Colombia blocks Prodeco request to return coal titles

  • : Coal
  • 21/06/23

The Colombian government has rejected Switzerland-based Glencore's request to relinquish the three main mining titles associated with its Prodeco unit, regulator ANM has told Argus.

ANM declared the request to return Prodeco's 044-89, 285-95 and 109-90 licences "unviable", claiming that it has no certainty about whether the licences comply with the conservation and maintenance of the facilities and equipment.

"In order to safeguard the interest of the nation and protect the net worth of the state, it was considered appropriate to deny the request for the resignation of the aforementioned mining titles," ANM told Argus.

The three titles accounted for 8.8mn t, 3.7mn t and 1.5mn t of Prodeco's 2019 production, ANM data show, more than 99pc of its output that year.

Prodeco has appealed against the ruling and expects a final decision on 20 July, it told Argus.

Prodeco has also appealed against an earlier ANM decision to reject the return of its smaller DKP-141 and HKT-08031 titles. The regulator had until 18 June to consider the appeal, but has not yet published a decision.

Prodeco told Argus that the government had not accepted the company's initial request to halt mining activities for four years, nor to return its mining titles, but that it must continue with costly maintenance of the mines and equipment. The unit has been on care and maintenance since March 2020, when operations were first suspended during the first Covid-19 lockdown in Colombia.

Prodeco told Argus that its decision to halt coal mining in Colombia is unchanged when asked if it would consider resuming operations to take advantage of firm seaborne prices.

Argus assessed NAR 6,000 kcal/kg Colombian coal at $100/t fob Puerto Bolivar last week, the highest since Argus launched the assessment in 2013. Colombian coal prices have risen by more than 130pc over the past 12 months, as the Prodeco suspension has compounded wider supply tightness in the global market just as economies begin to recover from pandemic-induced lows in 2020.


The latest ANM decision means that the Prodeco saga remains at an impasse, sources said, as the ruling does not oblige the firm to resume operations.

One government source from the mining and planning unit said solving a dispute about the programme of works and investments and establishing a programme for the mine closure could help break the deadlock.

But there is also a risk of further litigation, with JcF Energy and Mining analyst Jaime Correal saying that Glencore could file a lawsuit against Colombia for refusing to allow the titles to be relinquished.

"Glencore invested over $3bn in Colombia and the company one way or another is going to seek a return for that investment. Given the long track record of Glencore filing lawsuits against Colombia, I am confident that the miner will most likely sue the nation," Correal added.

Glencore declined to comment.

Prodeco has produced and exported limited amounts of thermal coal despite the suspension.

Prodeco three months ago received authorisation from environmental regulator ANLA to produce 7,000t of thermal coal from its Calenturitas mine as the coal was catching fire. But a Prodeco worker said the amount mined at Calenturitas was 80,000t.

Some of the Calenturitas coal has been blended with supply from the eastern province of Norte de Santander, on the Venezuelan border, which Prodeco has procured from small producers in the region to fulfil two orders.

A 35,000t vessel will arrive at Puerto Nuevo on 29 June and a 22,000t vessel will arrive on 4 July, sources said, with Prodeco understood to be railing 9,000 t/week on the Fenoco railway.

Thermal coal exports through Puerto Nuevo totalled 125,000t in January-May, according to figures from shipping agency Naves.

Prodeco is reported to have rehired some workers in Cesar province to operate the railway and the port.

Colombian coal price $/t

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