Cementos Argos Full-Year 2022 Profits Drop 59% Year-on-Year
Tuesday, 21 February 2023 09:10 Written by Roberto Peckham
Medellin-based multinational cement/concrete giant Cementos Argos – a division of Grupo Argos – announced February 21 that its full-year 2022 profits fell 59% year-on-year, to COP$215 billion (US$33 million), from COP$524 billion (US$115 million) in 2021.
Gross revenues rose 19%, to COP$11.7 trillion (US$2.37 billion), up 23% year-on-year, compared to COP$9.8 trillion (US$1.98 billion) in 2021.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 6.6% year-on-year, to COP$2.08 trillion (US$421 million), but adjusted EBITDA in U.S. dollars fell 6.2% year-on-year, to US$520 million in 2021.
Net profit from continuing operations dipped 14.4% year-on-year, to COP$403 billion (US$81.6 million), “mainly affected by the notable increase in financial expenses due to the increase in Interest rates,” according to Cementos Argos.
“On a consolidated basis, Argos shipped 16.2 million tons of cement, a slight decrease of 3.7% compared to 2021, mainly caused by effects on the industrial business in Central America and the Caribbean,” according to the company. On the other hand, concrete volumes rose 6.3%, to 7.5 million cubic meters, “highly leveraged by the good performance of the market in Colombia,” according to the company.
U.S. Operating Highlights
During 2022, U.S. cement shipments rose 4.4% year-on-year, to 6.1 million tons, while concrete shipments grew 1%, to 4.5 million cubic meters. Prices increased 16% in cement and 18% in concrete.
U.S. revenues rose 16.4%, to US$1.5 billion, but EBITDA dipped 4%, to US$256 million, “mainly due to significant increases in the variable costs of the operation as a result of the high inflation in energy prices,” according to Argos.
Colombia Highlights
In Colombia, cement volumes dipped 0.8% year-on-year, to 6 million tons, “as a result of the price recovery strategy in a context in which cement prices in Colombia continue significantly below the parity prices of imports,” according to Argos.
“Export volumes set a record at 1.2 million tons, with growth of 28.2%. Concrete volumes reached 2.7 million cubic meters, presenting a growth of 13.6%, driven by the construction of formal housing and the good dynamics of infrastructure projects. Local cement prices grew 19% and concrete prices increased 13%.”
As a result, Colombia operating income rose 11.8% year-on-year, to COP$2.7 trillion (US$546 million), while EBITDA rose 5.7%, to COP$605 billion (US$122 million), according to the company.
Central America, Caribbean and Trading
In Central America and Caribbean operations, cement shipments fell 18% year-on-year, to 4 million tons, but concrete shipments rose 42.5%, to 273,000 cubic meters.
“Prices increased an average of 14% in concrete and 29% in cement, due to the global dynamics of trade that led to the highest values of import parity in markets with high exposure to international supply,” according to Argos.
Central America and Caribbean region revenues rose 3.1% year-on-year, to US$541 million, while EBITDA dipped 8.1% year-on-year, to US$123 million.
“With higher price levels and more stable inflation, Cementos Argos expects to be able to capture the opportunities that arise in the Central America, Caribbean and trading regions in 2023,” the company added.
Colombia Health System Faces Chaos, Corruption, Delays, Huge Costs Under President Petro’s Government-Monopoly ‘Reform’ Proposal
Wednesday, 15 February 2023 14:18 Written by Roberto Peckham
Colombia President Gustavo Petro and his Health Minister Carolina Corcho on February 13 unveiled a massive national health system “reform” proposal that is already setting off alarm bells in Congress, among health-system providers, health insurance networks, insurance buyers and future patients.
According to the proposal – now facing weeks of debate in Colombia’s splintered Congress – most of the existing “Entidades Prestadoras de Salud” (EPS) health-insurance networks here would be abolished -- and the few remaining (seven in total) would be gutted and gradually transformed into vaguely-defined service providers, rather than health-network organizers and service payers.
