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Written by December 26 2020 0

Medellin-based electric power giant EPM announced December 22 that it reached agreements with all current construction, supervisory and consultancy companies to continue construction of the estimated US$5 billion, 2.4-gigawatt Hidroituango hydroelectric dam in Antioquia.

The contract renewals run through December 31, 2021, but could be extended until the entire project is completed, likely in 2024.

EPM general manager Álvaro Guillermo Rendón López added that “some clauses were included that will allow the contract to be extended -- once future validations are completed -- until the end of the project.”

CCC Ituango construction consortium leader Juan Luis Aristizábal Vélez -- president of construction giant Conconcreto -- added that “the signing of this contract is a sign of commitment to the project,” as it avoids costly problems that would arise if some new contractor were forced to take-over the project.

The three new contract extensions include:

1. Consulting via Consorcio Generación Ituango, which includes Integral Ingeniería de Supervisión S.A.S. and Integral Ingeniería de Consulta S.A.

2. Auditing services for civil works and electromechanical equipment, via Ingetec-Sedic Consortium.

3. Continuing construction of the dam works, power plant and associated projects via the CCC Ituango Consortium, which includes Camargo Corrêa Infra S.A, Constructora Conconcreto S.A. and Coninsa-Ramón H. S.A..

During 2021, “extension of these contracts will be sought to the extent that EPM has the assigned budgetary resources and all technical and legal requirements are met,” according to EPM.

“The three main contractors have expressed their desire and commitment to continue advancing in the development of the project and take it until commissioning,” with the first portion of power generation scheduled to start in 2022 and the final set of generation units starting-up in 2024.

EPM’s biggest trade union Sinpro praised the new agreement that extends the existing contracts -- even in the face of EPM's questionable “conciliation” lawsuit against the current contractors as pushed by Medellin Mayor Daniel Quintero and EPM’s new general manager this year.

That lawsuit could have prompted the current contractors to abandon the project, adding even more delays that could have resulted in hundreds of millions of dollars of lost power sales and regulatory power-provision penalties, Sinpro explained.

Meanwhile, “conciliation” lawsuit talks continue, with hopes that all parties soon come to a friendly agreement that would resolve confusing, contradictory claims about responsibilities for an earlier tunnel collapse at the project. EPM claims that financial damages resulting from the tunnel collapse total COP$9.9 trillion (US$2.8 billion). 

However, lacking a reasonable, fair settlement of such claims among all responsible parties (including EPM itself, which shares at least some blame), EPM's lawsuit potentially could endanger hundreds of millions of dollars of existing Hidroituango insurance payments -- and trigger counter-suits that potentially could cost EPM billions of dollars, according to Sinpro.

Written by December 18 2020 0

Medellin-based textile giant Coltejer revealed in a December 17 filing with Colombia’s Superfinanciera oversight agency that it now plans to abandon its foundational factory in the southern Medellin suburb of Itagüí.

When this abandonment is complete, all remaining textile operations will shift to Rionegro, Antioquia, according to the company, founded in 1907 by pioneering industrialist Alejandro Echavarría Isaza, his son Gabriel and five nephews.

Echavarría not only became Medellin’s most famous industrialist of the era, but also a crucial social benefactor with the founding of the Hospital San Vicente de Paúl complexes.

Echavarría later bought Medellin’s most famous castle-style residence, “El Castillo,” today a museum and event center owned by the city of Medellin.

Coltejer faced the first of many future financial crises in 1974 when world-wide textile manufacturers went overboard on production, resulting in below-cost contraband trade to Colombia. Such contraband has continued ever since, causing huge financial losses to Colombia’s textile producers generally and Coltejer specifically.

In 1978, Medellin-based industrial giant Carlos Ardila Lulle bought the majority of shares in the company, but he couldn’t reverse its fortunes. Then, in 2008, Mexican textile giant Grupo Kaltex became the majority shareholder, trying to find financial synergies.

According to yesterday’s filing with Superfinanciera, Coltejer’s board of directors have finally given-up on the historic Itagüí plant, selling it to real-estate developer Acierto Inmobiliario SA. As a result, Coltejer now plans to move its remaining operations to the Rionegro plant -- tied to modifying certain outstanding credit arrangements with Grupo MCM Colombia S.A.S.

