general news 217
Colombia President Ivan Duque announced January 22 at the World Economic Forum summit in Davos, Switzerland, that Medellin just won a world-wide competition to launch the first “Fourth Industrial Revolution” research center in all of Latin America.
Over the next 18 months, the initial research projects at the center will involve artificial intelligence (AI); the so-called “internet of things;” and “blockchain” technology (used to store and transfer information in a decentralized and secure manner).
Medellin’s “Ruta N” high-tech hosting center is already involved in projects involving these three areas, along with Colombia's Universidad Nacional, ViveLab Bogotá and Alianza Caoba (Bogota), the president noted.
According to Ruta N, the center initially will focus on three work areas:
1. Increase the national government's use of artificial intelligence to combat money laundering, improve tax collections and reduce contraband. "This would open opportunities for local entrepreneurs to develop security technologies that enhance the use of data such as images, videos and sensors as probative material in criminal cases," according to Ruta N.
2. Enable the creation of technologies to improve mobility. This would include development of projects to optimize bus routes; encourage the use of public transport by improving travel times, safety and quality; reduce pollution by increasing the use of shared vehicles; generate information in real time for public transport users to increase the movement of people; and optimize the network of local traffic lights.
3. Maintain the balance between privacy and the productive use of personal data. "One of the most interesting projects in this regard plans to use blockchain, one of the technologies of the Fourth Industrial Revolution, to organize property-appraisal archives and encourage the transparent management of data related to the value and the traceability of property ownership," according to Ruta N.
Colombia is the first country in the Spanish-speaking world to host such a center, joining first-wave host countries USA, Japan, China and India. Israel, South Africa, United Arab Emirates and Norway are joining Colombia in this second wave, according to the World Economic Forum (WEF).
The centers are cooperative endeavors between the private sector, government and academia, according to WEF.
According to José Manuel Restrepo, Colombia’s Minister of Commerce, Industry and Tourism, the centers open new avenues to obtain “disruptive” technologies that can boost industrial efficiency and competitiveness.
“We have a challenge to create a regulatory pathway to improve the potential for accelerated development of local, regional and global technology,” Minister Restrepo added.
Medellin Mayor Federico Gutiérrez added that the Fourth Industrial Revolution research projects could trigger "exponential" economic growth, generating "equity and opportunities for all sectors of society.”
Medellin’s winning bid to host the new center came about thanks to the help of the Colombia national government, the Interamerican Development Bank (IDB), Ruta N and Agencia de Cooperación e Inversión de Medellín y el Área Metropolitana (ACI), Gutierrez added.
According to WEF founder Klaus Schwab, the Fourth Industrial Revolution will combine advanced digital, physical and biological technologies, accelerating global industrial, social and economic changes.
Spain-based Grupo Globalia announced January 4 that its Air Europa airline subsidiary will launch three-times-a-week nonstop service between Medellin and Madrid starting June 1.
The company will employ new Boeing 787-9 “Dreamliner” jets, which can cut 40 minutes off flying time compared to competing jets on the same routes, according to Globalia.
Service to and from Medellin will be offered Tuesdays, Thursdays and Saturdays, offering new competition to Iberia’s and Avianca's existing nonstop flights between Medellin and Madrid.
Fare Comparisons
Air Europa was quoting a COP$2 million (US$626) fare for round-trip nonstop Medellin (MDE)-Madrid(MAD)-MDE for flights starting June 1. Iberia meanwhile was quoting COP$2.13 million (US$668) if including two pieces of luggage in the plane's belly, or no belly luggage (just carry-on) for COP$1,84 million (US$576) for June nonstop RT flights.
As for Avianca's June flights, it was quoting non-stop MDE-MAD-MDE (but not on same days as Air Europa nor Iberia) at COP$2,673,150 (US$848) including taxes and surcharges; fares for flights originating in Colombia include the airport tax.
From its Madrid hub, Air Europa offers flights to 16 European destinations as well as 22 cities in Spain, according to the company.