Still unclear in the proposal is what would happen to existing or future private-sector prepaid health insurance (PHI) and “complementary” health-insurance policies and programs -- the latter of which are just appendages to current EPS policies.
The issue: If the EPS networks eventually die, then so could the “complementary” policies -- and maybe even the PHI programs, according to some analysts.
Ominous language in the new Petro proposal potentially could gut the value of such policies by forcing all PHI or “complementary” policyholders to use the new, government-monopoly health system, at government-dictated service prices -- with all the inherent bureaucracy, availability constraints, political corruption and horrendous service delays that Colombians had suffered decades ago, under the old, pre-EPS health system.
Under a similarly disastrous government-monopolized health-care system now operating in Brazil, one-third of the entire Brazilian population has already fled the bureaucratic public health system, opting instead for private, PHI networks – fortunately still allowed by law there, but at relatively high cost.
Petro’s public unveiling of the “reform” proposal drew pathetically small crowds of a few hundred supporters at government-organized rallies this week (February 13 and 14) -- in contrast to the massive anti-Petro, anti-health-reform protest marches in many Colombian cities today (February 15).
That’s not a favorable sign for Petro’s proposed health legislation, despite Petro’s well-known reputation for inciting angry divisions, chaos and violence (as in the “Primera Linea” riots of 2021) with extremist, demagogic oratory, typically featuring straw-man “enemies” along with clever use of factual distortions and outright lies.
Colombia’s existing EPS-network system arose from the “Law 100” legislation of 1993 – promoted and led by Petro’s long-time nemesis, former Colombian President Alvaro Uribe. That 1993 law replaced what had been an historically chaotic, corrupt, vastly underfunded, government-monopoly Social Security health system.
Under that prior Social-Security system, only 22% of Colombia’s salaried workers were covered for health care services, while another 40% of the population had to stand in line for government-subsidized services, many suffering or even dying long-before getting any help.
In contrast, today 99% of Colombians are covered by various EPS health insurance networks – a system that would be replaced by a new version of government monopoly, accompanied by new local/territorial health-service “districts” that would be vulnerable to becoming new centers of political corruption, huge waste and lengthy service delays, according to Colombia’s National Academy of Medicine (“ANM” in Spanish initials).
In a public letter to Colombian Health Minister Corcho this month – signed by ANM and 13 other Colombian health-sector associations – ANM warned that under Petro’s proposal to replace EPS systems with new health-system “territorial entities,” these new entities “do not have the capacity to audit and review accounts or to review billing by event prior to payment, which constitutes an imminent risk of overbilling by some IPS [hospitals and clinics] that can lead to a depletion of resources, compromising the financial viability of all IPS and the guarantee of the right-to-care for all residents in Colombia.”
Colombia’s existing Administrator of Resources for Social Security Health Care (“ADRES” in Spanish initials) currently sends all collected health premiums from employers, workers and government welfare agencies to the EPS networks for subsequent payments to hospitals and clinics for patient services.
But under the Petro proposal, ADRES would replace all EPS payment systems, creating a government-payment monopoly, eliminating private-sector competition, hence stifling innovation and economy – and creating great risk of political corruption, ANM warns.
Under the new scheme of local health-system “territorial entities,” ADRES would pay hospitals and clinics only as directed by these new “territorial entities” -- members of which would be appointed or nominated by people who could be connected to corrupt Mayors and other local politicians, as in the prior, pre-1993 Colombian health system.
“Decentralization/deconcentration [of medical-service reimbursements to hospitals and clinics], which implies the appointment of managers, the formation of boards of directors and functional overseers of spending, must be carried out with the guarantee of preventing regional politicking and corruption. Audits should not be a function of ADRES. This must be done by an administrator/regulator,” according to ANM’s public letter.
“The forms of payment to health service providers must be defined, whether involving direct payment, or prospective global payment, etcetera. Other forms of contracting must be analyzed and arranged with the providers, including evaluation of health results,” the ANM letter warns.
Another section of the Petro proposal would require the creation of tens of thousands of new, territorial medical teams, currently non-existent. “The country must know the plan to meet the proposed goals in terms of the 20,000 territorial interdisciplinary medical teams,” ANM’s letter warns.