The credit rearrangement deal is tied to “canceling some guarantees that were in favor of [MCM] in order to replace them with properties located in the municipality of Rionegro. Mr. Rafael Kalach [president of Kaltex] abstained from voting on this proposition,” according to Coltejer’s filing.

“In accordance with the negotiation of a part of Coltejer’s land in Itagüí, the industrial operations of the plant [in Itagüí] will be discontinued, leaving the Rionegro plant in operation,” according to Coltejer.

Lands occupied by Coltejer’s factory complexes in Itagüí – now scheduled for non-industrial redevelopment -- are valued at COP$178 billion (US$52 million), according to the filing.

Written by December 16 2020 0

Global mining giant AngloGold Ashanti Colombia announced December 16 that it has launched initial recycling of mine tailings near Jericó, southwest Antioquia, into a cement-like product suitable for buildings, prefab homes, roads, ceramics, paints, outdoor furniture and soil amendments.

The announcement comes on the heels of new demands from Colombia’s environmental licensing agency (ANLA) and Antioquia’s Mining Secretariat for more information on how AngloGold Ashanti aims to avoid environmental impacts from its proposed “Quebradona” copper-gold mine near Jericó.

To date, AngloGold has already fabricated outdoor furniture, chairs, drinking fountains and flower pots – all made from tailings -- for three schools in Jericó.

“In order to help close the cycle of waste produced by mining activity and thus advance in the generation of a true circular economy, ‘Minera de Cobre Quebradona’ will implement different alternatives to give a new use to dry tailings,” according to AngloGold.

“We are testing the dry tailings in different applications,” explained Andrés Felipe López Bermúdez, Manager of Innovation at the Quebradona project. “The inert tailings -- which are almost dry -- are very fine sands, which have a thousand possibilities in terms of construction. Soon we will do the first test of tailings for paving tertiary roads. We have a possibility of paving 1,800 kilometers of tertiary roads in the southwest [Antioquia], where the tailings of Quebradona can serve this purpose and enhance the competitiveness of farmers so that they can move their products with less travel times,” López added.

On a related front, AngloGold announced December 15 that it is generating additional data for ANLA regarding “monitoring of surface water quality, hydrobiological and isotopic parameters in the tributaries of the upper, middle and lower parts of the La Palma and La Guamo streams that are in the [rural districts of] La Hermosa, Palocabildo, Vallecitos and La Soledad,” near the Quebradona mining site.

As for the Secretariat of Mines of Antioquia, “as part of the mining licensing process, an alignment and understanding meeting was held between the technicians of the Secretariat and Minera de Cobre Quebradona staff to clarify and respond to a large part of the [additional environmental data] requirements,” according to the Secretariat.

The additional data will include updates and revisions to maps and geological studies in specific mining areas, according to the Secretariat.

Mayor of Jericó Supports Project

While various environmental advocacy groups and some nearby residents have raised fears and objections to the proposed underground mine, Carlos Augusto Giraldo, former two-time Mayor of Jericó, argued in a December 7 column in Jericho newspaper Al Poniente that AngloGold has proven to be an environmentally and socially responsible miner.

“In the framework of the ANLA’s recent visit to Jericó, some opponents of the Quebradona project affirmed on social networks and in the media that the vast majority of Jericoanos had come out to protest against it,” Giraldo stated.

“The reality is that of the almost 100 people who took to the streets, only a few, less than 10, were from the municipality. The rest came from other places in buses and collective taxis.

“This is a clear example that what happens in Jericó is different from what some people think and declare from Medellín, from Bogotá, from far away Miami or from those who sign applications on the internet from other municipalities, or even from outside the country.

“The mining company’s workers are not at some desk processing a license. They are usually here in Jericó, they get involved with the people, they listen to the questions and they respond with transparency.

“It is true that, in recent years, thanks to the work carried out to promote tourism and other agricultural activities, the municipality has developed new sources of resources and employment.

“But if we Jericoanos have something clear, it is that there is still a long way to go in terms of education, health and well-being. For this reason, a large part understands that all [mining] activities can be carried out with responsibility and oversight by the state and citizens.

“Some data about what Jericó is experiencing: according to the DNP [Colombia’s national development planning department], the net coverage of education here is 77.7%, compared to 84.5% in Antioquia. In secondary education, aimed at 10th and 11th grade youth, the net coverage is 52.2%.

