Ecopetrol S.A. (NYSE: EC, BVC: ECOPETROL) reported first-quarter 2026 consolidated revenues of 28.6 trillion COP, a decline of 8.7% from 31.4 trillion COP in the year-earlier period, as lower crude oil prices and reduced hydrocarbon production compressed the top line for Colombia’s state-controlled oil and gas company. Against that backdrop, a marked recovery in refining margins and disciplined cost management lifted EBITDA by 1.5% to 13.5 trillion COP, yielding a 47% EBITDA margin and partially offsetting the revenue headwind. At the Q1 2026 average exchange rate of approximately 3,700 COP per USD, the quarter’s revenues translate to roughly $7.73 billion USD and EBITDA to approximately $3.65 billion USD.

Embattled Ecopetrol CEO Ricardo Roa was appointed to the position by Colombian President Gustavo Petro after managing his political campaign. (photo: Ecopetrol)

Net income for the quarter reached 2.9 trillion COP (approximately $784 million USD), down 7.7% year-over-year, reflecting the combined drag of lower revenues, a sharply elevated effective tax rate of 37.1%, and a one-time charge of 1.2 trillion COP for the impuesto al patrimonio — Colombia’s government-mandated wealth levy on large corporations established to fund post-disaster reconstruction measures. The company is also subject to a 10% income tax surcharge applicable for fiscal year 2026, which is embedded in the reported effective rate. The aggregate tax burden absorbed a disproportionate share of operating improvement relative to prior periods, limiting the flow-through of refining gains to the net income line.

Total hydrocarbon production averaged 725.2 thousand barrels of oil equivalent per day (kboed) in Q1 2026, below the 745 kboed recorded in the 2025 annual average cited by management during the March 2026 general shareholders’ meeting. Domestic crude output represented the largest component at approximately 520 thousand barrels per day (kbd). Ecopetrol’s Permian Basin operations in the United States contributed 91.8 kbd, underscoring the continued strategic importance of the international segment. Gas production continued a multi-year declining trend that poses a medium-term domestic supply challenge; management has sought to address this partially through regasification capacity additions at Puerto Bahía and on the Pacific coast, expected to come online in the second half of 2026 with a combined contribution of up to 430 billion BTU per day.

The refining segment delivered the quarter’s most pronounced operational outperformance. Ecopetrol’s domestic refineries, led by Refinería de Cartagena, processed 417.5 kbd of crude throughput. The integrated refining margin rose to $17.3 USD per barrel, a 60% improvement over the same quarter of 2025, driven by favorable differential pricing between domestic crude benchmarks and refined product values alongside ongoing operational efficiency improvements. The Comisión de Regulación de Energía y Gas (CREG) and the Ministerio de Minas y Energía remain central to the regulatory framework governing downstream margins over the medium term.

The balance sheet carries significant structural and contingent risk items of direct relevance to institutional credit and equity holders. Gross debt stood at 108.1 trillion COP (approximately $29.2 billion USD), representing a leverage ratio of 2.3 times trailing EBITDA — a level that leaves limited room for further deterioration before debt covenants or rating agency thresholds become binding. Ecopetrol holds a receivable of 4.2 trillion COP (approximately $1.14 billion USD) from the Fondo de Estabilización de Precios de los Combustibles (FEPC), a government fuel price stabilization mechanism that represents a claim on the Colombian treasury with timing and recovery risk. A dispute with the Dirección de Impuestos y Aduanas Nacionales (DIAN) over value-added tax assessments totals 12.26 trillion COP (approximately $3.31 billion USD) in aggregate, of which 10.22 trillion COP relates to Ecopetrol’s consolidated operations and 2.04 trillion COP to Refinería de Cartagena. Both cases are under administrative and judicial review; no provisions have been recognized in the financial statements pending resolution, but the potential liability represents a material contingency relative to the company’s quarterly net income.

