Colombia set to take Prodeco coal licence decision

Colombian mining regulator ANM has said it will take a decision next week about coal producer Prodeco's request to return its mining titles.

ANM did not specify the Prodeco titles in question, but the decision will affect some or all of contracts 044-89, 285-95 and 109-90, which accounted for 8.8mn t, 3.7mn t and 1.5mn t of Prodeco's production in 2019, ANM data show.

ANM earlier this month declared the request to return Prodeco's DKP-141 and HKT-08031 titles "unviable" because of unfulfilled contractual obligations. The titles account for only a nominal proportion of Prodeco's production.

Prodeco has appealed against that decision and ANM told Argus that it has until 18 June to consider the appeal and decide whether to accept the return of the titles or uphold its original decision.

The unfulfilled contractual obligations that caused ANM to reject Prodeco's attempt to return the licences concern the unified environmental management plan for the joint operation of the La Jagua mine and declarations regarding production and royalty payments.

Prodeco owner Glencore said in February that it would hand back the unit's licences because it is unprofitable to run them. Operations have been suspended since March 2020 and the unit will remain on care and maintenance during the process to return the licences.

Companies interested

The eventual return of Prodeco's mining titles would allow the government to begin the process of finding a new lessee for the unit.

Spanish coal contractor EPSA, the former mining operator of Colombian Natural Resources — Colombia's fourth-largest coal producer — is interested in taking over and assuming control of Prodeco's coal operations, according to Gabriel Rengifo, a geologist who works for the mining secretariat of Cesar department.

A lawyer for Colombia's biggest coal miners union Sintracarbon has also said EPSA is interested in the titles.

"We have heard that representatives of EPSA have visited the mines of Prodeco, but Prodeco has not said anything officially," Rengifo, who is filling in for the mining secretary in his absence, said.

EPSA has declined to comment and Glencore has also declined to comment.

EPSA is one of a number of companies that have approached the Colombian government about potentially acquiring the licences for the Prodeco mining unit. Mining and energy minister Diego Mesa said there is "a lot of interest" in the Prodeco titles from "different companies", including Asian industrial coal consumers. In a recent interview, Mesa said Chinese investors are interested in taking control of Prodeco.

Chinese economic planning agency the NDRC recently ordered a search for new coal assets in countries such as South Africa and Colombia, given a ban on imports from Australia imposed by Beijing last year.

Ovelio Jimenez, the mayor of La Jagua de Ibirico, where Prodeco operated, said the municipality is undergoing a serious economic crisis since Prodeco returned the mining titles and ceased economic activity. Cesar department, where Prodeco operated, is losing Ps65.5bn ($17.65mn) in annual royalties.

Prodeco has dismissed 2,500 employees alone in Cesar and about 12,000 indirect jobs have been lost in the province, Rengifo added.

By Diana Delgado

Prodeco coal production by concession mn t