“Likewise, a study carried out by the ECSIM Foundation indicated that one out of every five inter-municipal trips made from the [southwestern Antioquia] province of Cartama to Medellín is for health reasons due to the lack of the required health-care services here.

“Although Jericó does better than some of its neighbors in DANE’s [Colombia’s economic statistics agency] multidimensional poverty indicators, there are areas of the municipality that register percentages of up to 100%.

“In this context, Minera de Cobre Quebradona has understood that its role as a catalyst for the economy must positively impact other social aspects, for which it has worked using institutional channels to support local entities.

“What happens in Jericó, as referenced by the National Consulting Center in a study published in May, is that the majority of people here support the project, not for one reason, but for the multiple reasons mentioned above.

“My invitation to the opponents is to listen to the people, understand their fears and provide solutions, as the mining company has done in recent years. It is also important that opponents resolve their technical or social doubts about the project by asking questions, but not by accusing and even less, by assuming [negative outcomes].

“As Colombian author Héctor Abad Gómez has said, ‘the courage to admit that one does not know, that one doubts, that one is not sure, although difficult to practice, is an indispensable value in today’s world,’” Giraldo added.

Written by December 03 2020 0

Colombia’s Comptroller-General (Contraloria General de la Republica, CGR) Carlos Felipe Córdoba on December 3 announced long-expected mismanagement charges against 28 individuals and companies including contractors, former EPM board members, former Medellin Mayors and former Antioquia Governors for actions and omissions that contributed US$1.18 billion in losses at the estimated US$5 billion Hidroituango hydroelectric project.

“The CGR technically calculates a loss of profits of COP$1.1 trillion (US$317 million) and a detriment to public assets of COP$2.9 trillion (US$836 million),” according to the watchdog agency.

“Among the 28 defendants are 10 members of the board of directors of Hidroituango, two former managers of EPM, two managers of Hidroituango, one manager of the EPM-Ituango subsidiary, two former mayors of Medellín and two former governors of Antioquia. The rest [of those charged] are contractors,” according to CGR.

Those charged include former Antioquia Governors Sergio Fajardo and Luis Alfredo Ramos; former Medellín Mayors Aníbal Gaviria and Alonso Fabio Salazar; and former EPM general managers Juan Esteban Calle and Federico Restrepo.

Also charged are former EPM board members and Hidroituango officials including Alejandro Antonio Granda, Álvaro Julián Villegas, Sergio Betancur, Álvaro de Jesús Vásquez, Ana Cristina Moreno, Iván Mauricio Pérez, Jesús Arturo Aristizábal, Luis Guillermo Atehortúa, John Alberto Maya, Jorge Mario Gallón, Luis Javier Duque, María Eugenia Ramos and Rafael Andrés Nanclares, according to CGR.

The companies facing charges include Consorcio CCC Ituango (Construccoes e Comercio Camargo Correa, Constructora Conconcreto y Coninsa Ramón H.S.A), plus the Consorcio Túneles Ituango (Ferrovial Agroman Chile y Sainc Ingenieros Constructores), the Consorcio Ingetec-Sedic (Ingetec y Sedic) and the Consorcio Generación Hidroituango (Integral e Integral Ingeniería de Supervisión).

“When issuing this important decision, the Comptroller’s Office considered that the mistakes made in the Hidroituango project had three serious consequences:

“1. The first consequence is that the main objective of the project was not met, which was to generate energy already contracted and agreed for the year 2018, which produced the aforementioned loss of profits totaling COP$1.1 trillion (US$317 million).

“2. The second is that there was a disproportionate increase in Hidroituango’s costs. Initially it was agreed at COP$6 trillion (US$1.7 billion) and, due to failures and improvisations, it ended up costing about COP$13 trillion (US$3.74 billion), due to the destruction of the value of the project as of June 2019.

“3. And the third consequence is the serious [tunnel-collapse] contingency that in April 2018 threatened to cause a public calamity in the project's area of influence and for which resources had to be invested in more works."

In the run-up to the formal charges, CGR assembled a technical team including researchers at Universidad Nacional, finance experts and legal experts, according to the agency.