On the corporate development front, Ecopetrol disclosed three significant transactions during or following the quarter. The company agreed to acquire producing assets from Gran Tierra Energy (NYSE: GTE, TSX: GTE) for $92.4 million USD, adding Colombian upstream production inventory in basins where both companies have operated. In Brazil, Ecopetrol launched a tender offer for shares of Brava Energia (BVMF: BRAV3) at 23 BRL per share, seeking to expand its footprint in that country’s oil and gas sector. And in a transaction that would reshape the mid-size independent landscape in Colombia, the company reached an agreement to acquire Parex Resources (TSX: PXT) for $250 million USD; Parex is a Colombia-focused producer with a complementary asset base across the Llanos and other producing basins. Collectively, the three transactions signal that Ecopetrol’s capital allocation strategy under the current government continues to favor upstream consolidation despite the elevated leverage profile.

The exploration portfolio generated positive news announcements. The Copoazú-1 exploratory well, drilled in Colombia’s Llanos foothills region, was confirmed as a commercial discovery, adding to the domestic reserve base. The Sirius offshore project advanced through the Consulta Previa process — a legally mandated prior consultation with indigenous and Afro-Colombian communities required before development of projects in or near their territories — reaching a milestone in community engagement that brings the project closer to formal development sanction. The Agencia Nacional de Hidrocarburos (ANH) oversees the licensing framework within which both projects operate.

“Ecopetrol is listed on the New York Stock Exchange; we are governed by the strict regulations of US federal agencies. Agencies like OFAC and the SEC could intervene in the company and could even accelerate the payment of financial obligations, which would be extremely grave for Ecopetrol.” — Martín Ravelo, President, Unión Sindical Obrera (USO)

The ISA transmission segment, managed through Ecopetrol’s majority stake in ISA — Interconexión Eléctrica S.A., contributed stable regulated cash flows during the quarter. ISA completed 46 transmission reinforcement works across its Latin American concession portfolio. The segment also completed the acquisition of 100% of IE Madeira in Brazil, consolidating its position in that country’s power grid interconnection infrastructure. ISA further submitted a competitive bid for the Río Bueno–Puerto Montt high-voltage transmission line concession in Chile, demonstrating the group’s appetite for long-duration, inflation-linked infrastructure assets across the Andes region. For institutional investors evaluating Ecopetrol as a blended hydrocarbons-and-infrastructure holding, ISA’s consistent cash generation provides partial diversification from crude price volatility, though it does not insulate the consolidated entity from headline governance risk.

The most consequential variable for the investment thesis over the near term is Ecopetrol’s prolonged governance crisis. At the company’s general shareholders’ meeting on March 27, 2026, held at the Corferias convention center in Bogotá, minority shareholders loudly heckled president Ricardo Roa — with audible shouts of “¡Fuera, fuera!” reverberating through the hall — as debate over his leadership erupted into open confrontation. The meeting approved a dividend of 121 COP per share for minority holders and a 4 trillion COP distribution to the Colombian government as majority shareholder, payable in two installments by June 30, 2026. Despite the financial business conducted, governance overshadowed the proceedings.

Roa faces two separate judicial proceedings. The Fiscalía General de la Nación formally charged him in connection with alleged influence peddling related to the purchase of an apartment in northern Bogotá — charges he has denied. Separately, the Consejo Nacional Electoral (CNE) is examining whether campaign spending limits were violated during President Gustavo Petro’s 2022 presidential campaign, which Roa managed — an investigation that Finance Colombia has covered in detail. Angela Maria Robledo, Chair of the Board of Directors, defended the board’s decision to retain Roa at the March assembly, citing the constitutional presumption of innocence. However, four of the nine board members had already formally recorded their support for his removal at that point, exposing a divided governance structure at a time when strategic and operational decisions require unified leadership.

The Unión Sindical Obrera (USO), which represents approximately one-third of Ecopetrol’s workforce, issued a production strike ultimatum timed to a March 30 board meeting. Martín Ravelo, president of the USO, framed the leadership crisis explicitly in terms of US regulatory risk: “Ecopetrol is listed on the New York Stock Exchange; we are governed by the strict regulations of US federal agencies. Agencies like OFAC and the SEC could intervene in the company and could even accelerate the payment of financial obligations, which would be extremely grave for Ecopetrol.” Ravelo further warned that the company’s outstanding international debt — which he placed at approximately $30 billion USD and which is exacerbated by elevated interest rates — left Ecopetrol exposed to potential covenant triggers or early repayment demands in a scenario where the Securities and Exchange Commission (SEC) or the Office of Foreign Assets Control were to take enforcement action.

