Companies controlled by China’s authoritarian government have been granted critical infrastructure projects in Colombia and plan to expand their influence.
The Chinese government’s increased stakes in Colombia are the result of trade deals made with Bogota between 2008 and 2019, and Beijing’s growing imperial ambitions.
Many of the projects controlled by Chinese corporations were obtained with the help of regional elites and the administration of former President Ivan Duque after a visit to his Chinese counterpart Xi Jinping in July 2019.
Since this visit, foreign direct investment from the Asian giant skyrocketed and thousands of Chinese workers traveled to Colombia allegedly to work on Chinese projects.
Bogota and Beijing have been secretive about the extent Chinese state companies gained control over Colombia’s critical infrastructure.
China’s Small and Medium Business Corporation (CVCC) wants to “turn Colombia into the first Chinese warehouse in America” with its Sol de Oriente project.
The project, which has yet to be approved, includes a tax-free trade zone with 25,000 warehouses, a seaport and an airport on the Caribbean coast.
The seaport would be the sixth in the world with the capacity to receive 400-meter-long container, according to the CVCC.
The Sol de Oriente project even wants to facilitate “international education” that teaches locals to speak Mandarin.
The project proposal is the latest of four port construction proposals in Uraba, which has access to both the Caribbean Sea and the Pacific Ocean.
Three of these Chinese-backed projects have yet to be approved.
The Pacific connection
The elites from Antioquia and Choco have also been promoting the construction of a port in the Gulf of Tribuga, which would create a direct naval route between Uraba and China.
The government of former President Alvaro Uribe began constructing a road to Tribuga in 2007, but this project was abandoned.
Uribe’s successor, former President Juan Manuel Santos, told the BBC in 2011 that the Chinese government was “very advanced” in the development of a project to connect Uraba’s two coasts by train.
No project proposal about a railroad through the Pacific jungles was ever made public.
Santos’ successor, former President Ivan Duque, vowed to revive the Tribuga project while campaigning in 2018, but abandoned the plans almost immediately after taking office.
The Chinese embassy in Bogota has always shown more interest in expanding the existing Pacific port of Buenaventura.
During a November 2016 visit to the port city, the embassy’s top trade official, Donn Wei, said that “Buenaventura is an idea site because of its strategic geographical location.”
Local authorities and the embassy reportedly signed a memorandum of understanding about a $16 million investment in the port.
The Chinese apparently lost interest in Buenaventura until September last year when Ambassador Lan Hu led a delegation of more than 30 representatives of 21 corporations to the port city.
The only approved port project in Uraba is the Antioquia Port, which is being constructed near the banana plantations of the family of Governor Anibal Gaviria, which has all but monopolized the regional economy.
The Antioquia Port received credit from, among others, the China Co-financing Fund for Latin America and the Caribbean, a joint initiative of the Inter-American Development Bank (IADB) and the Bank of China.
The government of former President Ivan Duque granted the project to build the port to the Puerto Bahia Colombia de Uraba (PBCU), a French-Colombian consortium, in March 2019.
Construction didn’t begin until April last year, however.
Apart from the Gaviria family’s interests in exporting banana and copper, the Puerto Antioquia and the other ports would benefit the regional banana, lumber and meat industries and Chinese mining operations in Uraba.
Autopistas al Mar 2
The China Harbour Engineering Company (CHEC) and four local companies won the 2015 bid to build a highway to connect Colombia’s second largest city Medellin to the ports in Uraba.
The construction of the 254-kilometer highway was delayed until late 2019 when the Chinese-led consortium had obtained the necessary loans from the China Development Bank, the IADB, the Sumitomo Mitsui Bank Corporation from Japan and the World Bank.
Former Transport Minister Angela Maria Orozco said in September 2021 that the construction project had generated more than 9,600 jobs, 4,600 more than reported by the National Road Agency in July 2020.
According to economic website EMIS, CHEC’s Colombian subsidiary formally employed 2,967 people in 2022.
The mayor of Dabeiba told Medellin newspaper El Colombiano in 2022 that the majority of the people working on the Autopista al Mar 2 project were Chinese.
According to migration authorities, 2,436 Chinese citizens entered Colombia in 2019. “To build the highway,” said El Colombiano.
The newspaper said that CHEC had constructed three labor camps in Dabeiba. Radio station Caracol reported another labor camp in Mutata.
The Uraba ports and highways also allow the export of gold extracted by Chinese mining company Zijin Mining Gold from its mine in Buritica, which is located close to the highway.
