Philippi Prietocarrizosa Ferrero DU & Uría partner Juan Fernando Gaviria Guzmán speaks with Kurt Stumpo about his role advising on the financing for the Buriticá gold mine, and Colombia’s legal market for project work
How did your firm win this mandate?
One of the partners of the firm is a member of the board of the mining company.
Did the financing package have any distinctive features?
What was distinct in this transaction was the fact that the loan was granted to a foreign entity, abroad, and that we had to fly down the loan to a Colombian branch, and that is something [the loan] that in this case was perhaps worth considering and analysing from a Colombian law perspective.
I read a claim that this was one of the largest mining project finance deals in the history of Colombia. Did the high deal value create any challenges?
The big issue around this was for the company to obtain the environmental licence. In respect of the financing itself, once the environmental licence was obtained it was a regular financing, not very complex from a legal standpoint.
Speaking of issue around securng the licence, was there local resistance to the project?
The issue of the environmental licence makes me think of the recent mining referendum in Cajamarca. The Cajamarca protest is something of concern here in Colombia. Huge concern, I would say. Fortunately I guess that this mining project in Antioquia did not have these kinds of considerations and that the community agrees with the project.
In the course of obtaining the environmental licence the community had the opportunity to raise questions and to have comments, but the project was not nearly as problematic as the one in Cajamarca. So at the end the process was somewhat long, but without the community concerns that occurred in Cajamarca.
From a deal making perspective, did you run into any legal challenges?
No, the two main issues were environmental and land. But this project was very clean in terms of these two aspects so we could move forward with this very easily.
Has the recent peace agreement with the FARC had any influence on projects or foreign direct investment in Colombia in general?
The peace agreement with FARC paves the way to receive much more investment in Colombia, specifically in the rural sector, as opposed to the cities. So that is very good news, for agriculture, for mining projects which will not have the issues surrounding violence that we have had in the past. I think that this is very good news for Colombia.
In terms of the domestic Colombian legal market, do you tend to see the same firms on most deals or does it vary depending on the type of transaction?
The one issue in Colombia is that there are a lot of international law firms coming to our country. This is something, at this point, which is particular to Colombia since you do not see the same kind of movements in Peru and Chile, for example. So there is much more competition. Our counterparts in the Buriticá deal are Norton Rose, an international law firm very specialised in oil, gas and mining. But having said that, I think that, in terms of financings what we have recently seen, two firms have led most of the transactions. Those two firms are Brigard & Urrutia and us, and I think why that happens is because we have big teams, well prepared for infrastructure deals, well prepared for transactional deals, and that is why the two law firms have come to most of the work.
Do you generally see the same international firms on deals, or does vary depending on the type of deal?
Well, coming from a banking and finance lawyer, the international law firms do not participate as much in these kinds of transactions. I guess that in the case of Norton Rose they did participate because they have huge expertise in mining work, and therefore they were able to obtain the financing. But I think that the traditional Colombian law firms are doing the financial work or the financial transactions work, as opposed to the international ones. Another comment that is worth doing is that the big international law firms, such as the Magic Circle firm teams in London or the big New York firms, are not here right now, and those are the firms that you work with in connection with the big transactions.
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