Regulator to take Prodeco coal decision next month

A decision about Colombian coal producer Prodeco's appeal to remain off line because of unfavourable economic conditions will be taken by 17 December, mining regulator ANM has told Argus.

The regulator said it has 30 business days — starting on 4 November — to consider an appeal lodged by Prodeco in September against ANM's decision in the previous month that rejected the firm's request to remain off line.

ANM was previously expected to take a decision this month but Prodeco requested that the regulator make a "technical visit" to the mine, which has pushed back the deadline.

Prodeco's unions — Sintramienergetica and Sintracarbon — filed a right of petition to ANM, but the regulator declined to comment on the matter. A Prodeco worker told Argus that they expect a decision to be made in the first week of December.

After rejecting Prodeco's request, the Glencore-owned miner is asking for permission to stay off line for 18 months, according to former mining minister Amylkar Acosta, who believes Prodeco's appeal will be unsuccessful.

"I don't think an appeal would be successful, because shutting the mines goes against the government's economic recovery plan, which relies on the mining sector," Acosta told Argus.

Colombian mining and hydrocarbon production fell by 19.1pc on the year during the third quarter, according to the country's statistics department Dane. Coal output fell particularly sharply, by 44pc, because of the Prodeco suspension and as strike action halted operations at fellow miner Cerrejon.

Carlos Cante, a former deputy mining minister, also thinks Prodeco's appeal will fail as the government will be unwilling to see jobs cut from such a labour-intensive sector of the economy at a time when unemployment has already jumped to a record-high 16.8pc because of the Covid-19 pandemic.

Prodeco must restart operations immediately if ANM upholds its decision, Cante said.

But the resumption of operations at Prodeco may still be some way off, as the miner is yet to recall workers and has already signalled its intent to remain off line during the Colombian Covid-19 lockdown.

The national lockdown ended on 31 August and was replaced by new, less stringent measures to last until 30 November. Prodeco has said it will continue to pay salaries to its 2,400 direct employees until this date.

Heavy rains in Colombia as a La Nina weather phenomenon develops also pose a risk to coal supply if and when Prodeco restarts in the weeks and months ahead. Prodeco chief of human resources Miguel Angel Montoya said in a meeting with workers on 30 October that the miner would not resume production until ANM rules on its appeal, sources said.

By Diana Delgado