Zijin bought the mining license for one of Colombia’s largest gold mines from Continental Gold, a controversial Canadian company, for $757 million in late 2019, according to propaganda website Dialogo China.
The operations were immediately hampered by strikes because Zijin forced employees to work during the lockdown that was put in place in response to the COVID pandemic, according to an anonymous employee.
Additionally, “they are putting in more personnel from China” than locals, the miner told the Chinese website.
Zijin’s PR chief, Sergio Petro, said that the company employed 3,885 workers and that “63.7% of operational personnel and apprentices” were from Buritica and its immediate surroundings.
In December 2019, Chinese company JCHX Mining Management bought 19.9% of another Canadian company, Cordoba Minerals, which had been looking for gold, silver and copper in the south of the Cordoba province.
Chinese investment firm Yihao International Resource Investment (YIRI) invested more than $600 million in the Caypa coal mine in the northern Atlantico province, according to the Colombo-China Business Association (CCBA).
Regional authorities ordered an investigation into alleged environmental crimes at this mine in April last year.
In total, YIRI invested more than $3 billion in Colombia and mainly employs foreigners, according to the CCBA, which added that the investment firm’s CEO, Fu Bo, operated five more companies in Colombia.
Oil and gas
Chinese engineering firm Setco signed a contract with Canadian oil company Canacol to build a 289-kilometer gas pipeline between Medellin and Jobo, a town in the northern Sucre province.
The announcement came more than a decade after former President Juan Manuel Santos said that the Chinese government was “very interested” in building a pipeline that would transport oil from Venezuela in the east to the Pacific coast in the west, which never went anywhere.
Between 2006 and 2020, Chinese state-owned corporations acquired companies that gave them control over at least seven oil fields in Colombia’s Andean region, the eastern plains and the Amazon region, according to NGO Ambiente y Sociedad.
How much Chinese money has been invested in the exploration and extraction of oil in Colombia is uncertain.
According to Emerald Energy, a subsidiary of China’s state-owned chemical manufacturer Sinochem, all information on the company’s finances and commercial activities is “classified.”
The company has been involved in a dispute with locals from the southern Caqueta province about its exploration activities in the Amazon region.
Talasa Hydroelectric Dam
Another major Chinese player in Colombia is the China Three Gorges Corporations, which wants to construct three hydroelectric dams in the Atrato River in the western Choco province with a Portuguese energy company.
Their consortium, Hydro Global Investment Limited, has said that the dams would generate 170.9 megawatt in the jungle region.
Hydro Global Investment Limited
- China Three Gorges Corporation
- EDP Energias
The project was originally developed by Talasa ProjectCo SAS and Talasa Conexion SAS, two local companies that were bought by Australian investment firm Macquarie Capital, the China Communications Construction Company and Banco Modal from Brazil, in 2017
Hydro Global bought the majority shares of the local companies, as well as 80% of the megaproject’s rights and loan obligations, in November 2018.
How much was paid for the acquisition that required transfers in New York City, Bogota, Hong Kong and the Cayman Islands was never disclosed.
The project is controversial because of its mysterious origins and the fact it seeks major construction in the middle of a rainforest that has been devastated by illegal mining and drug trafficking.
Another Chinese-led corporation won the bid to finish the HidroItuango hydroelectric dam, which almost collapsed in 2018 due to mismanagement and alleged corruption, last month.
According to Medellin newspaper El Colombiano, the Consorcio Ituango PC-SC will finish the job for a measly $210 million on top of the additional $1 billion that had already been paid to other companies to save Colombia’s largest hydroelectric project from failing.
Consorcio Ituango PC-SC
- Yellow River Co Ltd.
- PowerChina International Group Limited
- Schrader Camargo SAS
The Medellin newspaper was notably displeased that Mayor Daniel Quintero preferred “his beloved Chinese engineering” over local engineering companies that are embroiled in all kinds of corruption scandals.
According to El Colombiano, the Chinese got the HidroItuango contract through the mediation of the China Three Gorges Corporation, which had already acquired the Talasa Project in Choco.
China’s state-owned solar panel manufacturer, Trina Solar Energy, is active in Colombia through a local subsidiary of Trina Solar Systems, which is formally registered in Spain.
According to Ambiente y Sociedad, this company had been granted projects to install solar panels in at least four of Colombia’s 32 provinces.
Trina Solar’s Colombian subsidiary told the NGO in 2021 that the company never received a single order and wasn’t aspiring to obtain one.