Medellin’s international airport (Jose Maria Cordova, JMC) also offers other nonstop international flights to Miami, Fort Lauderdale, New York, Orlando, Mexico City, Cancun, El Salvador, Panama, Buenos Aires, Ecuador, Peru and Venezuela, plus seasonal service to Dominican Republic, Aruba and Curazao.
JMC processed 8 million passengers through its domestic and international terminals during 2018.
The Plaza Mayor convention center -- owned by the city of Medellin -- reported this month that total events rose to 734 in 2018, up from 539 in 2017 and 480 in 2016.
Of that total, 38 events were international (up from 29 in 2017), 68 were national and 628 local, according to conventional center officials.
Having dramatically expanded its available space three years ago, Plaza Mayor additionally now offers a renovated conference/convention platform featuring “4k” high-definition video technology including “16:10” video screens that generate ultra-high-quality images for conference presentations, the center noted.
Among numerous upcoming events in 2019, Plaza Mayor will host the annual Colombiatex de las Américas textile-industry congress, the “Expofitness” show, the “”Expoinmobiliaria” real-estate industry show, the World Cities Forum (Foro Mundial de Ciudades) the International Avocado Industry Congress, the International Congress on Workplace Accident Prevention, the Colombiamoda international fashion-industry show, the semi-annual FISE electric-power industry conference, the Organization of American States Assembly and the Agrofuturo agricultural industry congress.
Plaza Mayor now receives about 1 million visitors annually and expects to continue growing, thanks to infrastructure upgrades including the soon-to-be-completed expansion of the Yellow Pavilion, according to the center.
The center also recently inked an “alliance” deal with Bogota’s main “Corferias” convention center to share events such as “Expopet 2019,” and also signed deals with IFEMA-Feria de Madrid in Spain and the KOELNMESSE convention organizer in Germany, enabling greater international participation in events held in Medellin.
Over the past 11 years, Medellin has seen 547% growth in international events, while in 2018 alone, such events brought an extra US$47.8 million in revenues to the city, according the city’s Secretary of Economic Development.
The Medellin Mayor’s Office announced December 28 that China-based electric vehicle (EV) manufacturer BYD won a contract bid to provide 64 pure electric buses for the “Metroplus” bus rapid transit (BRT) system in Medellin.
The resulting zero-emissions bus fleet “will be one of the largest in Latin America” and the contract calls for delivery during the second half of 2019.
“After reviewing the economic, technical and financial proposals of four firms specialized in buses, Metroplús awarded the contract for the acquisition of 100% electric vehicles to the ‘Green Medellín’ consortium, made up of the Chinese company BYD Industry Company Limited and BYD Motor Colombia,” according to the Mayor’s office.
“This award, which had a projected scope of at least 55 electric buses, exceeded this figure by nine [bus] units, for a total of 64,” according to the announcement.
The new fleet will have 16 electric recharge points, 300 kilometers range and two hours required for battery recharge, according to the Mayor’s office.
Medellin’s investment promotion agency ACI -- Agencia de Cooperacion e Inversion de Medellin y el Area Metropolitana -- reported December 21 that foreign direct investment (FDI) in Medellin so far this year has topped US$253 million, or US$11 million over ACI’s initial forecast target.
“These investment projects came mostly from Mexico, El Salvador, Italy, Venezuela, Japan, Spain, Taiwan, the United States, France and Panama and correspond to the economic sectors of tourism infrastructure, health services/life sciences, real estate, food and beverages, manufacturing and ‘fourth-generation’ [high-tech] industries,” according to ACI.
“For the development of these projects, it is estimated that 3,180 jobs were generated,” the agency added.
Meanwhile, foreign-government aid projects to Medellin – mainly from the U.S., the EU, Germany, Switzerland, Sweden, Canada and Japan – targeted education, security, mobility, economic development, environment, social inclusion and “peace building.” These investments topped US$17 million, or US$6 million more than ACI initially expected for 2018.
“Of a total of 1,287 projects and indications of investment intention directed towards Colombia between 2003 and 2018, the majority comes from the United States, Spain, Canada, Brazil, United Kingdom, Chile, Mexico and France, so the recommendation is to strengthen the relationship with these countries through proactive work to attract foreign investment to Medellin,” the agency added.
