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Global Risk Insights

Global Risk Insights

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Colombia Could Help Europe Ditch Russian Coal

  • Europe is racing to diversify its energy imports away from Russia.
  • Colombia could offer some assistance by tapping into its significant coal reservoirs.
  • Doing so, however, could exacerbate the country’s already delicate socio-environmental situation.

Sanctions against Russia have intensified Europe’s search for alternative energy suppliers. One of them is Colombia whose President Duque seeks to take advantage of the country’s coal reservoirs. This is likely to aggravate already existing socio-environmental conflicts and human rights violations for inhabitants of major mining regions. 

European Energy Supply, without Russia?

In response to Russia’s invasion in Ukraine, the European Union (EU) has introduced numerous sanctions. These target Russia’s imminently important energy sector. On April 8th, the EU Member States announced an important ban for Russian coal from August 2022 onwards. Up until then, 70% of European thermal coal imports had come from Russia. 

This has sparked a global search for viable alternatives. Increased imports from other major suppliers, including Australia, South Africa and the US, play an important role in this regard. Colombia is another candidate which seems willing and capable of increasing its coal sales to Europe. Prior to Russia’s invasion in Ukraine, Colombia had already doubled its thermal coal exports to Europe at short notice when logistical problems delayed the delivery of Russian coal on a large scale. It is thus unsurprising that Colombia’s President Duque publicly reported a phone call with German chancellor Olaf Scholz in which Colombia agreed to increase its coal exports to Germany as a substitute for Russia.

Colombian Coal: A Suitable Replacement?

Natural resource exports have sustained the Colombian economy since its colonial days. Due to rapidly increasing global commodity prices, this trend accelerated since the turn of the century. While Colombia is endowed with numerous resources of global interest, including oil, gas, gold, emeralds and more, coal plays a particularly important role. As such, Diego Mesa, Minister for Mines and Energy of the conservative Duque government currently in power, stated in March 2021 that coal mining secured 120,000 jobs, generating 85% of the central government’s entire mining revenues.

Related: Europe Faces “Red Alert” For Gas Supply As Russia Reduces Flows

Coal mining is geographically concentrated in the northernmost provinces of La Guajira and Cesar. The department of La Guajira has hosted Latin America’s largest open-pit mine since the 1980s. Commonly known as ‘Cerrejón’, its owning company Glencore enjoys massive tax reductions in Colombia. However, ordinary citizens do not seem to have benefited from this resource wealth. Approximately 63% of its citizens live in poverty, and an additional 25% live in extreme poverty. While thousands of residents, particularly indigenous Wayúu, struggle to access potable water, water sources were diverted to the mine, which consumes 24 million litres of water every day.  

Affected communities are increasingly mobilising against this use of Colombia’s resource wealth, angered by how it is impacting the lives of ordinary citizens. This has fostered growing numbers of socio-environmental conflicts across Colombia. The Duque administration and its predecessors have, in the past, tended to side with transnational mining companies, arguing that natural resource revenues are needed to achieve development. Continuing to take advantage of these resources, as a result of the Ukraine crisis, is therefore likely to intensify such conflicts given its impact on Colombian citizens.

For Cerrejón, practical implications are already coming to the surface: Glencore (one of the world’s largest natural resource companies) now envisages a further expansion of the mine. To this end, the Duque administration recently granted permission to divert the Bruno stream, the main tributary to the last remaining river in the Guajira desert. Openly violating previous court rulings, the consequences of this decision are potentially life-threatening, with experts fearing this move could dry up the entire river.

Risk Outlook

Considering that the lifting of sanctions against Russia is very unlikely without a withdrawal from Ukraine, its consequences for Colombia are highly unlikely to change in the short term. Decades of mobilisation and protest, particularly at local and regional levels in affected areas, seem to have done little to shift this use of natural resources. Tellingly, the outgoing President Duque recently announced that Colombia’s coal production of 2022 and 2023 had already been decided and sold. Even an electoral victory of the leftist Gustavo Petro in the upcoming second round of the presidential elections may not be enough to set off a major change in Colombia’s prevailing development paradigm. Although Petro claimed during the campaign he would ban new fossil fuel exploration, this leaves the current use of these resources and other contractual obligations unaffected. Furthermore, lack of support from Congress may well prevent the implementation of such alternative policies. Thus, political instability, citizen protests and unrest as a result of these socio-environmental conflicts are likely to persist in the short and medium term.

By Global Risk Insights

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