“A policy and resources for professional training and continuing education must be defined. A reform to the health system that does not contemplate a transformation of health education is incomprehensible,” the letter adds.
Currently, Colombia’s EPS organizations collect health-insurance premiums paid by companies and workers (the “contributory” sector) as well as government welfare payments designed to cover unemployed and unaffiliated workers (the “subsidized” sector). The EPS subsequently sends payments to hospitals and clinics to cover bills for services for both sectors.
But replacing the EPS networks with new, territorial health networks will cost at least COP$52 trillion (US$10.6 billion) under the Petro proposal, with nearly half of that cost hike (COP$25 trillion/US$5.1 billion) resulting from the creation of new primary-care health centers around the country.
Another COP$11 trillion (US$2.2 billion) would be required for new health-center infrastructure and COP$9 trillion (US$1.8 billion) for “formalization” and upgrading of health-care workers, under the Petro proposal.
Nowhere in the proposal is there any explanation of how to pay for these spending increases, although certain vague language in the proposal would authorize President Petro to make unilateral decisions to fund whatever programs he would like – a provision likely to provoke opposition in Congress.
Meanwhile, while Petro claims that too many Colombians suffer from poor service under the existing EPS networks, his massive, government-monopoly “reform” scheme eventually would destroy the entire existing system – its good parts along with the not-so-good parts -- rather than surgically remove or replace diseased portions with cures.
That’s like bringing a reckless, incompetent knucklehead as the surgeon into the operating room, using a sledge-hammer rather than a scalpel.
So: Welcome to Petro Health Care, where many fear the ideologically inspired “cure” could become worse than the disease.
Colombia-based multinational cement/concrete producer Cemex LatAm Holdings (CLH) on February 13 posted a full-year 2022 net loss of US$185 million -- far worse than the US$28 million full-year net loss posted in 2021.
Despite the worsening losses, sales actually increased 4% year-on-year. On the other hand, operating earnings before interest, taxes, depreciation and amortization (EBITDA) declined 21% year-on-year, to US$131 million, according to the company.
Free cash flow also fell into the red, at a negative US$83 million for full-year 2022. “The decline on a year-over-year basis was mainly due to lower EBITDA, higher capex, working capital investment and taxes, as well as a negative effect from discontinued operations,” according to the company .
On the other hand, CLH “received an approximate total consideration of US$325 million related to the divestment of its aggregate majority ownership of Costa Rica and El Salvador operations during the third quarter of 2022. The proceeds of the divestments are not shown in the free cash flow lines.”
Corporate net debt declined by 41% year-on-year -- by a total of US$238 million -- mainly due to the divestment of Costa Rica and El Salvador operations, the company added.
As for fourth quarter (4Q) 2022 results, net loss worsened year-on-year, to US$115 million, compared with a loss of US$17 million in 4Q 2021.
Consolidated net sales during 4Q 2022 rose 10% year-on-year. “Higher prices and increased ready-mix volumes were the main drivers of the improvement,” according to CLH.
Cost of sales as a percentage of net sales increased by 5 percentage-points, from 63.6% in 4Q 2021 to 68.7% in 4Q 2022. “The increase was primarily due to higher variable costs, mainly in kiln fuel,” according to the company.
As for Colombia operations, "our domestic gray cement prices in local-currency terms improved by 11%, and our volumes increased by 2%, during the fourth quarter on a year-over-year basis,” the company explained.
“In the ready-mix business, our prices and volumes improved by 7% and 5%, respectively, during the fourth quarter on a year over year basis. Our volume growth during the quarter and the full year was supported by increased market demand in the formal sector, and the recent investments to increase our ready-mix footprint.”
As for Panama operations, “our volumes for domestic gray cement and ready-mix increased by 5% and 74%, respectively, during the fourth quarter on a year-over-year basis. Despite the improvement, domestic industry volumes in 2022 were still below those of 2019,” the company added.
As for its remaining operations in Guatemala and Nicaragua, “our domestic gray cement volumes declined by 7% during the fourth quarter on a year-over-year basis,” according to the company.