Following sustained pressure from the USO, minority shareholders, and opposition political figures, Ecopetrol’s board approved an extended leave of absence for Roa beginning April 7, 2026. Under the arrangement, Roa used accrued vacation through May 27, followed by 30 calendar days of unpaid leave beginning May 28, extending his absence through the end of June — a period encompassing Colombia’s presidential first round on May 31 and a potential runoff on June 21. Juan Carlos Hurtado Parra, the company’s executive vice president of hydrocarbons and designated first alternate to the presidency since November 2025, was appointed acting president. Hurtado Parra holds an MBA in International Oil and Gas and brings more than 28 years of energy sector experience to the acting role, having previously served as vice president of exploration, development, and production.

The political calendar creates a structural transition risk that sits above the operational and financial results as the primary concern for long-duration investors. Colombia’s incoming government, to be inaugurated August 7, 2026, is widely expected to appoint a new Ecopetrol board and select a new company president. That transition may bring material shifts in strategic priorities — including the pace of upstream investment, the approach to the FEPC receivable recovery, the trajectory of energy transition spending, and the capital allocation balance between the hydrocarbons segment and the ISA infrastructure platform. The Ministerio de Hacienda y Crédito Público and the Ministerio de Minas y Energía will both play key roles in establishing the post-election policy framework under which Ecopetrol operates. Institutional investors holding exposure to Ecopetrol via NYSE: EC or BVC: ECOPETROL must weigh Q1’s genuine operational improvement — most visibly in refining margins and EBITDA stability — against a governance and policy transition risk profile that is unlikely to be resolved before the August handover.

Ecopetrol’s Cartagena refinery (photo courtesy Ecopetrol)

The National Oceanic and Atmospheric Administration (NOAA) and the Climate Prediction Center (CPC) have confirmed that ENSO-neutral conditions are currently present in the equatorial Pacific Ocean. However, technical indicators suggest a rapid transition, with a 61% probability of El Niño emerging between May and July 2026. For international investors and executives operating in Colombia, this shift indicates a looming period of increased operational costs, specifically within the energy and agricultural sectors.

The El Niño Southern Oscillation (ENSO) is a recurring climate pattern involving changes in the temperature of waters in the central and eastern tropical Pacific Ocean. During El Niño, trade winds weaken, allowing warm water to move toward the west coast of South America. Conversely, La Niña is characterized by stronger trade winds and cooler ocean temperatures. These fluctuations disrupt global atmospheric circulation, altering rainfall and temperature patterns across the planet.

In Colombia, the effects of these phenomena are distinct and significant. El Niño typically results in a sharp decrease in precipitation and a rise in average temperatures. Because Colombia relies on hydroelectricity for more than 60% of its total power generation, extended dry periods lead to lower reservoir levels. This forces the grid to rely on more expensive thermal generation fueled by natural gas and coal, which historically drives up spot market electricity prices for industrial and residential consumers.

“There is a 25% probability that the index reaches or exceeds +2.0°C during the Northern Hemisphere winter,” according to the National Oceanic and Atmospheric Administration.

The current technical diagnostic from NOAA shows that while the sea surface temperature index in the Niño-3.4 region was recently -0.2°C, the easternmost indices have already moved into positive territory. Furthermore, the equatorial subsurface temperature index has increased for five consecutive months. This accumulation of ocean heat is a primary driver behind the high probability of El Niño persistence through the end of 2026. Some models, including those from the European Centre for Medium-Range Weather Forecasts (ECMWF), suggest a 25% chance of a “strong” or “very strong” event, where temperatures exceed the 2.0°C anomaly threshold.

The Ministerio de Minas y Energía and the Comisión de Regulación de Energía y Gas (CREG) are monitoring these developments closely. A strong El Niño would place additional stress on a natural gas system already facing structural supply constraints. Reduced hydroelectric output coupled with a potential deficit in gas supply could lead to significant energy price volatility. In past events, such as the 2015-2016 cycle, these conditions resulted in substantial financial pressure on the national utility system and necessitated emergency conservation measures.

