The war in Ukraine has forced Germany to boost coal imports from Colombia even as it seeks to phase out fossil fuels at home. Glencore is benefiting the most from the high demand, but the local people not nearly as much.
The German and Colombian governments both have detailed decarbonization strategies to take on climate change. Still, the real beneficiary of this green transition is actually based in Switzerland.
Almost a year ago, when Gustavo Petro and Francia Marquez were on the verge of their election victory in Colombia, they made a historic promise to their voters during the election campaign.
The program of the left-wing Historic Pact for Colombia, a political and electoral coalition, stated that the South American country would phase out fossil fuels under their leadership.
Previously, the then environmental activist and current Vice President Marquez drew attention to the El Cerrejon coal mine with a Twitter post.
“El Cerrejon is the largest coal mine in Latin America. Still, children in La Guajira are dying from hunger and the people are not getting any help from them during the pandemic. This is so-called development,” she wrote.
Profiting from the energy transition
It is precisely from this mine that Germany has been getting coal since the start of the Russian war of aggression against Ukraine to partially compensate for the loss of Russian gas supplies and the embargo on Russian coal imports.
The German government’s decision to phase out nuclear power and to boost electricity generation — at least temporarily — with coal-fired power generation is currently creating additional demand for coal.
The Glencore group is a major beneficiary of this development. The Swiss company had completely taken over the mine just a few weeks before the Russian invasion of Ukraine. Since then, coal exports have shot upward. While a Glencore spokesperson said the company doesn’t comment on “individual markets,” the figures speak for themselves.
According to German coal importers, 7.3 million tons of hard coal came from Colombia in 2022. Coal imports from the South American country are likely to have at least doubled during the first year of the war in Ukraine — and they could just keep going up.
In mid-July last year, the price of coal on the world market reached a record price of almost $400 (€373) a ton. In the meantime, it has fallen sharply. In mid-May this year, it was around $117 per ton, back to the level seen in 2021.
Big global deals in coal
Glencore is thus benefiting from global political developments. On the one hand, shareholders of rival miners pushed to sell stakes in coal mines because of their impact on climate change. On the other hand, at the time of Glencore’s boosting of its stake in the El Cerrejon mine, only Ukrainian politicians were warning about the possibility of a Russian invasion.
In June 2021, Glencore bought the remaining 66% stake in the mine from its competitors BHP Group and Anglo American for a total of $588 million, making it the sole owner.
BHP and Anglo American shareholders welcomed the deal in light of their emission reduction goals.
For Glencore, the world’s leading mining and commodities trading group, the deal meant all the controversial mine’s profits would flow their way
And where does all the money go?
Critics who live around the coal pits complain that far too little of the enormous profits that the company is making remain in the region.
“The money generated from the coal doesn’t even stay here in La Guajira,” Leobardo Sierra, a spokesperson for the Indigenous Wayuu community who live in El Rocio, told DW.
Activist Jakeline Romero Epiayu from a Wayuu women’s rights organization sees it similarly. “Today, after decades of mining activity in La Guajira by Cerrejon, which is fully owned by Glencore today, the impacts on the regional economy, and cultural and social life of these areas are devastating,” she told DW.
Among other things, the mine has led to increased water shortages in a region where water is already scarce.
The mine operator countered the allegations.
“Cerrejon makes a positive contribution to the development of La Guajira and currently generates around 46% of the regional gross domestic product,” said the Glencore spokesperson. “With more than 61% of the 12,000 employees from the region, Cerrejon also makes an important contribution to local employment.”
This article was originally published in German.
Germany has been importing coal from the El Cerrejon mine to compensate for the loss of Russian fossil fuelsImage: Tobias Käufer/DW