Colombia govt seeks work-around to coal mining deadline

Colombia's government is seeking ways to enable miners to continue exporting coal even if they have not switched to automated loading by a january 1 deadline.

A work around solution will be of key importance to the coal market since the existing deadline could force the second-biggest mining company, Drummond, to halt one-third of Colombia's exports from the start of next year.

The law obliges mining companies to start loading ships with coal via a suspended and fully enclosed conveyor belt system that stretches far out to sea to drop the solid fuel straight into ships' holds.

Currently miners use a two-step system, loading barges at the docks that then sail out to waiting ships where a floating crane transfers the coal onto the ships. 

This will be banned due to pollution from dust and coal lumps falling into the ocean.

Coal trade participants say US-based Drummond will not have completed construction of its new loading system until several weeks or even a few months after the deadline due to delays caused by a seven-week miners' strike from late July.

A Drummond spokes person said the company had no comment to offer on the status of new loading facilities it is building.

"What is for sure is that there are companies that won't manage to be up and running by this date and they will have difficulties that the government, as I understand, is looking at to see in what way this can be resolved," Javier Garcia, the ministry's Director for Corporate Mining.

"Extending the deadline would imply modifying it with a law because there is no other way and I understand that the government is looking into by what means it could do this," he said.

Some coal trade sources say that the export facilities of Goldman Sachs, one of the smaller producers in the country, will also not be ready to meet the deadline.

The government has good reason to avoid more disruption to exports after a woeful year for the sector in which production is expected to fall far short of an official target, cutting royalties revenues destined for the public coffers.

Concern about a potential reduction in Colombian exports linked to the new law was one factor in the rise in the price of European (Ara) coal delivered to the ports of Amsterdam, Rotterdam and Antwerp, which traded at $85/t on wednesday.

Mining Minister Amylkar Acosta said on tuesday Colombia's coal output would be around 85-million tonnes in 2.013, about 10% below the 94-million tonnes the government had been hoping for, due to the cumulative effect of strikes and rebel groups' bomb attacks on coal railway lines.

The biggest disruption to Colombian coal output this year came from a month-long strike in February at Cerrejon, a joint venture between Anglo American, BHP Billiton and Glencore Xstrata, and a seven-week stoppage at Drummond.

Problems were compounded by a temporary ban on loading at Drummond's port facilities after one of its barges spilt coal into the Caribbean Sea in January, a ban on overnight use of the shared Fenoco coal railway line and guerrilla bomb attacks that shut down Cerrejon's private railway.