Men wearing mining helmets and headlamps ride the heavy trucks and motorcycles that clog the dirt roads leading into the bustling Colombian mining town. Passing shipments of earth and rock spill dust into the hot, humid air. Foundries and workshops buzz 24 hours a day, sorting gold from stone or clay. By night, workers pack bars and brothels that line the streets, many still wearing their mining uniforms.
Segovia lies in northeastern Antioquia, one of the richest gold regions in all of Colombia. It seems like every business in town is tied to the gold trade—legal and otherwise. But judging by the brick shacks, lack of infrastructure, and visible poverty, the multi-million dollar earnings reaped by international conglomerates in the region don’t reach residents in any meaningful way.
The only sign of the Colombian government is a passing truck full of soldiers with assault rifles and heavy body armour. On nearly every signpost along the single muddy, winding road into town is graffiti marking the town as belonging to the most powerful criminal armed group in Colombia, the Gaitanista Self Defense Forces of Colombia, or AGC by its initials in Spanish.
The government calls the group the “Clan del Golfo” but in Segovia they’re called “paracos”—an abbreviation for paramilitaries, the same ones who fought on the side of the government during Colombia’s half-century long civil war.
Recently elected President Gustavo Petro has announced plans to negotiate a new peace plan in Colombia that includes direct negotiations with armed groups. Some AGC fronts have signaled a willingness to sign on.
Petro has also spoken of reining in the human rights abuses and environmental damage caused by extractive industries in Colombia. Both of these plans mark a break with the past, but they come with extreme logistical, political and security challenges.
Among the biggest players in Colombia’s mining sector is Toronto’s GCM Mining, better known as Gran Colombia Gold, the country’s largest gold producer. But the Canadians do very little actual mining, and instead rely on subcontractors to access the gold they bring to market—a risky proposition in a region under the thumb of criminal organizations.
A history of pillage
Colombia’s war ended—at least officially—in 2016 when the government signed a peace agreement with the Revolutionary Armed Forces of Colombia (FARC).
Northeastern Antioquia, where mineral-rich Segovia and Remedios are located, was one of the hotspots of the conflict where the FARC regularly clashed with the government and its paramilitary allies. When FARC fighters laid down arms and rejoined civil society en masse, it was paramilitary death squads like the AGC who moved in.
In Segovia, reserves of the precious metal have long attracted international companies, small independent miners, illegal operations extracting gold without a license, and a host of secondary businesses who cater to their needs.
Criminal groups prey on the most vulnerable residents, who are often least able to access formal justice. The fact that many locals participate in activities deemed illegal, like small-scale mining without the proper permits, means there are even more barriers to ensuring they are shielded from organized crime networks.
But it’s not only those in the informal sector whose activities are entwined with the criminal economy. International mining companies can also be targeted by criminal groups, though sometimes their activities can appear symbiotic, especially when it comes to money laundering and the control of workers and local residents.
Gran Colombia’s entry into the gold business in Segovia was preceded by over a hundred years of pillage that left locals with little and denied pensions for unionized mine workers. In 2010, the Toronto company indirectly acquired the mine holdings, licenses, and infrastructure that had belonged to Frontino Gold, a US company that was in bankruptcy.
Gran Colombia quickly ran into labour problems, and its activities sparked land disputes with small independent miners in the region. As the company acquired new mining titles near Segovia, it displaced artisanal miners who had worked in the region for generations, and who organized to resist the company’s efforts.
Independent miners from Segovia, whom Gran Colombia denounced as criminal operations infringing on their titles, were presented with a choice: work for the company, or be evicted, by force if necessary.
Workers who stayed claimed the conditions were dangerous and pay amounted to “slave wages.” Those who pushed for better pay and safety standards were violently removed from mines they had worked in for years. Labour groups protested via strikes and meetings with regional government officials in Medellín, where they denounced Gran Colombia’s actions.
In November 2016, the Inter-American Commission for Human Rights solicited state protection for informal miners from Segovia amid a dispute with Gran Colombia, which claims that areas used by informal miners in Segovia belonged to it.
A year prior, informal miners that had been working in that mine were invited to Antioquia’s state congress in Medellín to explain the situation in Segovia and the threat posed by paramilitary groups.
Two days later, a mysterious pamphlet declared the miners that opposed Gran Colombia’s interests “a military target.”