High-Tech Sector Leads Outlook
On a related front, ACI reported December 20 that a recent joint study by the Medellin Mayor's office and Argentina’s “PRODEM” development agency found that Medellin is becoming a major focal point for high-tech investment.
“In the last three years, the Mayor's Office of Medellín has accompanied about 119,000 people in their ideas of entrepreneurship,” according to ACI.
The joint study was the result of local officials setting a goal that Medellín should become one of the top-three “most-entrepreneurial cities” and the “capital of innovation in Latin America in 2023,” according to ACI.
The study analyzed variables including human capital, entrepreneurial education, culture, business structure, science, technology and information platform, as well as local demand, social capital, financing, local institutional support and local policies and regulations, according to ACI.
"Medellín has an ecosystem of young entrepreneurship that advances and has opportunities for improvement to make the leap towards a new, more dynamic stage,” added Hugo Kantis, director of Argentina’s PRODEM, according to ACI.
The Medellin City Council on November 26 voted 19-2 to approve a COP$5.3 trillion (US$1.6 billion) 2019 budget mainly favoring the city’s most vulnerable citizens.
More than 78% of the budget goes to public education, health, infrastructure and “social inclusion,” according to the city’s Treasury Secretary Orlando Uribe Villa.
The budget includes a COP$77 billion (US$23.7 million) addition over the Mayor’s originally submitted budget in order to complete infrastructure projects including a new public hospital in the low-income Buenos Aires neighborhood, the new Alejandro Echavarria public school and the “Buen Comienzo” kindergarten head-start program for poorer children in the Loreto neighborhood.
Medellin leads all major cities in Colombia by funding public education from pre-kindergarten through eleventh grade and then subsidizing college studies for many lower-income children.
Electric-Bus Fleet to Expand
On a related front, Medellin Mayor Federico Gutierrez announced November 20 that the city has asked vendors to submit bids for a contract worth COP$75 billion (US$23 million) for 55 pure-electric transit buses for the “Metroplus” bus rapid transit (BRT) system, which currently employs 77 natural-gas-fueled buses and just one electric bus.
If any bids eventually qualify, then the city could start acquiring these new electric buses by end-2019, according to the Mayor.
The zero-emissions buses would have capacity for 80 passengers, have a 280-kilometers range between recharges, be capable of climbing steep inclines in some of Medellin’s neighborhoods, and be capable of battery recharge in four hours, according to the bid proposal.
Medellín aims to slash air pollution by converting more of its vehicle fleet to zero-emissions electric power. The city currently suffers poor air quality mainly because of grossly excessive emissions from cheap, poor-technology motorcycles along with ancient, obsolete diesel-powered trucks and buses, as well as obsolete, high-emitting cars.
If any of the bus-bids are successful, then Medellin soon will have the largest electric-powered transit fleet in Colombia -- and one of the largest in Latin America, Mayor Gutierrez boasted.
The city’s current “Metroplus” BRT system runs through 14.7-kilometers-long circuits on “Line 1” and "Line 2,” from the University of Medellin (Belén neighborhood) through the city center and then onward to Aranjuez neighborhood.
Medellin also has Colombia’s only all-electric “Metro” elevated-train system, tied into its growing, all-electric “Metrocable” aerial tram networks plus the electric “Tranvia” roadway tram system.
Antioquia Mining Secretary Dora Elena Balvin revealed at the 2018 edition of the annual Colombia Gold Symposium (CGS) here that Antioquia continues to dominate national gold production – and is likely to expand output dramatically in coming years.
One reason for optimism is the well-underway development of Continental Gold’s massive mining project at Buritica, Antioquia, as Continental chief financial officer Paul Begin told the 350 CGS delegates here in a November 13 presentation.
The high-tech, environmentally and socially responsible project – which has won high praise from the community as well as from local, departmental and national regulatory agencies -- will become Colombia’s biggest gold mine when it hits full production in 2021, Begin explained.