“In Guatemala, our cement volumes declined by 4% during the fourth quarter on a year-over-year basis. Our cement volumes declined due to a slowdown in the construction sector and challenging competitive dynamics.
“In Nicaragua, our cement volumes declined by 12% during the fourth quarter on a year-over-year basis. The decline was largely attributable to reduced activity in the construction sector and heavy rains,” the company added.
Corporate-wide, CLH foresees cement volume sales in 2023 essentially unchanged from 2022, although ready-mix volumes are likely to rise in the “high single digits” in Colombia, by more than 25% in Panama and by “mid-teens” hikes in its remaining Central America markets.
On a related front, sister company Cemex Spain recently proposed to acquire the outstanding shares of CLH, with closing expected later this year.
EPM Claims New Hidroituango Contract Amendments ‘Transparent’ Despite Insinuations of Mayor Quintero Corruption
Tuesday, 20 September 2022 11:24 Written by Roberto Peckham
Medellin’s city-owned EPM utility claimed in a September 19 filing with Colombia’s Superfinanciera oversight agency that an investigative report published September 18 in the local El Colombiano newspaper -- citing potentially corrupt Hidroituango contract manipulation – ought not to be considered as accurate.
The El Colombiano report reveals that EPM recently changed the US$5 billion Hidroituango hydroelectric-plant construction contract bidding in a way that presumably would solely favor China’s Yellow River construction company via partnership with a previously unqualified Colombian construction company.
This alleged scheme follows Medellin Mayor Daniel Quintero’s years-long efforts to eliminate Hidroituango’s current construction contractors in favor of a Chinese company that has been cuddling-up to Quintero (see Medellin Herald September 3, 2020).
While Quintero failed in his lawsuit attempting to revoke the current Hidroituango contractors, the Chinese Communist Party’s official People’s Daily newspaper published a fawning report on Mayor Quintero in its August 19, 2020 edition, under the headline: “Daniel Quintero, Mayor of Medellín: ‘We Have Seen in China a Strong Investment Ally.’”
In the new El Colombiano report -- citing EPM’s recent contract “addendum 7” -- EPM “did the Chinese three favors: first, they reduced the required volume [of prior construction experience] to 28,350 cubic meters. Second, they included that the [new] company could accredit that experience in the construction of ‘framed structures.’ In other words, they no longer had to have experience in more complex structures such as bridges, but building houses or buildings was enough.
“And third, if the Colombian partner did not have a way to accredit that experience in two prior works, as required in the original specifications, now it can accredit it in four works. That is, the company can add 28,350 cubic meters [of experience] in several houses or buildings,” instead of 94,500 cubic meters of experience as originally required, according to the report.
The amended contract also lowered the experience requirement for excavations and construction of wells, tunnels, or caverns to 57 square meters, rather than 80 square meters as specified originally.
José Fernando Villegas, president of the Colombian Chamber of Infrastructure in Antioquia, is quoted in the El Colombiano report as asking why EPM cut the experience requirements to very specific numbers, rather than roundabout numbers. “When one puts an indicator that is not a round figure, it means that someone in particular wants to win [the contract]. It's what they call tailor's sheet,” Villegas was quoted as saying.
Likewise, “in the case of tunnels, the natural thing [in a contract amendment] would be to go down from 80 square meters to 55 or 60, but not 57,” he added.
In response to those charges, EPM issued the following statement to Superfinanciera:
“The fundamental purpose of the public request for bids [via the new contract amendments] is not to change the construction firm, but rather to guarantee the continuity of the civil works of generation units 5 to 8 of the Ituango Hydroelectric Project, under a unit-price payment methodology. in accordance with the development of the work and the current state of the risks, seeking optimization in costs and control of the execution schedule of the project in its final stage,” according to EPM.
“This process has had seven addenda (modifications), among which are extension of the date for receipt of bids, updating of the readjustment formula and provision of complementary documentation to interested parties, information meeting with bidders, inclusion of construction plans of the exterior works and modification to the requested experience.