Curiously, former Energy Minister Diego Mesa announced in July last year that the company had invested $30 thousand in the “Bosques de Los Llanos Solar Park” project, which connected 9,800 solar panels to the grid in the central Puerto Gaitan municipality.
In December last year, the government’s monthly progress report on energy projects said that Trina Solar would deliver two more solar parks in March and June.
Bogota Metro Line 1
In October 2019, weeks before local elections, the administration of former Bogota Mayor Enrique Peñalosa granted another consortium led by the China Harbour Engineering Company, APCA Transmimetro, a contract to construct the capital’s metro system.
- China Harbour Engineering Company (85%)
- Xian Metro Company (15%)
Xi An, China
This project received loans from the IADB, the International Bank for Reconstruction and Development from the United States, BBVA from Spain and Colombia’s largest bank, Bancolombia.
The surprise deal between Peñalosa and the Chinese triggered an immediate investigation by the Comptroller General’s Office because the proposal hadn’t been reviewed by engineers.
President Gustavo Petro said last week that he would travel to Beijing to renegotiate the project.
Bogota light rail
Another Chinese company, the Ferrea de Occidente consortium (CFRO), was given the green light to connect three towns east of Bogota to the capital’s metro system by train in June 2020.
The China Civil Engineering Construction Corporation (CCECC) controls 85% of this joint venture after teaming up with Empresa Ferrea Regional (EFR), a company that was created by the government of the Cundinamarca province in 2010.
Concesionaria Férrea de Occidente SAS
- China Civil Engineering Construction Corporation (CCECC)
- Empresa Ferrea Regional SAS
According to a 2019 government audit, the administration of former government Andres Gonzalez initially added 24,964 of EFR’s 24,968 shares to Cundinamarca’s assets, claiming they were worth $1.3 million.
The audit found that more than 2 million of EFR shares were being sold, and that the Bogota Supplies Corporation had acquired 23.4% of these shares and television network Canal 13 another 15%.
Former President Ivan Duque and Cundinamarca governor Nicolas Garcia formally created CFRO in the presidential palace in June 2020.
A 2017 document showed that Chinese citizens had created CFRO years before already and virtually controlled the entire consortium.
On August 3, 2020, local media reported on the arrival of 19 engineers who would work on ACPA’s metro project as well as CCECC’s project.
The next day, former Transport Minister Angela Maria Orozco granted the consortium a $725.3 million contract to design and build the RegioTram.
Medellin light rail
Medellin’s urban planning department granted the “Union Temporal Metro de la 80” consortium a $738 million contract to expand the city’s metro system in the west of the city in October last year.
The consortium of the China Railway Construction Company and Mota-Engil from Portugal was the only one that ended up bidding on the project.
According to Medellin’s city hall, no foreign entities will be involved in the financing of the project.
The jailed former director of Colombia’s civil aviation authority in 2008 granted a $63.7 million contract for the “administration, operation, commercial exploitation, adjustment, modernization and maintenance” of six airports for 25 years to the so-called Airplan consortium.
One of the companies that took part in this consortium was CAH Colombia SA, of which 52% of the shares were owned by Capital Airport Holding Company (CAH), a corporation that operates 57 airports in China.
Sociedad Operadora de Aeropuertos Centro Norte SA
- CAH Colombia SA
Capital Airport Holdings SA (52%)
Azzaro Internacional SA (47.88%)
Mario Pinzon (0.04%)
Nelson Andres Rengifo (0.04%)
Oscar Javier Hernandez (0.04%)
- Fernando Mazuera y CIA
- Olimpica Supermarkets and Drug stores
- Malibu SA
- Información y Tecnologia SA
- Portales Urbanos
- Sociedad Colombiana de Inversiones Comerciales
- Noarco SA
- Servicios Integrales para Redes y Comunicaciones
CAH lost its position as majority shareholder after the Chinese told minority shareholder Mario Pinzon that they planned to sell their shares.
In response, the minority shareholders held a meeting without the Chinese representatives and created additional shares that were granted to Azzaro Internacional, effectively making the Chinese company a minority shareholder.
Union del Sur
The Union del Sur project, which seeks to connect Colombia’s entire road network with Ecuador, did seek Chinese loans for the construction of this critical infrastructure project.
The National Road Agency granted the project to a consortium called Union del Sur SAS in February 2018.
Spanish engineering firm Sacyr, the majority stakeholder in the consortium, said in February 2022 that it had received $800 million from foreign investors, including one that was called “Not Available.”
In 2019, the consortium explicitly mentioned the Bank of China among the foreign financial institutions that had lent the builders $575 million to construct the highway.
Source : Colombia Reports