Production at Buritica is now forecast at 300,000 ounces of gold per year, tapping reserves estimated at 3.86 million ounces, or 8.75 grams-equivalent of gold per ton of rock mined at the site.
Continental also foresees that its mining reserve here has a “global resource estimate of more than 9 million ounces” at 10.26 grams-equivalent per ton of rock mined.
Favorable geology, experienced leadership and high technology are seen delivering production costs at less-than US$600 per ounce of gold produced, with pre-production capital costs of US$475 million to US$515 million, he explained.
Construction at the project is now 38% complete. Global mining giant Newmont Mining recently took a 19.9% stake in Continental, investing C$109 million, while RK Mine Finance has put-up C$275 million in debt finance plus C$25 million in equity, he showed.
At year-end 2017, Antioquia’s gold production hit 634,655 ounces, or 46.4% of national production, Antioquia Mining Secretary Balvin explained here. Ten municipalities in Antioquia account for 92% of all production, she added.
What’s more, Antioquia now has an estimated gold reserve totaling more than 33 million ounces, with average production of 25 grams-equivalent per ton of rock mined, she explained.
Unique in all Colombia, the Antioquia departmental government administers mining regulations, including mining titles, oversight, programs to convert irregular and illegal miners to legalized mining, overseeing the abolition of toxic mercury used in gold processing, promotion of both local and international investment, and promotion of socially and environmentally responsible mining, she added.
Besides the Continental Project at Buritica, other proposed large-scale gold and copper-mining projects in Antioquia include AngloGold Ashanti’s currently stalled Gramalote and Quebradona projects, she noted.
The Gramalote project at San Roque, Antioquia, is estimated to have potential production of 350,000 to 450,000 ounces of gold per year, with a resource estimate over life-of-mine at 4.22 million ounces, she noted.
AngloGold has already invested US$270 million in the project, but local opposition to date has slowed development.
As for AngloGold’s proposed Quebradona copper-mine in Jericó, Antioquia, this project is in an "advanced stage" of studies to determine the extent and quality of the resource, which includes not only copper but also gold, silver and molybdenum, she said. AngloGold has already invested US$65 million in that proposed project, she added.
As for Medellin-based Mineros S.A., its “Ciénaga Grande” and “La Ye” projects in the municipalities of El Bagre, Zaragoza, Caucasia and Nechí, Antioquia, are in “advanced exploration stages,” according to Balvin.
“During 2017, Mineros allocated the sum of COP$46.5 billion pesos [US$14 million} in the advanced exploration stage, in support of its Colombia mining operations and support for [community-based] rubber plantations,” she said.
As for Gran Colombia Gold (GCG), which including predecessor company Frontino Gold Mines has been mining gold at Segovia, Antioquia for more than 150 years, its production continues apace, as noted in a separate presentation here by GCG exploration VP Alessandro Cecchi.
GCG, which has permanent offices in Toronto and in Medellin, produced 214,439 ounces of gold in the 12-month period from September 2017 to September 2018, Cecchi said. That’s a 23% boost in output over the comparable prior 12-month period, he added.
While Colombia generally and Antioquia specifically have suffered from decades of irresponsible and illegal mining by criminal groups and mercury-spewing miners, as well as mass anti-mining protests and strikes in certain communities, “today the panorama has changed [as more communites] approve mining," Secretary Balvin said. However, instances of violence, murders and disorders still break-out, most recently in certain areas in Antioquia (see October 8, 2018 Medellin Herald, Continental Gold Honors Employees Murdered by FARC ‘Dissidents,’ Hires Top-Flight Security Agency).
In a separate presentation here, Agencia Nacional de Mineria (ANM) mining-promotion vice-president David Gonzales pointed-out that gold is 39% of all Colombian mining concessions, and Antioquia has more than two-thirds of the national gold concessions.
National gold production is expected to increase by 27% in 2020, he added.
Today, Colombia is 18th in global gold production, but fifth in Latin America. Colombia also is 42nd in global copper production, and sixth in Latin America, he said.