“As a result of an interdisciplinary analysis, EPM identified the need to modify the experience requested to encourage the participation of Colombian companies and seek a greater plurality of bidders. EPM clarifies that one of the fundamental requirements stipulated in the contracting process is the presentation of offers from national and foreign legal entities, under associative forms, which may not be made up of more than three members and at least one of them must be Colombian. EPM insists that the reason why it modified the experience was due to serious analysis and not at the request of one of the participants in the process (Yellow River).
“The reopening of the process, that is, the opportunity for new interested parties to acquire the right to participate, is not an alien or foreign matter to the contracting of EPM, since precisely to guarantee the principles of equality and plurality of bidders, the specifications of conditions establish the obligation to carry out a new opening of the process when participation requirements are modified. In this particular case, as the experience was modified in some aspects, it was imperative to once again exhaust the stage of reopening the process.
“EPM reiterates that the selection process to build the final civil works of Hidroituango is carried out in a transparent manner,” the statement concludes.
Update: Medellin City Council Reverses Planned Sale of EPM’s 50% Stake in UNE
Tuesday, 20 September 2022 10:27 Written by Roberto Peckham
The Medellin City Council on September 29 decided to reverse an earlier vote that would have approved the sale of city-owned utility EPM’s 50% stake in telecom-internet giant UNE to Millicom Spain, which holds the other 49.9% of shares.
Following an earlier provisional vote to approve the sale, on September 29 some Council members stated that they had subsequently lost faith in promises that the estimated COP$2.8 trillion (US$633 million) proceeds from the sale would be dedicated exclusively to “strategic investments.”
Instead, a last-minute change to the deal -- inserted by Medellin Mayor Daniel Quintero – stated that part of the funds would go toward paying EPM debt and part for other city projects, such as stream-maintenance. That broke the back of the tentative deal.
For more than 18 months, the long-expected deal had been held-up over concerns of misuse of UNE sale proceeds by Medellin’s politically embattled Mayor Quintero, who has been hit by numerous charges of corruption as well as illegal meddling in the recent election of President Gustavo Petro.
Under the earlier, tentative deal, an academic committee was supposed to oversee and verify that all UNE sale proceeds would indeed go into a strategic investment fund at EPM rather than being diverted to political projects of Mayor Quintero.
Earlier this year, UNE (popularly known as “Tigo”) posted a COP$572 billion (US$150.5 million) net loss for full-year 2021, more than twice the COP$212 billion (US$55.8 million) net loss in 2020.
Beside posting net losses in 2021 and 2020, the UNE-EPM venture also posted another net loss in 2018, while its 2019 net profit came-in at just COP$519 million (US$128,000).
Éxito’s Main Shareholder Unveils Huge Stock-Spinoff Plan to U.S., Brazil, Colombia Investors
Tuesday, 06 September 2022 10:55 Written by Roberto Peckham
Medellin-based multinational supermarket and dry-goods retailer Éxito and its principal Brazilian shareholder GPA simultaneously announced September 5 that GPA soon will offer 83% of its shares in Éxito to more than 50,000 current GPA shareholders.
The deal ultimately means that tens of thousands of investors in the U.S., Brazil and Colombia collectively would become Éxito’s biggest shareholders – that is, holding 53% of the total -- during the first half of 2023, according to the companies.
“The transaction is expected to consist of the segregation of GPA and Éxito through a capital reduction of GPA with the objective of distributing approximately 83% of the shares of Éxito currently held by GPA to its shareholders,” according to the companies.
“Therefore, following the closing of the transaction, GPA would retain a minority stake of approximately 13% in Éxito, with a potential for monetization in the future,” while France-based Groupe Casino would continue holding a 34% share via its GPA shareholdings, according to the companies.
“As a result of this project, the company's shareholding base would be substantially expanded, in such a way that the floating capital tradable on the stock markets would increase from 3% to 53%, approximately,” according to a separate Exito press release.
“Casino and GPA (Grupo Pão de Açúcar), would jointly maintain a shareholding of approximately 47%.
