Coal production in Colombia, exports jump in 2.011, government

Colombia's coal production jumped 15.4 percent in 2.011 to 85.8 million tonnes versus the previous year while exports rose 16 percent to 79.2 million tonnes, the country's mining regulator said on Thursday.

The largest production increases were in the Cesar province where Glencore's Prodeco unit, Drummond International, Vale and Goldman Sachs' local affiliate operate.

Colombia's coal industry is dominated by big producers, with their own port and railways, such as Glencore, Drummond and Cerrejón, which is owned equally by BHP Billiton, Anglo American and Xstrata.

The world's No. 4 coal exporter is experiencing a boom in investment into the petroleum and mining sectors thanks to a U.S. funded security crackdown on illegal armed groups that has made it safer to explore and mine.

Colombia's No. 2 coal exporter Drummond an 80-20 joint venture with Japan's Itochu Corp saw output at its La Loma and El Descanso mines increase 9.5 percent to 23 million tonnes last year versus 2.010, according to regulator data.

Output at Glencore's Prodeco unit went up 44 percent to 14.38 million tonnes in 2.011 versus 2.010, the data showed.

Production in the Guajira state where Cerrejón, the country's largest exporter, has four of five licenses to mine increased 7 percent to 33.3 million tonnes in the same period.

The top three producers export almost all their output. 

The main markets for Colombia's coveted coal are the United States and Europe although exporters have made shipments to Asia depending on the cost of freight.

The regulator did not give a reason for output changes, but all major thermal producers are currently expanding their mines and infrastructure in Latin America's top coal exporter.

Colombia's coal production is expected to reach 97 million tonnes this year, the mining minister has said.

Production at Vale's mines rose 19.4 percent to 3.57 million tonnes last year while output at Goldman Sachs' Colombian Natural Resources increased 58 percent to 2.39 million tonnes.

Reuters was first to report that Vale was selling its Colombian coal operations in November.

Goldman Sachs is the front-runner in an auction to buy the Colombian coal assets of Brazil's Vale, attempting to achieve strategic port access, while Glencore waits in the wings and rival traders stay away, industry sources familiar with the matter said.

Coal mines in the past few years have attracted almost frenzied M&A interest, particularly from traders seeking to become vertically integrated and Asian consumers such as India and China.

But buyers are becoming more choosy, focusing on large, low-cost mines with big reserves.