Agricultural productivity is equally at risk. The Instituto de Hidrología, Meteorología y Estudios Ambientales (IDEAM) has identified the Caribbean and Andean regions—including departments such as La Guajira, Magdalena, and Antioquia—as highly vulnerable. During El Niño, these areas face increased risks of forest fires, water scarcity, and crop failure. For agribusinesses and exporters, this translates to disrupted planting cycles and higher production costs for staples like corn, potatoes, and vegetables, which can fuel domestic food inflation.

Conversely, when La Niña is in effect, Colombia faces the opposite extreme. The cooling of the Pacific leads to excessive rainfall, which can cause devastating landslides and flooding in mountainous terrain. While La Niña can replenish reservoirs, it often damages infrastructure and logistics networks, complicating the transport of goods to port. The current transition out of a La Niña phase provides a brief window of ENSO-neutral stability, which the CPC estimates has an 80% chance of lasting through June 2026.

For the international business community, the significance of these weather cycles extends to macro-economic stability. Persistent dry weather can impact GDP growth by raising the cost of basic services and reducing agricultural output. Strategic planning for 2026 and 2027 must account for these climatic variables. Meteorologists at Colorado State University note that El Niño also tends to reduce hurricane activity in the Atlantic, which may provide some relief for coastal logistics, but the primary threat remains the inland hydrological deficit.

As the Ministerio de Ambiente y Desarrollo Sostenible activates preventive mechanisms, companies are encouraged to review their energy procurement strategies and water management protocols. The next comprehensive diagnostic update from NOAA is scheduled for May 14, 2026, which will provide further clarity on the intensity of the projected warming trend. Understanding the mechanics of the ENSO cycle is no longer a matter of environmental interest but a necessity for risk mitigation in the Colombian market.

Satellite sea surface temperature departure in the Pacific Ocean for the month of October 2015, where darker orange-red colors are above normal temperatures and are indicative of El Niño. (Image credit: NOAA)

Headline photo: the Pacific Ocean from Guachalito Beach, Chocó, Colombia (photo © Loren Moss)

Under the terms of Resolutions 00368 and 00369 issued by the Dirección de Hidrocarburos, the total amount is divided between Ecopetrol S.A., which is owed $1.2 trillion COP, and Refinería de Cartagena S.A.S. (Reficar), which is owed $0.4 trillion COP. The repayment schedule began with a cash transfer of $2.89 billion COP on April 1, 2026. The remaining balance of approximately $1.55 trillion COP is scheduled to be paid on December 15, 2026, through the issuance of Treasury Securities, or Títulos de Tesorería (TES). The Colombian state has acknowledged the financial costs associated with the time elapsed until the final December payment.

“The Ecopetrol Group continues to work in close coordination with the Ministries of Finance and Public Credit and of Mines and Energy — the authorities responsible for fuel pricing policy — in the implementation of payment mechanisms and the reduction of FEPC balances.” — Ecopetrol S.A.

Concurrent with the subsidy settlement, Ecopetrol received authorization from the Ministerio de Hacienda y Crédito Público via Resolution 0666 to execute an external public debt management transaction totaling $1.25 billion USD. The five-year loan was secured through a consortium of international lenders including BBVA (BME: BBVA; NYSE: BBVA), Bank of America (NYSE: BAC), JP Morgan Chase (NYSE: JPM), and Bank of China (HKG: 3988). The credit facility carries a floating interest rate indexed to the Secured Overnight Financing Rate (SOFR) and will be repaid in four equal installments.

The proceeds from the $1.25 billion USD loan are designated for the repayment of existing obligations. Specifically, $1.2 billion USD will be used to settle a 2024 loan previously authorized for the acquisition of the state’s interest in Interconexión Eléctrica S.A. E.S.P. (ISA), while the remaining $50 million USD will be applied to an outstanding balance from a 2025 credit agreement. The loan agreement is governed by the laws of the State of New York and includes standard covenants regarding the borrower’s payment capacity and financial integrity.

These financial maneuvers are intended to optimize the maturity profile of the Ecopetrol Group, which remains responsible for over 60% of hydrocarbon production in Colombia. The company continues to operate integrated systems in transportation, refining, and petrochemicals, with additional international operations in the US Permian basin, the Gulf of Mexico, Brazil, and Mexico.

