to threatened flora and fauna; and have potential for hosting sustainable forestry, animal husbandry, beekeeping or similarly non-destructive activities on part of the land.

Following Zapata’s Proantioquia presentation, Animal Bank and “Tierras Con Proposito” coordinator Carolina Castaño Restrepo explained to Medellin Herald in a follow-up interview many of the key underlying principles and mechanisms involved in such projects.

If for example some company proposes to develop an industrial or mining project on certain lands that are now legally declared as environmentally sensitive, then Animal Bank would help find a matching, privately-owned parcel somewhere else that either will be purchased by the corporation -- or else extended some type of finance or incentives for “green” preservation or restoration -- of some-or-all of the parcel.

Unless the land is purchased, the original owner could still keep the land -- but then avoid any sort of environmental damage such as logging, mining, cattle grazing or industrial development on specified, dedicated acreage – at very least during the term of the restoration or preservation contract.

In this sort of transaction, Animal Bank could earn a commission on what might be considered something like a real-estate deal. But there’s a difference: the main driver to the transaction is environmental protection rather than conventional “use” of an “offset” property.

“Tierras Con Proposito” could include lands that (for example) currently are partly dedicated to farming or ranching, but with at least part of the land in a natural state -- hence aiding biodiversity and environmental conservation.

One such land cited on the Animal Bank web-site is a former cattle ranch near El Retiro, Antioquia, now considered as having potential for eco-tourism. Another property historically dedicated to ranching in San Pedro de los Milagros, Antioquia, is listed on the web site for potential preservation of native forest and water resources.

While this particular parcel in San Pedro de los Milagros isn’t specifically identified on the Animal Bank web-site as a potential site for conservation of the endangered Antioquia Brush-Finch (Atlapetes Blancae) bird, it’s notable that there is now an extraordinary potato farm near San Pedro de los Milagros that just started offering birdwatching-ecotourism, with high probability of seeing this extremely rare bird at this specific site.

Other potential projects cited on the Animal Bank web-site – but looking for matching partners -- include conservation of the endangered Blue-Billed Curassow (Crax Alberti) bird as well as the endangered Andean Condor (Vultur Gryphus).

Meanwhile, a successful freshwater-turtle conservation/ecotourism project in Cocorna, Antioquia – with project design and management training provided by Animal Bank – has won financial aid from Medellin-based Grupo Argos, a multinational corporate giant in cement, electric power and highway/airport concessions.

Other founding allies of Animal Bank include Canada-based, environmentally responsible gold miner Continental Gold (developer of Colombia’s biggest new gold mine in Antioquia); the “Renting Colombia” vehicle-leasing division of Medellin-based banking giant Bancolombia; Vanderbilt University (USA); Turner Family Center for Social Ventures (USA); and corporate social-responsibility advisor B Lab (USA).

To date, "Tierras Con Proposito" has already registered 150,000 hectares of various farms and ranches in Colombia -- all ready for matching with a suitable corporate project development for environmental “offsets” or (in some cases) possible ecotourism projects.

What’s more, based on projections from the growing popularity of the program, “Tierras Con Proposito” aims to grow to a staggering 11 million hectares registered-and-ready over the next five to 10 years -- all over Colombia -- according to Portafolio Verde executive Alejandro Zapata.

Interested parties in Animal Bank and Tierras Con Proposito potentially could include all sorts of investors (not just big corporations), as program coordinator Carolina Castaño explained to us.

For example: A company, individual or an organization might be interested in developing an ecotourism hotel at a candidate site. Tapping its database, Animal Bank wouldl analyze the proposal and search for a potential, suitable site, which would include follow-up verification of the actual status of flora and fauna for possible ecotourism.

Individuals also can contribute to Animal Bank, as for example through the allied “100 Apasionados por la Fauna” group. Animal Bank asks such individual donors to contribute at least COP$3 million (about US$875 at current exchange rates) per year.

The organization also continuously employs social media, public events and news-organization interviews in order to reach-out to more landowners interested in registering their properties, as well as companies, corporations and individuals interested in collaborating on its many-varied projects.


Page 2 of 42

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.

Medellin Herald welcomes your editorial contributions, comments and story-idea suggestions. Send us a message using the "contact" section.

Contact US

logo def
Medellin Herald: Find news, information, reviews and opinion on business, events, conferences, congresses, education, real estate, investing, retiring and more.
  • COL (4) 386 06 27
  • USA (1) 305 517 76 35
  •  www.medellinherald.com 
  •  This email address is being protected from spambots. You need JavaScript enabled to view it. 
  • Medellin, Antioquia, Colombia

Medellín Photo Galery

Medellin, contrasting colors and styles by Gabriel Buitrago

MPGMPGMPGMPGMPGMPGMPGMPGMPGMPGMPGnav