California Dreamin’ Greystar Gets It Right in Rural Colombia

Last week in this space we looked at the broad improvements in Colombia and its minerals sector; this week we focus on the lessons learned from one company’s Herculean efforts to resume a major exploration program in that civil war-scarred country.

Since 1995, Vancouver-based Greystar Resources has been exploring a high-sulphidation, gold-silver deposit named Angostura in the Santandar complex of northeastern Colombia. The wholly owned, 67-sq.-km property is beside the small mining community of California, 55 km northeast of the major city of Bucaramanga.

Greystar has completed 95,000 metres of core drilling since 1995 and delineated 125 gold-bearing veins.

About US$25 million has been spent at Angostura so far. The gold resource totals 8 million ounces, and geologists are still getting a handle on significant high-grade shoots that have developed at vein-vein and vein-fault intersections.

Greystar has about $30 million in its treasury, and nine drills and some 250 employees and contractors are active on the site, all in an effort to propel the project toward the feasibility stage.

It hasn’t always looked this good for Greystar, and the company is frank about the challenges it has faced: Work was interrupted by high-profile kidnappings of personnel in 1998 and 1999, and by two guerrilla attacks in 1999 on the town of California by the Revolutionary Armed Force of Colombia (FARC). The second attack caused the police to withdraw, and later, the withdrawal of the last vestiges of the Colombian state. Greystar packed up its core library and left the California community in early 2000.

For the next three years, Greystar personnel sat in their offices in Bucaramanga and North America, brooding over what had happened and what needed to be done to return to Angostura and resume exploration.

During that time, Greystar President David Rovig welcomed Frederick Felder on board as executive vice-president, and the two met repeatedly with top-level Colombian, U.S. and Canadian government officials. They also took a hard look at the deficiences in their own company’s actions and security arrangements.

Felder says Greystar was lucky in that, during this hiatus, a Colombian oil company gave them real insight into how to deal with social issues in Colombia.

“As a result, we got away from petty approaches to things,” he says.

The cold reality was that Angostura was in a major, mountainous “corridor of movement” that guerrillas from FARC and the National Liberation Army (ELN) used to move personnel — sometimes numbering as many as 400-500 fighters at a time — from their strongholds in the highland jungles north toward Venezuela.

Under the new hardline Uribe regime that came to power in 2002, the Colombian military decisively to cut off this and similar corridors and, with improved communications equipment, made the use of radios and cell phones impractical for the guerrilla forces. As a result, the guerrilla groups were substantially cut off from each other, and they must now communicate largely by courier and letter.

In the region around Angostura, government combat troops returned in early 2003, followed by the police and Greystar personnel in June of that year.

The army built two battalion-size fortresses in the mountains, one north of Angostura and one to the south, and has been patrolling the surrounding roads and mountainsides ever since.

Upon its return, Greystar had to negotiate with and evacuate some 180 illegal miners and dismantle land mines laid down by the guerrillas. The company also had to take a pragmatic approach when hiring employees, accepting some who had been involved with the guerrillas just to survive, while simultaneously keeping out the real criminals.

“Once you keep those criminals out, then the rest start feeling safe,” comments Felder. “If you have someone in your organization who’s dangerous, then people are not going to say anything, because they know they are always at risk.”

Although the government troops and company security personnel have come back to Angostura with a strong show of force, Felder says it was critical that things be toned down once risk levels started to fall. And he has ordered that the blatant display of weaponry be discouraged in and around the work site, and that any complaints about security forces be investigated.

Says Felder: “The last thing you want is to have a situation where some force, be it the police or the army, goes in and does something that violates human rights, because then you, as a company, are painted with that.”

At the same time, Felder has addressed groups of up to a hundred Colombian military officers to explain what Greystar is doing. His message is that they should not protect the project because Greystar has invested money but because the company is giving respectable jobs to young people and bringing cash into local, regional and national government coffers.

Greystar has also won friends by helping finance a school in Colombia for mine-sniffing dogs, from which more than a hundred trained sniffers have now graduated.

As for dealing with social problems, Greystar has been guided by consultant Alonso Ortiz, a Colombian lawyer and sociologist, and the company has had a full-time sociologist and a psychologist on staff for years. Greystar also welcomes independent social audits by organizations such as Boston-based Collaborative for Social Development Action.

Upon returning to Angostura in June 2003, Greystar concluded there were various social concerns in California and the nearby mining town of Vetas. These included: extreme individualism; sectarianism; a lack of social cohesion; a loss of confidence in developing projects; poor economic development; a lack of dialogue between local organizations; and excessively high expectations of Greystar.

Greystar has responded with what Felder calls a “within community” approach, the principles of which include: employing locals and Colombians whenever possible; supporting education, health and infrastructure improvements; avoiding paternalism; and promoting self-management and micro-businesses.

In dollar terms, Greystar requires its contractors spend 1% of the contract value on social programs, and $2 per metre of diamond drilling goes toward social and security programs. Greystar matches these expeditures so that total spending on social and security matters reaches 4% of total project expenditures.

As well, once a mine in Colombia is in production, a generous portion of the national government’s mining royalty is returned to the region and the community where the mine is situated. For this reason, there is always keen local interest in a mineral project’s progress.

Greystar is, at the same time, committed to being neutral in local politics and does not support candidates during elections.

While vocal opposition must be dealt with, Felder says he has learned the hard way that today’s problem is actually the “silent” opposition, by which he means people who do not say anything until changes take effect whereupon they become volatile and irrational.

“If you let small things lapse too long, they become major problems,” Felder says. “The facts are never an issue; it’s usually perceptions. If facts and perceptions are too different, then you’ve got a real problem.”

Felder has a bit of a missionary zeal when he talks about how Greystar has managed the prickly social issues at Angostura, and he hopes others can learn from his company’s and Colombia’s hard-won victories.

“In our business, we’re usually doing technical things; we haven’t dealt very well with these other things,” he says. “And perhaps because we’re good technically, we think that’s all that is necessary, but it’s not. And it’s not a matter of looking at people as your enemies but engaging in discussions with them in a productive and positive way.”