Traders and transport operators have suspended a 19-day blockade at the Rumichaca International Bridge, the primary land crossing between Colombia and Ecuador. The protest, catalyzed by a 50% tax imposed by the Ecuadorian government on Colombian goods, was lifted to accommodate travel and commerce during the Semana Santa holiday period. Despite the suspension of the strike, the regional business community reports that significant economic damage and diplomatic tensions persist.

Ecuador’s President Daniel Noboa (photo: Carlos Silva/Presidencia de la República)

The closure of the border crossing created a substantial disruption in binational economic activity. Estimates from the Cámara de Comercio de Ipiales in Nariño, Colombia indicate that losses reached approximately $5 million USD per day due to freight remaining stationary in the border zone. The Comité Gremial de Trabajadores de la Frontera de Ipiales stated that while the reopening is a responsible gesture for the high-traffic holiday season, current tariff policies continue to threaten hundreds of direct and indirect jobs linked to foreign trade.

The Governor of Nariño, Luis Alfonso Escobar, criticized the trade barriers implemented by the administration of Ecuadorian President Daniel Noboa. Governor Escobar argued that such measures inadvertently encourage illicit activities in the region. He emphasized that instead of facilitating formal commerce, high tariffs drive trade toward illegality, undermining regional security efforts. To mitigate the conflict, the Comunidad Andina de Naciones (CAN) has initiated high-level dialogues. Diplomatic delegations led by Colombian Deputy Minister of Foreign Affairs Juana Castro and her Ecuadorian counterpart, Alejandro Dávalos, held a virtual working group to address pending issues in trade, transport, energy, and hydrocarbons.

“Decisions adopted without considering the reality of our communities have put at risk the livelihood of merchants, transporters, foreign trade workers, and thousands of people who live from binational exchange,” stated the Comité Gremial de Trabajadores de la Frontera de Ipiales.

Diplomatic friction has extended into the energy sector. President Noboa claimed that in 2017, Ecuador assisted Colombia during a potential blackout by charging 1.6 cents USD per kWh, whereas in 2024, Colombia charged an average of 28 cents USD per kWh during Ecuador’s hydroelectric crisis. In response, the Colombian Minister of Mines and Energy, Edwin Palma, clarified that prices during the 2023-2024 El Niño phenomenon reflected the actual costs of production and distribution, particularly when fossil fuel-powered thermoelectric plants using fuel oil and diesel were activated.

The ongoing trade dispute has impacted more than 5,500 companies over the past two months. Diana Marcela Morales, the Colombian Minister of Commerce, Industry, and Tourism, confirmed scheduled meetings with Ecuadorian officials to de-escalate the conflict and establish fair, transparent rules. Concurrently, the Ministerio de Comercio, Industria y Turismo has moved to protect domestic industries by implementing new tariffs on steel and ceramics from countries without existing free trade agreements. These measures aim to counter market distortions and protect a sector that employs more than 50,000 people while promoting circular economy practices and reducing CO2 emissions.

Above photo: Border between Ecuador & Colombia looking towards Ipiales, Colombia (Photo: Cancillería de Colombia)

This level also represents a 0.1% increase from April, and the slight increase marks the third straight month of rising production, according to the Ministry of Mines and Energy.

After five months, the annual average for the country now stands at 854,190 barrels of oil per day. This is almost exactly in line with the 2017 average of 854,121 barrels of oil per day yet still below the 885,000-barrel daily average of 2016.

The annual figure, however, still exceeds the Ministry of Mines’ previously released “medium-term” estimate of 840,000 barrels of oil per day.

The vast majority of the oil in Colombia is produced by state-controlled oil company Ecopetrol. The Bogotá-based company has set a goal of 725,000 barrels of petroleum-equivalent per day for 2018 and expects to drill at least 620 development wells and 12 exploration wells during the year to help replace falling reserves.

Frontera Energy, formerly known as Pacific Rubiales, produced an average of 52,195 barrels of oil per day in Colombia the first quarter of 2018. This was a slight decrease from the 56,593 it produced in the country compared to the first quarter of 2017.

This was up from 804,298 barrels per day in March 2017.

Production was also up 4.1% over February of this year, with the Ministry of Mines citing more output coming online from various oilfields where work had been halted, including Castilla, Castilla Norte, Castilla Este, Chichimene, and Copa.