Since Hidroituango now isn’t expected to start generating electric power until 2022 – instead of the planned December 1, 2018 start-up – the project will have failed to generate 2.87 trillion megawatt-days of power from 2018 to 2038, at a loss of US$13.99 per megawatt-hour.

“The CGR's technical team carefully evaluated -- with all the technological supports -- if there were unjustified increases in investments that affected the net value of the project or if the delay in starting operations generated a loss of profit that was would translate into damage of a fiscal nature,” the agency added.

Written by November 20 2020 0

Five Israeli high-tech companies in the agriculture sector, the Antioquia departmental government and Medellin’s Agency for Cooperation and Investment (ACI) just launched a new initiative to boost investment and productivity in Antioquia’s booming agricultural-exports sector.

According to a joint announcement from ACI, the Antioquia government and Israeli Ambassador to Colombia Christian Cantor, the initiative aims to further Israel’s world-leading ag-industry technologies and investments in Antioquia, while simultaneously boosting Colombia’s growing and profitable agricultural exports.

The five Israeli companies participating in the launch here in Medellin include:

1. TapKit, “specializing in large-scale hydroponic systems for fresh culinary herbs, micro-greens and vegetables based on its own advanced growing methods;”
2. Agritask, “which offers a platform designed to unite precision agronomy and business intelligence;"
3. ClariFruit, “provider of optimization software solutions for the fresh fruit and vegetable industry;"
4. LR Group, “which operates in the initiation, development, financing, construction and management of medium and large-scale projects in high-growth economies;" and
5. Bean & Co, “a global cocoa company that grows sustainable large-scale cocoa plantations around the world,” according to the joint announcement.

The initiative represents a “fundamental step to further strengthen the competitiveness of the [Antioquia] region in the agro-industrial sector in the lines of precision agriculture, irrigation systems and greenhouses,” according to the parties.

Colombia’s recently approved free-trade agreement with Israel is one of the key reasons for the new initiative -- although numerous Israeli companies have aggressively pioneered investments here in Antioquia and Colombia especially in the last five years.

Commenting on the new initiative, Antioquia Governor Aníbal Gaviria Correa stated: “In these coming years, major transformations of our department’s competitive platform will be consolidated thanks to the construction of fourth-generation [high-speed, high-capacity] highways, the completion of Hidroituango [Colombia’s biggest hydroelectric dam] and the new ports of Urabá [on the Atlantic coast], among others. These works, added to the security and institutional stability here are key elements that allow us to invite investment from Israel and the world to our department and our country.”

Antioquia’s Secretary of Agriculture Rodolfo Correa added that “it is inspiring what Israel does in the modernization of the agricultural sector in areas of organizational models, technology transfer, efficiency and other advances and developments.”

Christian Cantor, Israeli Ambassador to Colombia, added that “agriculture is and will continue to be a main axis of relations between the government of Israel and Colombia. The companies that are presented at this event are among the best companies that Israel has to offer to Antioquia”.

According to the parties, “Antioquia has key products in the agro industry favoring exports and investment including Hass avocados, cocoa, citrus fruits and beef, among other products. In the case of Hass avocados, exports have grown by 40% in just the last four years.”

Managro Hails New Initiative

Asked to comment on the latest initiative, Israeli expat Chagai Stern -- executive director of Medellin-based agricultural investment firm Managro -- added that “we realize and promote the important partnership between Colombia and Israel. We have been doing so since we were established here in Medellin five years ago.

“Colombia has all the natural resources and scale that any country could wish for and Israel has the technology and know-how especially in the agriculture sector. That’s why we believe that the free-trade agreement between Israel and Colombia will only enhance the partnership and collaboration.”

Earlier this year, Managro bought Colombia’s giant “Pacific Fruits” packing and export company near Cali -- boosting capacity for export of ag products including Haas avocados and mangoes.

Pacific Fruits boasts that last year alone, it shipped 250 ocean export containers of Colombian farm products to Europe, Saudi Arabia, Japan, United Arab Emirates and Hong Kong, tapping proprietary production in Antioquia and Valle del Cauca as well as contracts with ag producers in 14 Colombian departments.

As a result, Managro now administers more than 1,000 proprietary hectares of agricultural production including avocados, milk, mangos, lemons, oranges, guanabana, pineapples and corn.

Page 7 of 33

About Medellin Herald

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

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

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