Gold-mining projects with already-approved environmental licenses here include Continental’s Buritica project, AngloGold Ashanti’s Gramalote project, Antioquia Gold’s Ciseneros project, and Alicant Mining’s Rionegro (Santander department) project, he said.
Other big upcoming gold-mining projects here include the Cordoba Minerals project at San Matias (Cordoba department), scheduled for 2023; Minesa’s “Soto Norte” project in Santander (currently tied-up in legal disputes over defining and controlling operations adjacent to or within the Santurban Paramo); the Miraflores Mining project at Miraflores, Risaralda, scheduled for 2021; the Batero Gold project at Batero-Quinchia, Risaralda, scheduled for 2023; the Orosur project at Anza, Antioquia, scheduled for 2021; and the Andes Resources project at Andes, Antioquia, scheduled for 2023, he said.
Colombia offers favorable incentives for mining including five-year amortization of assessments and exploration studies; tax refund certificates for miners that boost investments; public-works in-lieu of taxes; a 25% income-tax reduction for innovative R&D; discounts on sales taxes imposed on imported machinery; exemptions on payment and social-security taxes for lower-income employees; and a 25% income-tax deduction for environmental conservation measures, he said.
Obstacles Trip-Up Investment
Despite encouraging signs on several fronts, Colombia still puts-up obstacles to more-aggressive mining investment and development, as noted in a separate presentation here by Exploration Insights analyst Brent Cook.
While global demand for gold and copper continues to rise, “globally, discoveries are declining and odds [for success] are deteriorating,” Cook warned.
“Mining companies are increasingly desperate for new deposits, and Latin America is exceptionally prospective. Yet investment in exploration [here] is low, as perceived and real obstacles include political and bureaucratic problems, protests and lawsuits by non-governmental organizations, uncertainties about the rule of law, and security problems,’ he said.
“Mining investors’ money goes where it feels the investment is secure. And projects get advanced there,” he added.
In a panel discussion here featuring mining-legal experts Hernando Escobar, Hernan Rodriguez and Claudia Herrera, the panelists took note of seemingly contradictory legal decisions by Colombia’s Constitutional Court and the Council of State on whether local communities can block mining projects with “consultation” votes -- even if a project had already been earlier approved by the national government.
The Court ruled on October 12 that “consultations” aren’t the correct legal method to stop mining, and that instead a new legal scheme must be developed by Congress to ensure proper coordination between national mining regulators, local governments and regional environmental agencies.
Ironically, one week after the Court decision, Colombia’s Council of State ruled in a separate lawsuit that it’s legal for mayors to invoke such consultations -- but that the national government ultimately should decide whether to allow such mining.
Yet as legal expert Rodriguez pointed-out here, most members of Colombia's Congress represent areas where mining doesn’t exist. So they likely wouldn’t have much interest in devoting time and energy for a new law governing mining regulation, he said.
While local communities have the responsibility to develop zoning laws (planes de ordenamiento territorial, or POTs), vast areas of Colombia lack updated POTs that otherwise potentially could trip-up or else encourage local mining applications presented to the national government.
Still, if more mining companies were more aggressive and thorough in carrying-out advanced consultations with local communities – including profound examinations of economic, social and environmental impacts of any proposed project – then perhaps some of the most angry protests and "consultations" against mining in certain areas might have been averted, he added.
However, “for now, the [mining] extractive sector and the [Colombian] government do not show signs of going beyond social corporate responsibility projects,” as local analysts at Colombia Risk Monthly noted in their November 2018 newsletter.
“Therefore, confrontation between proponents and opponents of projects [in certain areas] is likely in the near term both in the legislature and on the ground,” the analysts warned.
Wall Street bond rater Fitch announced November 16 that it has affirmed Medellin’s favorable “AAA(col)” long-term debt rating despite the financial challenges facing city-owned electric utility EPM because of problems with the giant “Hidroituango” hydroelectric power project.
According to Fitch, Medellin also enjoys a “stable” debt oulook and a favorable “F1+(col)” short-term debt rating.
“The rating action is based on the financial strength of Medellín, which is a reflection of its positive fiscal performance, supported by its importance within the national economic context,” according to Fitch.