Natural gas output rose as well in March, with the 937,452 million cubic feet per day produced representing 3.1% growth compared to 2017.

This nearly-31,000 drop, a decrease of 3.4%, was expected, however, and the actual output did exceed the ministry’s previously released “medium-term” estimate of 840,000 barrels of oil per day.

Some good news was seen in December. The average monthly production of 870,328 barrels per day was up 2.3% compared to November and 3.9% above the average seen in December 2016.

Pipeline disruptions, particularly due to attacks on the Caño Limón-Coveñas pipeline in eastern Colombia in the first half of the year, caused pumping to be halted for extended periods at certain oilfields.

READ MORE: Ecopetrol to Ramp Up Exploration and Production in 2018 with $4B USD Investment

Though a bilateral ceasefire negotiated with ELN, the country’s last remaining armed leftist guerrilla group, helped to ease these issues in the third and fourth quarter of the year, that ceasefire has now ended, and the group has been blamed for carrying out several pipeline attacks over the past week.

Ecopetrol, the Colombian state-controlled oil company and primary producer in the nation, plans to ramp up its production and investment in 2018 with an investment of up to $4 billion USD. It has set a goal for the Bogotá-based company to produce up to 725,000 barrels of petroleum-equivalent per day in 2018 and expects to drill at least 620 development wells and 12 exploration wells during the year.

Occidental Petroleum Corporation of the United States and two Canada-based firms, Frontera Energy Corp. and Canacol Energy Ltd., are among the other high-profile oil companies operating in the country.

(Photo credit: lalabell68 / Pixabay)

In a statement, the company said that: “Diverse reasons — which range from the institutional, the political, and particularly the social, with the recent referendum — oblige us to take the unfortunate decision to stop all project activities, and with it all employment and investment, until there’s certainty about mining activity in the country and in Tolima.”

According to the industry outlet Mundo Minero, the decision means that more than 400 people working in the operation, administration, and logistics of the mine will be laid off and compensated in a manner compliant with Colombian labor law.

Photo: Though AngloGold Ashanti’s La Colosa gold mine has yet to produce for the company, local residents feared the site would be turned into a giant open-pit mine resembling the company’s Sadiola mine site in Mali seen here. (Credit: AngloGold Ashanti)

Though no official plans have been made public, the local opposition to AngloGold Ashanti’s exploration of the site, which dates back some 14 years, is rooted in the company’s desire to turn the location into a giant open-pit mine. Such a process would aid in the recovery of the roughly 28 million ounces of gold that the company believes may be present at the site. Many residents, however, fear the effects that such a massive undertaking would have on local water supplies, the environment as a whole, and the local community generally.

In a referendum on March 26 in the municipality of Cajamarca, just 76 voted in favor of further mining and exploration in the town while 6,165 people voted to prohibit mining. The landslide outcome was hailed by environmentalists and social rights advocates as a major victory for the local community.

But in the aftermath of the ballots being counted, public officials in Bogotá, namely Minister of Mines Germán Arce, said that a local ballot initiative could not supersede mining titles awarded by the federal government. While he acknowledged the town’s right to prohibit future exploration, he stated that the outcome of the referendum could not be applied retroactively to a mine that has been held and invested in for more than a decade.

Regardless of the legal underpinnings of the dispute, the community opposition put the project into doubt, as local officials in Cajamarca reportedly felt compelled to abide by the results of the vote. Colombia’s Constitutional Court has also ruled previously that municipalities affected by mining have the right to prior consultation on planned projects, a decision that helped spur the March 26 vote.

“AngloGold Ashanti’s statement is a major victory for Cajamarca that had been told by the national government their vote was irrelevant,” wrote journalist Adriaan Alsema of Colombia Reports.

Though AngloGold Ashanti today restated that it believes that mining, agriculture, livestock, and other commerce can all coexist in this area of Tolima, the company said that it “accepts the position expressed by the community.”

It expressed frustration that, after 14 years of investment and planning, La Colosa still has not produced any gold and has gone “without concrete progress for several years.” But the company added that it “will continue working in the search for a constructive and sincere dialogue that is necessary for the mining sector in Colombia” while “accepting that local communities are a fundamental part of the debate.”

