Oscar Eduardo Gómez, Vice President Legal, Grupo Prodeco
As head of the legal team for Glencore’s coal mining operations in Colombia, Gómez describes the importance of keeping sustainability front of mind.
GC Magazine: Could you tell me, first of all, how you came to be working in-house, and at Grupo Prodeco?
Oscar Eduardo Gómez (OEG): 25 years ago, I started working at a law firm, then I jumped into the financial sector, as general counsel of different financial companies. In my experience as an in-house counsel I have found that building the legal structure of any company is a very rewarding challenge. It allows the in-house counsel to provide a more integrated legal advice considering the underlying needs and requirements of the different areas of the company – legal advice that sometimes external counsels can’t provide because they don’t have direct access to the internal knowledge of the company. So I have structured my career as an in-house counsel, going into the detail of how each company works, working with different teams, and then being able to provide legal advice for the proper functioning of the company.
As I mentioned before, I have built my professional career in the financial sector for a long time. However, around four years ago, I was invited to participate in a selection process for the Legal VP of Grupo Prodeco, of which the main business is coal mining. I considered the invitation as an opportunity to work in a different field based on my previous experience building and managing in-house legal structures and teams. Considering my background, I told my interviewer (the current president of Grupo Prodeco) that I didn’t have any mining experience so if they were looking for that profile I would not be the person. However, his answer was that it didn’t matter as he was not looking for a mining expert but for a person with an in-house legal expertise capable of working in a multidisciplinary environment to manage the legal strategy of the corporate group. And so I have been working with Grupo Prodeco for four years!
GC: How have you found the transition from the financial sector to the mining sector?
OEG: It has been very interesting, because it’s a completely different world. In the finance sector, you are working with more abstract structures, but when you come to the mining sector, it’s somewhat easier to propose solutions for problems that are more ‘real’.
Every day is a career-making experience. Of course there have been difficulties, at the beginning, getting to know a new sector and a new corporate group like this, but as you get broader knowledge of the organisation you can organise and manage all the legal issues relating to the operations of the company.
GC: What are the main business challenges facing a mining company like Grupo Prodeco? They must be very different to those of a financial company?
OEG: Yes. We manage the chain of coal, starting with production at the mine, so we have to solve any legal issues related to mining leases, mining operations, mining contracts and transport operation among others. Then once we get the coal extracted, we need to rail it through our rail line and then deal with the rail regulation in Colombia, and then control all these processes until we get it to the port. Then we need to ship the coal, because it must be exported, so we also have to deal with port regulations, maritime regulations, and other regulations that apply for that kind of operation.
In the financial sector, you look at these operations from a different point of view. You do deals for mining activities, for instance financing the rail, financing the companies or the infrastructure. But working in the sector, you need to look into the specific detail and then integrate the whole chain of activities.
GC: Are sustainability and environmental issues big on the radar for you as well?
OEG: Very much so – for all businesses of the company, because we have to comply with complex environmental requirements, and high environmental standards, throughout our operations. We have a very good team involved in environmental matters in the mining areas. We are also working with the communities in the area where mining activity takes place on sustainability, and the same with the railway and the port. My team provides all the legal support required by the companies of the group on matters related to the environment, so it’s a very important part of our team work.
GC: What are the particular environmental and sustainability issues affecting mining operations in Colombia?
OEG: Within Colombia, we have been improving the environmental regulation and, day by day, it’s more demanding. So the first challenge is to understand and to apply new regulations that have been put in place.
We have been involved in different amendments of our mining and environmental plans, and this requires a lot of interaction with the environmental authorities and the communities. In Colombia, we have specific laws protecting the communities, so we are working hard on getting these requirements in place, based on close cooperation with the communities.
We also support future development in terms of social matters by helping the communities to develop and grow their own ventures and their own businesses, preferably within the same area of influence of our mining operation. That’s a part of the challenge – to put everything together and to provide the community with another source of opportunities to continue working. Because mining is not forever, and it is going to end at some point when we conclude our projects, we would also like to provide additional resources and activities for the community.
Here’s one example that is very important to me. We have been developing internship programmes with people of the towns around the mining areas. During this process one of the persons that applied for the internship happens to be a law student sponsored by the Grupo Prodeco for his law studies. Although initially he was hired for a one-year internship, very quickly we decided to employ him, on a permanent basis. As a result, the community and his family are very proud of him considering him as a role model to follow. To me, such experience demonstrates the importance of giving job opportunities to local people with limited professional possibilities in rural areas, showing them that based on their own personal merits and efforts it is possible to build a professional career in a multinational group.
GC: How does the peace process impact on business operations and the legal team?
OEG: It is a big challenge, not only for a multinational company, but in general for the country’s development. At this point, what we have been doing is closely following what is happening in the discussion, and being ready for developments.
It is clear that there is a need for general wellbeing and development in the area of our influence. Due to our presence in the region, we are in the position to participate and to assist in the process of reconciliation. Therefore, we are willing, through our sustainability programmes, to co-operate with the community in the process of starting and developing new projects and future ventures for them.
At this point, the implementation of the peace agreement is in process, so we are closely following how it will finish. In any case we are supporting it, because it’s important that Colombia is able to terminate decades of internal conflict as a result of a proper peace process. It will provide not only better life conditions for the Colombian people but also it will open more opportunities for the companies to continue doing business in Colombia.
GC: It must be difficult to operate if there is instability in that regard?
OEG: There is a big debate now, which will become more complex as we will have a general election this year. Currently there’s a lot of uncertainty about how the implementation of the peace process is going to work. But at this point, as the peace process is part of our legislation, we need to abide by the current and future regulations to define and to adjust (if needed) the legal strategy applicable to our operations in Colombia. Our legal strategy will also consider programmes or activities to be developed with the communities under the umbrella of the peace process regulations.
GC: What are the other main legal issues your team is dealing with on a day-to-day basis?
OEG: We have the recurring issues related to the current operation of a corporate group in a real sector, including litigation. We have one important litigation now – an international arbitration against the government of Colombia under the umbrella of the investment treaty with Switzerland. It takes a lot of time for our legal team to work on this piece of litigation, which is very important for the company and for Colombia as well. We also have a couple of international arbitration cases as well as local arbitrations that we are working on; so we consider litigation as one of our relevant working areas due to its impact on the company’s results.
Another part of our day-to-day job is the corporate governance structure. As we are a corporate group, we have different companies which, day to day, perform different corporate activities, such as mining, environmental, rail, port, transportation. They have different boards of directors, shareholder meetings, reporting, and different risk structures – so we’re in charge of that as well.
GC: What does your legal team look like? How many people do you have and how is it structured?
OEG: We are ten persons in Colombia, seven in Barranquilla, including the chief of legal (Natalia Anaya), and three in Bogotá working in mining law, environmental law, corporate law, transport law, ports, maritime law and litigation. Although the main office of our group is in Barranquilla, I am based in Bogotá as it is the place where the interaction with the official authorities take place. However, I travel to Barranquilla on a permanent basis for two or three days a week to work closely with my team and other areas of Grupo Prodeco.
GC: What have you got coming up on the horizon over the next 12 months or so?
OEG: We are in the process of amending some of our environmental plans in order to adjust them to our mining plans. It will be a very challenging process because it requires community approval of the activities.
We have a couple of international arbitrations which are going to be decided probably next year, so I think we will be busy during next year while these arbitrations are finally decided.
We have to follow up closely what is happening with the peace process, and then realign and restructure our activities based on that.
And finally, we are expecting an increase in our day-to-day activities, which over the medium and long term require a more effective, timely and efficient legal advice to the different areas of the company.