“Medellín benefits from the important capital resources coming from the dividends received from EPM [rated ‘AAA (col)’ and ‘F1 + (col)’; stable perspective], which allows the city to be more flexible to allocate funds to finance capital expenditures.
“In general, EPM dividends have represented around 20% of the total revenue of the city since 2012. The transfers to Medellin in 2017 were COP$1.01 trillion [US$319 million], in addition, COP$300 billion [US$95 million] were paid corresponding to the sale of the participation of EPM in Isagen.
“The contingency of the Hidroituango hydroelectric project has impacted EPM’s financial plan, considering the expenses related to the resolution of its technical complications and the change in [power sales revenues] projections due to the delays presented. Fitch classifies EPM transfers as capital income used exclusively to finance Medellín’s capital spending program.
“Therefore, it is not expected that the difficulties in Hidroituango will have a significant effect on the key financial indicators of Medellin in the short-to-medium term. Likewise, Medellín has a high degree of financial flexibility that allows it to make the necessary adjustments to its medium-term financial plans in a scenario of decreasing EPM financial transfers.
“The city maintains a high share of its debt in foreign currency (49.5%), whose risks are under continuous monitoring. This aspect is compensated since 36% of the indebtedness is contracted at a fixed interest rate and [Medellin] has an adequate liquidity position in which the free destination liquid resources have more than once covered claims. In addition, the Medellín administration is working to have [adequate] external debt coverage to reduce the risk exposure at the exchange rate,” Fitch found.
As for the general economic outlook, Fitch rates Medellin as “strong with stable tendency."
"Medellín plays a very important role in the country's economic and social contribution. Its contribution to the national GDP is approximately 7.3% and maintains an unemployment rate of 10% to 11%, higher than the national average," according to Fitch. “However, due to its internal migratory attractiveness, Fitch notes the existence of high investment needs in various social sectors. The city continues on the path of investments that allow improving the coverage rates of its citizens at levels above 95% in education, health and public services,” the ratings agency concluded.
Medellin-based electric power giant EPM on November 4 heralded the start-up of the engineered spillway over the giant “Hidroituango” hydroelectric project in Antioquia (see photo, above).
That start-up soon will allow EPM to close a makeshift diversion tunnel through the dam, ensure steady, safe, adequate water-flow of the Cauca River downstream of the dam, and enable repairs to begin in the machine room -- temporarily used to evacuate water following a collapse of the main diversion tunnel last April.
The start-up also means that Medellin eventually would start to recover billions of dollars of future revenues expected to be generated by Hidroituango, as city-owned EPM supplies about 25% of the city’s annual revenues.
“With the start-up of the spillway, a new milestone is reached in compliance with the schedule set for 2021 for the recovery of the project,” according to EPM, which also posted a video of the initial water-flow through the spillway (see: https://www.facebook.com/epmestamosahi/videos/2116900111960032/?fref=ts).
“The structure of the dam remains stable and in optimal conditions to ensure the passage of water through the spillway and the safety of the communities downstream. EPM will close the water passage through the machine house once we are fully confident that the technical conditions of the project allow it.”
The reservoir behind the dam rose to 405 meters above sea level on the afternoon of Sunday, November 4, enabling safe evacuation of Cauca River water through the spillway.
The spillway has a horizontal length of 405 meters and includes four radial gates, 15.4 meters wide by 19.5 meters high. Opening more gates enables controlled increase of water-flow through the spillway. At the bottom of the structure is a settlement well, enabling smooth, continuous flow of the Cauca River downstream of the dam.
The left channel of the spillway was the first put into operation on November 4, initially enabling evacuation of 200 cubic meters-per-second of Cauca River water.
“These 200 cubic meters-per-second are now added to the 750 cubic meters-per-second of water flowing through the machine house, for a total of 950 cubic meters-per-second on average,” according to EPM.
“This ensures an ‘ecological flow,’ or what’s necessary for a normal flow of the Cauca River, which is 450 cubic meters-per-second -- and this also guarantees the safety of the communities that live downstream of the project,” according to EPM.