Four of them were found dead within a week, allegedly assassinated.
Over this same period, large numbers of artisanal miners were also displaced from the region by armed groups— though no link between AGC and Gran Colombia interests was ever proven.
Faced with labour disputes, criminal armed groups and a local community in rebellion, Gran Colombia changed its strategy. The company hired Colombian sub-contractors to mine their gold, as a way of dealing with escalating security, legal and social issues.
Using subcontractors gave Gran Colombia a key advantage: plausible deniability. The company could put distance between their operations and the problems that come with working in a region effectively controlled by criminal armed groups.
Gran Colombia has in the past claimed that it has no knowledge of any of the subcontractors in their employ making payments to armed groups. The company did not respond to repeated requests for comment from The Breach.
Just last week, Gran Colombia announced the completion of a merger with Aris Gold, another Canadian company which owns the controversial Maramato mine. The new legal entity created by this merger is to be called Aris Mining. Aris Gold promised to forward queries sent by The Breach to its compliance team, but didn’t respond to specific questions.
Entrenched criminal interests
Carlos Valencia operates a small sub-contracting company in the neighbouring town of Remedios. “It’s onerous to get the licenses necessary to operate,” he said—a legal barrier that largely prevents small independent miners from being eligible for permits.
“But once the company is set up, we work directly under the companies who own the mining rights, and we are responsible for production as well as code compliance,” Valencia told The Breach. He explained that subcontractors, in practice if not in exact legal terms, are given regular payments in exchange for managing mining licenses owned by companies like Gran Colombia. The subcontractors have profit sharing deals tied to gold production, which they are in charge of reporting.
The self-reporting of production figures by sub-contractors, which occurs with little government oversight, has been identified as a method to launder illegal gold into legal markets.
When asked about AGC presence in the region, Valencia ended the interview, citing safety concerns.
Multiple miners in Segovia, who requested their names not be published due to fear of retaliation from armed groups, told The Breach that no company, large or small, can operate in Segovia without paying the vacuna or vaccine, the slang term for extortion payments, to the AGC.
Segovia is dotted with dozens of small shops that buy gold, their signs on nearly every corner of the bustling town. Miners need to be certified by the state to sell the gold they mine, but Valencia explained that law functions only in theory. “There are less scrupulous buyers who will buy from unlicensed ‘artisanal miners,’ paying lower prices, of course, then re-sell the gold on the legal market for a profit.”
The Organization of American States and the Colombian government estimate that up to 85 per cent of the gold exported from Colombia is mined illegally, much of it laundered into legal markets.
“In places like Segovia and Remedios, which are rife with illicit economies, the difference between legal enterprises and criminal ventures has faded to the level that both sectors are entirely intertwined,” Bram Ebus, a consultant and researcher with Crisis Group, told The Breach.
The methods of independent mining in the region vary greatly. Some are lower-impact: gold-panning in rivers, or toiling in small underground mines. Other operations are effectively strip-mining—knocking down mountains with heavy machinery or explosives and then using mercury to sort the valuable minerals from waste, a practice with devastating environmental impacts.
Historically, the Colombian government has not differentiated between the two, which has led to small miners without permits being grouped in with large illegal industrial operations, sometimes run directly by criminal groups.
By 2016, 83 per cent of the gold mined by Gran Colombia in and around Segovia and Remedios was being produced by sub-contracted Colombian companies, according to a study on the social impacts of mining in Colombia conducted by Germanwatch. Some of these companies have been credibly accused of links to armed criminal groups.
When it comes to Gran Colombia’s bottom line, the new model appears to be working. Last year, Gran Colombia produced over seven tons of gold in Colombia, for net earnings of US$178.8 million. That’s slightly less than one tenth of Colombia’s total gold production.
Some of the subcontractors that Gran Colombia uses in the region have questionable back stories.
Damasa is the Colombian parent company of nearly a dozen mining related subsidiaries that works closely with the Canadian company. Damasa owner Edgar Julio Erazo claimed last year on the company’s website that his company “was able to produce almost 100,000 ounces of gold, constituting nearly 50% of the total production of Gran Colombia Gold.”
Erazo is a demobilized paramilitary leader. During the civil war, he worked closely with some of the highest levels of leadership in the now defunct paraco group the United Self-Defense Forces of Colombia (AUC), an alliance of paramilitary cells that operated as death squads for the Colombian government and financed their activities via a sprawling criminal empire.