In addition to La Colosa, AngloGold Ashanti owns additional mining rights in Colombia, notably its holdings in the Gramalote gold mine.

Now, Gran Colombia Gold is seeking more support from the Colombian government to deal with its concerns, and a recent report from Canadian publication the Financial Post claims that the company has already filed a massive $700 million USD suit against the state, alleging a violation of the free-trade agreement between Canada and Colombia.

To add some context and clarity to the headline-making dispute, Finance Colombia Executive Editor Loren Moss recently sat down to talk with Colombian mining expert Paul Harris. In addition to being the organizer of the Colombia Gold Symposium, editor of the Colombia Gold Blog, and publisher of the Colombia Gold Letter, Harris serves as a consultant in Colombia on gold and copper mining, mining information analysis, and project identification, among other subjects.

Paul Harris is a mining consultant in Colombia & publisher of Colombia Gold Letter, the organizer of the upcoming Colombia Gold Symposium

Loren Moss: Reports have surfaced about Gran Colombia Gold filing a $700 million USD suit against the Colombian government. It seems that they’ve had some struggles here in the past locally where they’re operating. What’s behind that lawsuit and what is their grievance?

Paul Harris: Well, first off, I think we need to be very clear. As far as I understand, Gran Colombia Gold has not yet filed suit. So, in Trump parlance: There’s fake news going around.

Where there’s smoke, there’s fire — there’s certainly fire here — but as things stand, and as far as I’m aware, Gran Colombia Gold has not filed suit. If they did, that would be a material fact, and they would have to issue a press release on it. If you look at their website, there’s no press release yet.

So, this story stems from something published in the Colombian media several weeks ago that was not factually correct, and somehow that’s been picked up and reported on and reported on, most recently by the Financial Post in Canada — and that piece had errors in it in addition to this one.

After I initially saw and heard about this in late February or early March, I had the privilege to go to the PDAC in Toronto — a big exploration conference — and I sat down with the CFO of Gran Colombia Gold and I asked him that very question you just asked me.

He said: Look, we haven’t filed suit yet. We’re in conversations with the government. We’ve got a problem. We’ve got a dispute. We’re in conversations with the government about how we can possibly remedy that dispute. And if we’re unable to remedy it, then one possible solution is to file suit — but we haven’t done it yet.

So, the figure may or may not be $700 million USD, and they may or may not file suit. They’re claiming that government policy — or lack of government intervention — has hindered their ability to develop, advance, and expand their operations in Marmato, in Caldas. And also issues related to their Segovia operations in Antioquia that have to do with dealing with local communities, local groups of artisanal miners, and things of that nature. Gran Colombia Gold has seen the government act to help other companies with those kinds of issues. Continental Gold Buritica, for example.

Loren Moss: There were hundreds of troops, I think, sent out there.

Paul Harris: They went in to help clear it out. So, Gran Colombia, I guess, is arguing: You did it for these guys, why aren’t you doing it for us? Why aren’t you helping us?

That seems to be the basis of their dispute. But, bearing that in mind, it still didn’t stop them having record production last year in 2016. So, we’ll see how that evolves.

Loren Moss: They’ve had problems with violence before. I think I remember there was a death at one of their facilities. They’ve had problems with some of the armed groups and some of the criminal gangs. How much of a factor is that? Obviously, it has not impeded them from operating completely. Is that a big hindrance? What are their challenges right now?

Paul Harris: At Segovia, I think, when they originally got the mines in 2010, they were already going into a very difficult social situation. As you mentioned, you had all the illegal armed groups there. The FARC, plus the ELN, and others. You also had the armed criminal groups — or BACRIM — and you had a widespread culture of illegality or informal mining.

One of the solutions they have tried to develop is developing third-party contracts, so that they basically buy the ore that the third-party traditional artisanal informal miners produce and they put that through their mill. That currently is about somewhere between 70% and 80% of their production in Segovia, and to a certain extent that has worked very well for them.

But I think it’s always been a difficult situation for them to manage. They’ve been seeking government assistance to help advance and deepen that program to help formalize some of these informal miners, to bring them into their business model, and it seems that the government hasn’t really been supporting them enough.