“Grupo Éxito will continue to strengthen its investment in Colombia and will continue executing its strategy of omnichannel, commercial expansion and innovation, and traffic monetization, fulfilling its higher purpose of nurturing ppportunities in Colombia,” the company added.
“The transaction will take place through the pro rata delivery to GPA’s shareholders of Éxito common shares -- including in the form of Level II Brazilian Depositary Receipts (“BDRs”) or Level 2 American Depositary Receipts (“ADRs”) -- both representing Éxito’s common shares, in the manner to be disclosed to the market in due course,” according to GPA.
“GPA’s Board of Directors considers that the transaction, which has the objective of enhancing the market value of the shares of GPA and Éxito separately, has the potential to unlock the value to be captured equally by all GPA’s shareholders.
“GPA’s securities will continue to trade in Brazil on the B3 S.A.– Brasil, Bolsa, Balcão (“B3” exchange) and in the United States on the New York Stock Exchange (“NYSE”).
“Éxito’s securities will continue to trade in Colombia, and Éxito will file the necessary documentation with the CVM [Comisión de Valores Mobiliarios of Brazil] and the U.S. Securities and Exchange Commission to in order to have the BDRs and ADRs listed for trading in Brazil and the United States, respectively, in accordance with high levels of corporate governance and regulation applicable in each of the markets,” according to the announcements.
Grupo Imsa First-Half 2022 Profits Jump 136% Year-on-Year
Thursday, 01 September 2022 10:58 Written by Roberto Peckham
Medellin-based multinational Grupo Imsa – a spinoff last November from Medellin-based paints, chemicals and hardware multinational Grupo Orbis, the latter now part of global chemicals giant AkzoNobel – on August 31 posted a second quarter (2Q) 2022 net profit of COP$2.24 billion (US$501,000), while first-half (1H) net profits soared 136% year-on-year, to COP$13.437 billion (US$3 million).
Grupo Imsa produces industrial tubing and posts (O-tek division), food additives (Addimentum) composite materials (Novascott, Novapol and Novaforma), cleaning/disinfectant products (MCM), and also develops commercial real-estate projects in Colombia. Imsa has eight production facilities in four nations: Colombia, Brazil, Mexico and Argentina.
On two new fronts, Imsa now reports expansion into the U.S. and Canada for its food-additives lines.
Consolidated sales in 1H 2022 rose 36% year-on-year, to COP$340 billion (US$76 million), while 2Q 2022 gross margin rose 36% year-on-year, according to Imsa, which now trades on Colombia’s BVC stock exchange.
Improved profits this year came “despite the strong impact on raw material costs associated with restrictions in the supply chain worldwide,” according to Imsa.
Sales for 2Q 2022 at the company’s chemical business in Brazil rose 15% year-on-year, to COP$134 billion (US$30 million), “driven by the reactivation of the Brazilian market and the search for new business opportunities,” according to Imsa.
The “Addimentum” food-additives businesses in Mexico and Colombia saw 1H 2022 sales rise 28% year-on-year, to COP$42 billion (US$9.4 million). “This business continues to consolidate market share, mainly in North America, with current contracts and approvals in Mexico, the United States, and the development of new clients in Canada,” according to Imsa.
As for the “O-tek” industrial pipes-and-poles division in Argentina, Mexico and Colombia, this unit saw sales jump 84% year-on-year, to COP$127 billion (US$28.4 million).
O-tek is “increasing its market share in high-pressure applications in aqueducts, hydroelectric plants and industrial projects, with innovative products such as lock-joint technology, which gives access to a new market for large diameter pipes with greater pressure,” according to the company.
As for the MCM division --specializing in products for the home, vehicles and industry – sales are up 20% so far this year, to COP$40.7 billion (US$9.1 million), according to Imsa.
“Grupo Imsa has a solid capital and liquidity structure and a low level of indebtedness that allows it to support this growth. The Imsa Group holding reports that in the second quarter of 2022, it maintained financial indicators that reflect its solidity, without financial debt and its total liabilities only represent 3% of total assets, while this indicator as of December 2021 stood at 1.8%.
