Kidnapping of Canadian highlights risk of mining in Colombia

The kidnapping of a Canadian executive in Colombia and his employer's decision to abandon a gold find in return for his release highlights the risk for mining firms operating in Colombia.

Tough calculation of risk vs. reward for mining companies

Colombia's President Juan Manuel Santos on Aug. 7. Government officials insisted Canadian mine executive Gernot Wober be freed before they would talk to guerrilla group ELN. (Fernando Vergara/Associated Press)

The kidnapping of a Canadian executive in Colombia and his employer’s decision to abandon a gold find in return for his release highlights the risk for mining firms operating in Colombia.

Gernot Wober, vice-president of exploration for Canadian gold exploration firm Braeval Mining Corp., was released Tuesday after 221 days in captivity.

He had been held by a group of leftist rebels, the National Liberation Army, known by its Spanish acronym ELN, and his release came after months of intense negotiations involving his company, the government and religious leaders. The Colombian government said he must be released before ELN could enter into peace talks.

Gernot Wober, 47, is shown in this handout photo taken Tuesday in Bogota. (Associated Press)

Eric Farnsworth, vice-president of the Council of the Americas, says ELN did gain leverage by getting Braeval to leave the country, but there is good news in that the group will participate in talks.

"I think in the immediate term it says the ELN is trying to find a way to negotiate with the government in a peace deal —that’s a good sign, but it also shows that [Colombia's] a difficult place to do business," Farnsworth told CBC’s Lang & O’Leary Exchange.

The ELN is opposed to foreign exploitation of resources and was against Braeval's mining project in northern Colombia, where Wober was kidnapped. The group offered Wober's freedom in exchange for Braeval handing over the four mining titles still in the exploration stage in the area.

ELN sees itself as a protector of  traditional miners who feel they’ve been squeezed out of their livelihoods as the government grants mining concessions to foreign companies in an area plagued by decades of disputes over land rights. Another rebel group, FARC, has already agreed to peace talks with the government and the participation of ELN lends hope that Colombia may eventually end its history of internal conflict.

"We have to remember where Colombia has come from. It has come a huge distance in a short time – conditions used to be much worse," he said.

"And frankly, mining companies and extractive industries are not risk averse — they’re used to dealing in inhospitable environments with risky governments in different countries so this isn’t going to kill mining in Colombia by any stretch, but it is a reminder that it can be dangerous."

Colombia  has been working hard over the past decade to reverse its image as a dangerous place to do business. Improvements in the mining and petroleum sectors were expected to lead to four per cent growth in GDP in Colombia in 2013.

There are almost 50 Canadian mining companies in Colombia, and several have gold claims.

Farnsworth said Colombia is considered a "frontier economy" but the government has conditions in place to attract investment, particularly in oil and gas exploration.

"Oil and gas is an area a lot of companies are looking into because the government has made the environment for investors so favourable and they’ve done that because they think there is a lot of energy in the ground, but nobody’s really found it yet so they’re hoping to get companies to come in and explore and hopefully produce on the energy front," Farnsworth said.

Mining and extraction industries always have to make tough decisions balancing risk and reward in a market like Colombia, he added.

"That’s  difficult under the best of circumstances and, if you’re not able to guarantee the safety of your executives, that’s a real problem."

Wober is on his way back to Canada.