Striking Coal Miners in Colombia and the Vulnerabilities of a Rentier Based Economy

The extractive model—or the “motor of development” as the dominant elite and the technocrats call their preferred economic model—is exhibiting its limitations as it confronts a deepening crisis. More than 5,000 [3] workers at the Cerrejon owned by a joint venture between BHP Billiton, Anglo American and Xstrata went into a general strike protesting low wages and dismal working conditions at one of the largest open-sky coal extracting mines in the world. This strike came at an inopportune moment for the coal sector, colombia's economy and Drummond. First, this is occurring against a backdrop of a sharp decline in coal prices—from $120 per ton to an average price of $96—between 2011 and 2012.  This forced the company to postpone and scrap some of its expanding projects. Second, Drummond [4], like the other multinational corporations, is lacking good governance and exhibits an almost total disregard to the environment, especially when states’ environmental protection policy and oversight are limited, as in Colombia. But on this occasion the violation was exposed when a journalist caught Drummond red-handed contaminating seawater by dumping 500 tons of coal from a sinking boat in the port of Santa Marta. Colombia's President, Juan Manuel Santos, suspended [5] Drummond operations until a “satisfactory” review of its environment protocol is performed. The suspension of Drummond, the second largest coal company operating in Colombia, reveals a much larger problem: the vulnerability of an economy that during the last decade has increasingly become dependent on mining and oil.

Photo Credit: interpolitico.com

Coal has become the second most important of Colombia’s exports after oil and accounts for more than three times what the country has earned from its traditional coffee export. Revenues from coal exports reached $8 billion in 2012, a crucial income for a country in war, spending almost 6.5% of GDP [6]on its military. This sector has also attracted about $2.5 billion of foreign direct investment, it employs about 5,657 workers, 700 of whom are suffering from diseases caused by fumes and coal dust. The strikers are demanding a 7% increase in their wages, better health conditions, and other social services in addition to safeguarding the environment. All of which will affect the rates of profits of the Coal multinationals corportations  and may also affect other multinational corporations operating in the country such as Pacific Rubiales, Occidental Oil, and AngloGold [7] Ashanti, among many others. Colombia has become a lucrative market due to many factors, chiefly among them that the state has provided these companies favorable contracts, low taxes—among the world’s lowest rates—and a very lax environmental policy. In other words, Colombia has become a haven for capitalist looting.

For an update see http://www.eltiempo.com/justicia/drummond-pide-reducir-su-planta-laboral... [8] see alsohttp://www.youtube.com/watch?v=JbqEyz7dQXs&feature=player_embedded

Nazih Richani is the Director of Latin American studies at Kean University. He blogs at nacla.org/blog/cuadernos-colombianos [9].