Who is Garry Neil Drummond?

Gary Drummond

Who is Garry Neil Drummond? Is he H.E.’s boy, the son of Drummond Co.’s founder, H.E. Drummond, who started the company in Jasper Alabama by putting up his 3 mules for collateral on a $300 bank loan in 1935? Is he Garry, the young civil engineering student who graduated from the University of Alabama in 1961 and became the company’s first engineer?

Or is he Mr. Drummond, the man who owns 100% of the U.S.-based coal mining company, whose majority of assets are made up of a series of open-pit coal mines sprinkled across Colombia’s Northern Caribbean coast? Is he Mr. Drummond, the man who directs a volume of mining activity in Colombia that turns out most of Drummond’s $3 billion in revenues (2012), pays some $278 million in royalties to the Colombian state, and accounts for 25% of Colombia’s total mining royalties?

Most in Colombia recognize him as the latter man. And since 1986, when Drummond Co. acquired its first mine in Colombia, Garry Neil Drummond has earned more and more attention for the controversy surrounding his company.

Recently, Mr. Drummond’s company has been fined more than $100 million and got its shipping license revoked for a a series of blunders, including failure to pay taxes and intending to cover up an environmentally hazardous coal spill through 2013. From Colombia Reports

The Alabama-based company was forced to close its private Caribbean port two weeks ago when it failed to meet the January 1st deadline for the implementation of a direct-loading conveyer belt system. The deadline was set by the Colombian Environmental Ministry after a company barge dumped almost 2,000 tons of coal into the Bay of Santa Marta last year. The regulation outlawing crane-and-barge coal loading had been in place for six years prior to the incident.

But the company has also come under attack in the US for alleged links to paramilitaries and funding the murder of several union leaders who represent Colombian miners at Drummond. From Business and Human Rights

In 2002, the families of three deceased Colombian labour leaders and the union they belonged to, Sintramienergética, filed suit against Drummond Company, Inc. and its wholly-owned subsidiary Drummond Ltd. in US federal court.  The plaintiffs alleged that Drummond hired Colombian paramilitaries to kill and torture the three labour leadersin 2001.  Sintramienergética represents workers at Drummond’s coal mining operations in Colombia…

Drummond Co. seems generally quick to dispute the legal matters it faces in its Colombian operations. But it’s hard to know exactly what Garry Neil Drummond really thinks about any of the complex matters surrounding Drummond’s coal mining in Colombia. For example, in 2012, beset by accusations that he sponsored murder in Colombia, Garry Neil Drummond reportedly confessed,

“I was never in charge of anything in Colombia.”

photo credit: Portafolio

New Information on Old Resources: Coverage of Mining in Colombia

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I once asked a Colombian business leader why her business publication was set to cover topics like Electric Power, Oil & Gas, and Infrastructure… but not mining.

“It’s very difficult to get accurate data on that sector,” she said. She also added that there is a mix of legal and illegal actors in the mining sector, making it very difficult to profile.

La Silla Vacia, a Colombian digital magazine, is doing something about that difficulty. They’ve just launched a special page (español) that will cover Colombia’s complex mining industry.

From the site…

Aunque la locomotora minera que prometió el presidente Juan Manuel Santos apenas prendió motores y todavía no ha comenzado ningún proyecto nuevo en su gobierno, la minería ya se convirtió en uno de los temas de debate más polarizadores en el país.

Even though the mining engine that President Juan Manuel Santos promised is hardly turning, and none of the new projects of his government have begun, mining has already turned into one of the most polarizing matters of debate in Colombia.

La Silla Vacía covers the mining sector, but also provides a database of the companies, players and interest groups that make it go.

More on Colombia’s mining sector here (español)

Foreign investment could hurt Colombia peso, economy: Analysts

January 14th, MEDELLÍN (Colombia Reports) – Analysts worry over the consequences of a strengthening peso after Colombia recorded a jump in Foreign Direct Investment in 2012.

Colombia, the third largest economy in Latin America, reportedly received $16.7 billion in foreign direct investment in 2012, far exceeding the Ministry of Commerce’s goal of $10.8 billion. This marked a 25% increase from 2011.

Roughly 59% of capital inflows, however, poured in to Colombia’s booming energy and mining sectors, provoking concern amongst some analysts over the severity of a potential “Dutch disease,” which occurs when currency appreciation, in response to a steep rise in commodity demand, erodes the price competitiveness of other export products.

David Reese, an emerging markets economist and Colombia analyst with Capital Economics in London told the Financial Times that “on the one hand, it is good that Colombia is being seen as a favorable destination for FDI. It shows how far the economy has come in building investor confidence.”

But Reese expressed concern over the negative consequences that come with a sharp increase in foreign investment inflows.

“We’ve seen industry struggle for a long time now,” said Reese. “We have seen consumer spending slow and we have reached the point of low growth and rate cuts.”

The Colombian economy experienced an extreme slowdown in the third quarter of 2012 when GDP grew just 2.1% — a five percent drop from the same period in 2011.

As Reese explained, pressure on the peso warps sectors other than energy and mining.

Economist Ed Dolan explained that the behavior of the peso has in turn produced a loss of competition for Colombia’s manufacturing and agriculture sectors.

The peso’s gain in 2012 prompted the Central Bank to shore up its dollar-buying policy in order to cool down the peso and prevent a more dangerous onset of Dutch disease. Jose Dario Uribe, Manager of the Central Bank, told local media that in 2013 the bank plans to buy at least $4.6 billion in US currency.

Caught in between the booms.

As its copper mining industry quickly swells in the middle of the Gobi dessert, the landscape of Mongolia is changing too. But so is its capital, Ulaanbaatar. Stuck in between two worlds is how everyone from rural herders to expatriate security guards feel inside the mining boom that is expected to significantly push up the country’s GDP of $2,000 per capita over the next decade.