The AUC formally demobilized between 2003 and 2006 as part of a deal with then-president Alvaro Uribe. The majority of combatants formed new armed groups and continued their criminal activities. The AGC was formed by three breakaway leaders from this process, and their early ranks were filled almost entirely by ex-AUC fighters.
In the course of this investigation, The Breach obtained a copy of Erazo’s criminal record. He was charged with “terrorism, conspiracy and criminal threats” in 2014 and sentenced to 33 months in prison for criminal conspiracy. The conviction was expunged in 2015, before any time was served, when he demobilized as part of a special process that offered him immunity for his actions during the civil war.
Erazo told The Breach that these were blanket charges applied to all former AUC combatants as part of their immunity deal. He was, he says, “merely a low level militant” during the civil war.
One of Erazo’s subsidiary companies, Standard Gold, also part of Damasa Group, was charged with laundering illegal gold into legal markets as part of larger investigation into criminal ties of Colombian mining companies between 2006 and 2008.
In 2015, Damasa was accused by miners who worked for the company of paying extortion fees to AGC, and of collaborating with the armed group in an intimidation campaign that included threats against union leaders, who at the time were leading a strike over working conditions.
Erazo has denied paying off AGC, some of whose members were his former comrades in arms.
But after a series of gruesome killings in 2016, numerous employees told the Toronto Star that in practice that meant only that extortion payments were passed on to the miners directly.
In a phone interview with The Breach, Erazo again denied allegations that he had worked with or paid extortion to AGC in Segovia. “The opposite is true. I am a victim of these groups,” he said. “I have faced death threats and persecution.”
Colombia’s Ombudsman’s Office issued an alert in September, claiming the AGC was threatening members of the Mesa Minera de Segovia, an organization that defends informal miners from the region against the ambitions of corporate mining giants like Gran Colombia.
“Armed criminal groups commonly operate third party organizations, such as subcontractors or subsidiary companies, that act as links between the criminal world and the legitimate business world,” said Franciso Javier Daza, an investigator at the Foundation for Peace and Reconciliation (PARES), an organization that studies criminality and conflict in Colombia.
“Their tentacles extend into every aspect of the regions they control, making them very difficult to investigate or dislodge.”
The path forward
Numerous multinational companies operating in Colombia have faced legal action over payments to paramilitary organizations, and have argued in court that extortion payments were made under duress.
But that does not exempt them from responsibility, according to Kelsey Jost-Creegan, Supervising Attorney at Columbia Law School. She has studied the ties between multinational companies, domestic corporate entities, and paramilitaries in Colombia.
“This argument doesn’t hold up,” said Jost-Creegan. “These companies choose to operate in regions where they know criminal actors hold power, often using third parties to facilitate and provide legal distance from the consequences of their actions.”
Illegal structures in Colombia like AGC often become so embedded in the regions they control that resistance against their interests becomes impossible. Their ties to legitimate financial activities and their desire to impose extortion payments on extraction projects, by whatever means available, is a key reason why Colombia for years has led the world as one of the most dangerous countries for environmental activists and land defenders.
President Petro, as part of proposed peace talks, has offered amnesty to criminal groups who disarm and dissolve their criminal structures. But it is unclear yet how the pattern of past paramilitary disarmaments, which have seen combatants sign immunity deals and return to crime, will be avoided.
It also seems unlikely that hybrid organizations like the AGC, which have a presence in both legal and illegal economies, will volunteer their full holdings to the state. For now, new mineral extraction contracts with foreign companies are on hold, and the Petro administration has made mining sector reform a focus of their efforts.
The OAS says that independent subsistence miners must be incorporated into legal industries that operate under state oversight as part of any real reform. But past efforts by Colombia in this direction have not achieved the desired effects, due to widespread infiltration of criminality into the extractive industries. Top-down programs have been focused on the needs of mining conglomerates rather than those of residents in affected communities.
President Petro has promised change. But untying the Gordian knot of links between organized crime and legal structures in conflict zones will be much more difficult than making promises of reform on the campaign trail.
“We’ve mined here for decades independently,” one small-scale miner told the Breach. “We are not the ones with bulldozers and dynamite knocking down mountains.”