“On the other hand, its current assets of COP$172 billion [US$38.5 million] exceed its current liabilities by 11 times, maintaining a favorable liquidity situation.
“At a consolidated level, Grupo Imsa also maintains adequate levels of indebtedness and liquidity, with total liabilities representing 33% of its total assets, compared to 30% at the end of 2021. In turn, it maintains a current ratio that at the end of June stood at 2.0 times, while as of December 2021 this indicator stood at 2.1 times,” the company added.
Antioquia Gold Posts 2Q 2022 Net Profit, Reversing Net Loss in 2Q 2021
Monday, 29 August 2022 11:51 Written by Roberto Peckham
Vancouver, Canada-based Antioquia Gold on August 26 announced a second quarter (2Q) 2022 net profit of CAD$474,000 (US$364,500), a big improvement over the CAD$2.6 million (US$2 million) net loss for 2Q 2021.
Revenues from the company’s sole asset – its Cisneros, Antioquia mining operations -- nearly doubled year-on-year, to CAD$30.5 million (US$23 million), while adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) likewise improved, to CAD$7.3 million (US$5.6 million), more than double the CAD$3.3 million (US$2.5 million) EBITDA in 2Q 2021.
Gold production at Cisneros soared to 13,489 ounces, up from 9,543 ounces in 2Q 2021, while average realized gold price rose to US$1,734/ounce, up from US$1,624/ounce in 2Q 2021, according to the company.
As for first half (1H) 2022 operating results, Antioquia gold reported production of 24,856 ounces of gold so far this year, while sales of 24,500 ounces of gold netted an average realized price of US$1,723 per ounce.
Cash costs so far this year have averaged US$1,275 per ounce of gold sold, up from US$1,187 in 2Q 2021, while all-in sustaining costs have averaged US$1,393 per ounce of gold sold, up from US$1,305 in 2Q 2021.
The year-on-year boost in revenues “reflects the increase in production along with an increase in the average realized gold price,” the company explained.
The Cisneros underground gold operation consists of two underground mines in the Guaico and Guayabito rural districts, a processing plant located outside Medellin, and “exploration and development of additional properties,” the company noted.
Conconcreto 2Q 2022 Net Income Rises 14% Year-on-Year
Thursday, 18 August 2022 09:08 Written by Roberto Peckham
Medellin-based multinational construction giant Conconcreto announced August 17 that its second quarter (2Q) 2022 net income rose 14% year-on-year, to COP$47 billion (US$10.7 million).
Revenues jumped 67% year-on-year, to COP$528 billion (US$120 million), while earnings before interest, taxes, depreciation and amortization (EBITDA) rose 21%, to COP$79.5 billion (US$18 million).
The boost in revenues is explained “primarily by a greater execution of works, a greater contribution from investments, as well as for the positive impact of the UVR [Colombia mortgage interest rate] on the Pactia Capital Fund and the active debt position subject to [highway project] concessions,” according to the company
“Results were partially limited by an increase in expenses as a consequence of the [post-Covid] reactivation of the company, impacts of the Decree-560 [Colombia bankruptcy exit] process [which Conconcreto successfully exited on May 25, 2022], as well as higher financial cost,” the company added.
Conconcreto’s exit from bankruptcy came as a result of Colombia’s Comptroller-General finally absolving the company from any responsibility for a costly diversion-tunnel collapse at the US$5 billion “Hidroituango” hydroelectric project in Antioquia.
Meanwhile, Conconcreto and two project partners in the “Double Calzada Oriente” (DCO) highway project (linking Medellin to Rionegro) inked a deal this year with international financiers BlackRock and AC Capitales.
That financing deal “provides greater solidity to the project, as BlackRock “is one of the world’s largest asset managers and a leading provider of investment management, risk management and advisory services to institutional clients globally,” Conconcreto noted.
“For its part, AC Capitales is one of the most recognized and experienced asset investment firms in Peru,” the company added.
