Colombia gets more mineral-dependent. Now, mineral extraction gets tougher.

Colombia’s in a bit of a tough spot on natural resource exploitation. (But who isn’t, right?) On the one hand, the economy is getting more mineral-dependent every year. Here’s a chart showing what Colombia’s exports are made of, according to the central bank. The inner ring is 1995. The outer ring is 2012, through May. The red part is minerals. Cocaine exports aren’t included. Minerals — including fossil fuels — now make up more than half of Colombia’s legal exports, up from less than 42% every year through 2010. In other words, industrial and agricultural exports are becoming less important to Colombia’s foreign trade.

I know, the bars' thickness or radius should reflect the nominal amount of trade in each year. Excel doesn't do that.

(Below, see a chart of the overall export figures — industry has actually been doing well, just that minerals are kicking its culo.)

That wouldn’t be a big deal except that mineral exploitation is facing a collection of problems. One is that guerrilla attacks appear to be having a real effect on oil output in some of the new frontier areas. Portafolio reported on this last week, and Colombia Reports gives a decent summary in English:

FARC attacks and threats against oil infrastructure in southern Colombia have completely halted the production of one multinational company since March, financial magazine Portafolio reported Tuesday.

Emerald Energy, a UK-based subsidiary of the Chinese-owned conglomerate SinochemGroup, last shipped oil from the southern Colombian department of Caqueta on March 11. That same day the FARC attacked a company oil tanker and killed one of its drivers. It was allegedly the FARC’s 25th such assault since January. The company has since suspended its operations in the region indefinitely.

In 2011 Emerald Energy had a potential oil production of 3,120 barrels of crude a day in the north of Caqueta. As of July 2012, the company stopped production entirely due to the FARC’s continuous intimidation tactics and violence against oil infrastructure. (MORE HERE)

Gran Tierra Energy said last week it expects to miss its oil output guidance this year, because of attacks.

At the same time, environmental and social justice groups continue to apply pressure around gold mining projects. And coal prices are at risk, thanks to the growth of fracking.

Nevertheless, Colombia is forecasting that it will not only break the elusive million-barrel-a-day mark, but will reach 1.15 million in two years (“mid-2014”).

All of this has, if my reading of the hype-machine is right, taken some of the (excessive) shine off the Colombia story. Not just for foreigners, but also for the local investors, who were repeatedly taken for a ride by new listings over the last few years. Caution is a good thing. Check out not just the price, but the volumes in this chart of the Bogotá IGBC Index:
IGBC 3-year chart

And as promised, the overall Colombia export figures in USD from 1995 to 2012. I did a straight-line extrapolation of the first 5 months to give 2012 figures, so as to show the trend. That is, the 2012 figures are estimates.


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