Drummond seeks Colombia coal loading extension

Bogota, 9 December (Argus) — Colombia coal mine company Drummond asked the government to extend a 1 January port construction deadline so it can still load coal using barges into 2014.

Drummond requested a three- to six-month extension because it will not conclude the mandatory direct-to-coal loading vessel system by the deadline, Colombia's mines and energy minister Amylkar Acosta said.

The government is in talks with other coal firms that have direct loaders to determine if they can handle Drummond's coal. They include the terminals Puerto Bolivar, controlled by Cerrejon; Puerto Nuevo owned by Glencore-Xstrata, and Carbosan in the city of Santa Marta.

“Drummond has expressed the impossibility of having the direct loading system on time. Drummond considers that in a term of no higher than six months it will have the direct coal loading system,” Acosta said on the sidelines of an oil press conference.

Acosta acknowledged the difficulties of granting an extension to Drummond because the National Planning Law, which stipulates that all ports must use direct loading by 1 January, can only be modified by passing another law. The new law has to be approved by Congress, but lawmakers will only work until 16 December before adjourning for the year.

“Any decision will follow legal and constitutional principles,” he said.

Acosta said the government is weighing the environmental impact of continued use of barges if an extension is granted against loss of government revenue if Drummond is banned from loading coal.

Drummond argues that it could not conclude upgrades at Puerto Drummond on time because of a long workers' strike that lasted almost three months, Acosta said. The company met with government officials last week, including from the ministry of environment, environmental regulator ANLA, the Ministry of Mines and Energy and a presidential aide.

The Ministry of Environment will announce any decision the government makes.

Drummond would have difficulties using Puerto Nuevo, because Drummond's rail cars are designed to dump coal differently than Glencore-Xstrata's.

Drummond unloads coal using a system that turns railcars over, while at Puerto Nuevo coal is unloaded from the railcars through door gates, Javier Garcia, director of mines at the Ministry of Mines and Energy, recently said.

If Drummond were to use the 6mn metric tonne/yr Carbosan terminal, the company would need to move coal there by truck, adding $10-12/t in transportation costs, Garcia said. The costs would be sharply higher if it has to truck coal to the Puerto Bolivar terminal, which is about 200km from Puerto Drummond.

Goldman Sachs' subsidiary Colombian Natural Resources (CNR), another company not expected to finish upgrades at its port by 1 January, could unload coal at Puerto Nuevo because it has the same rail cars systems.

CNR is in talks with Glencore-Xstrata on loading coal at its new port, three sources said.

Several government officials including Garcia have said the government will not grant extensions to any port to keep loading coal if direct loaders are not running by 1 January.

Drummond produced 26 mn t of steam coal last year, and production will tumble this year after the workers' walkout and a suspension of activity at Puerto Drummond for almost a month earlier this year.

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