The DCO project carries an estimated capital cost of COP$960 billion (US$218 million), of which Conconcreto has a 25% interest
As for Conconcreto projects in the United States, the company reports a construction backlog totaling US$225.7 million, mainly for projects in the metro Miami, Florida area.
In Colombia, infrastructure backlog stands at COP$1.67 billion (US$379 million) “concentrated mainly in the Ruta 40 and DCO projects and the TransMilenio trunk lines on Avenida 68 and Soacha,” according to the company.
Petro, Colombia’s Business Sectors: Economic Goals Similar, but Smart Pathways Must Emerge
Tuesday, 16 August 2022 10:57 Written by Roberto Peckham
Colombia’s new President Gustavo Petro and Colombia’s business trade associations are publicly endorsing broad goals for boosting economic growth, improving the lot of poorer populations, cutting income inequality and moving toward a “greener” future.
But the national tax proposal put forward by Petro and his Finance Minister this month ironically might only help the poor with two or three years of tax transfers, followed by years of economic stagnation caused by crushing tax burdens on most jobs generators, along with tax schemes that would only accelerate the destruction of fiscally crucial energy and mining industries.
In a speech last week to Colombia’s biggest national industrial-commercial trade association (the Medellin-born ANDI), President Petro outlined lofty-sounding goals for a Colombia that would disincentivize exports of oil and minerals, cut income inequality via higher taxes on individuals and companies (ironically hitting middle-class people making just US$2,500 per month), target unhealthy beverages and foods, and accelerate the move away from oil-and-gas and mining industries to “greener” schemes.
Yet all those goals could be achieved much-less-painfully -- and more practically -- with a gradualist, more market-based approach as favored by ANDI and many other business and consumer advocates.
That’s especially important given today’s painful inflation problems and Colombia’s relatively fragile attractiveness for both domestic and foreign jobs-creating investments. Boosting industrial/consumer/employee taxes now -- including a proposed doubling of taxes on investors -- on the very sectors generating most jobs, tax revenues and economic growth inevitably would turn counter-productive, as most economic experts here publicly acknowledge.
What’s more, Colombia already has been on a decades-long, gradual pathway of improving the lot of poorer populations and cutting inequality via dramatic improvements in free or low-cost health care, free public education, low-cost job training programs, expanded social welfare payments, food and medicine subsidies, retirement subsidies, free vaccination campaigns, vastly improved public utilities, dramatically improved highway infrastructure, diminished levels of armed conflict with guerilla groups, and a total avoidance of violent foreign entanglements.
Colombia presumably could continue on this gradualist approach, perhaps with a scaled-down version of Petro’s tax proposal. For example: it’s possible to imagine new incentives for alternative production and consumption of “greener” or “healthier” products and services via tax deductions offered to producers and consumers of some of today’s less-friendly products or services -- just as can be seen in many tax policies in North America and Europe, for example.
In his closing speech to the ANDI national convention in Cartagena last week, ANDI President Bruce MacMaster publicly praised President Petro for publicly sharing his vision and hopes for Colombia’s future with ANDI’s members.
“Opportunities and employment are definitely the best way, the safest, the most concrete, the most sustainable and the most proven to be able to overcome the limitations in terms of poverty that any society has,” MacMaster said, speaking directly to President Petro as well as to the assembled, standing-room-only crowd.
“And we are convinced that we are a fundamental part of that pathway, as the companies of Colombia -- from the micro to the large -- are the best and largest generators of employment.
“[President Petro] said it here, as also said in your inauguration speech, that we have to generate wealth, production and opportunities, that if we do not generate wealth, then we do not have anything to distribute, and wealth must be capable of meeting social needs.
“Competitiveness is extremely important and, of course, involves generating a friendly, reasonable and stable environment for the business world. And in that we are completely willing to read the signs that are given to us.
“And I want to make a special mention of conversations we had with your Minister of Finance in which we talked, for example, about the opportunity that Colombia has to be highly competitive in environmental matters, given the capacity we have to produce in our country, with a carbon footprint much lower than in the rest of the world, a small fraction of what it takes to produce in China. We are sure that we can turn this into a great competitive advantage for the country,” MacMaster concluded.