Loren Moss: We’ve seen where mining companies have had success in going out and reaching and working with local populations. It seems that in this case, Gran Colombia Gold hasn’t really gotten their support. There are some families that are upset and feel like their rights or their claims have been violated. Are they making any progress? Are they doing anything to try to work locally, or is their strategy just dealing with officials in Bogotá and trying to solve that conflict that they have?

Paul Harris: I think their strategy is very much focused on the local area. When they had the change of their presidency a couple of years ago, the former presidency that was based in Bogotá really came to Medellín. Lombardo Paredes, who was the new CEO a couple of years ago, is located in Medellín, so he can be hands on with the communities, with the municipality, and with the mayor’s office. So the focus really is on local.

But obviously, you’ve got to deal with the national government as well through the Ministry of Mines. And they’re looking to use the tools at the top level of government in addition to engaging very much at the local level of government.

Loren Moss: Where I’m from, in the Appalachian part of the United States, we have what we call “mountain-top removal,” which is very controversial to this day. If I understand correctly — and I’m not an expert on mining — they want to bring that technique into some of their areas where they want to re-shape the geography. Are they getting resistance from that, or is that not part of their plan?

Paul Harris: No. Mountain-top removal is a very specific method, specifically for coal in the Appalachians. I don’t think that was ever the intention here. At Marmato, in Caldas, which I think is the project or deposit you’re referring to, the original plan — way back in 2010 or 2011 — was to do an open-pit mine, which you could argue is effectively mountain-top removal. I’m not going to get into that.

But they encountered a lot of resistance to that idea, and so I would say, way back in 2012, they changed strategy to just focus on underground mining development. That hasn’t been that company’s strategy for probably about at least five years now.

Loren Moss: This is why we wanted to talk to an expert like yourself. Speaking of that, your organization has an event coming up later in the year. Who is that directed toward, and how can readers who are in that sector could get more information?

Paul Harris: Yes. The Colombia Gold Symposium from November 14-15. We did the first one of these last year, last November. We had over 200 people participate. A great success. So we’re repeating this year, and we’re expecting 250 to 300 people.

It’s focused on anybody that really either wants to invest in or work in the Colombian gold and copper sector. We don’t deal with coal. We don’t deal with emeralds. We’re focused on gold and copper. So, it’s targeting investors, mining analysts, exploration companies, major miners, equipment providers, and service providers.

It’s a two-day event. The bulk of the program focuses on the companies and their projects, so the companies present the projects and tell people what they’re doing. There will be anywhere between 10 and 15 of those, plus sessions on government and regulation, mining and mining finance in South America, and there will be an ad hoc or miscellaneous section, which will probably focus on issues related to the peace process and the implications and impacts that that will have for the mining sector.

We’ve already got a lot of companies that have agreed to give presentations. We’ve already got two field visits organized. And we’ve also been fortunate that Rick Rule, the CEO of Sprott U.S. Holdings Inc., one of the big investors in the junior mining space, has agreed to be the keynote speaker. So, it’s going to be a very exciting event this year.

This interview has been edited for space and clarity.

Bioenergy, which is operating from its El Alcaraván plant in the department of Meta, is currently storing its ethanol as it strives to hit its production capacity of 504,000 liters of ethanol per day. Rafael Pittaluga, general manager of Bioenergy, applauded he company’s growth since realizing its first liter of output on December 21 last year, after which it awaited approval from the Ministry of Mines and Energy.

Photo: Bioenergy’s plant in Meta has a production potential of more than 500,000 liters per day of ethanol.

“The certification as a producer of ethanol represented a great achievement for the company, in that it allows us to comply with the quality standards required by Colombian legislation for biofuel marketing,” said the Rafael Pittaluga, general manager of Bioenergy.

In addition to sales from its ethanol product, which is a plant-based fuel blend that includes 10% gasoline by volume, the firm also produces its own electricity in order to be self-sustaining. Bioenergy plans to sell any excess supply through a generator that is already connected to Colombia’s national electric grid.

Thus far, it has already generated a cumulative 51 megawatt hours, an amount large enough to power some 250 homes for a month, according to the company. At full capacity, Bioenergy expects to generate 35 megawatt hours that it can send into the grid.

“We have made significant progress in the development and stabilization of the agroindustrial complex for the production of ethanol in Colombia,” said Pittaluga.