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Colombia’s government will let US-based Drummond Co, the country’s second largest coal producer to resume exports on March 24 as the company is set to finish a $350 million upgrade to its Cienaga port, on the Caribbean Sea, to meet new environmental legislation.
The government shut the port in January after the new law, which bans the use of cranes and barges to load boats, took effect. As a consequence, Colombia’s coal exports to drop by about a third and Drummond had to declare force majeure, since it was unable to use any other port to ship the fuel.
Mines and Energy Minister Amylkar Acosta told local news outlet Caracol.com (in Spanish) that there already are ships on their way to the port, which will able to handle an extra 3 million tonnes of coal, thanks to the switch to direct loading.
$7bn mining investments stalled
For months, coal miners operating in Colombia have warned that new regulations paired with delays in environmental approvals have began to affect production and damage the embattled local mining industry even further.
In fact, production at the world’s fourth largest coal exporting nation dropped 4% to 85.5 million tons last year, below its 89 million target. While not dramatic, the drop is costly for both private companies and the Colombian government, which counts on mining royalties and taxes calculated largely on the amount of coal produced.
On top of that, the nation’s Large Scale Mining Association, which represents 13 of the country’s largest miners, such as Cerrejón, Cerro Matoso, AngloGold Ashanti (NYSE:AU) and Drummond, recently denounced that there are about $7.3 billion of expected investments currently stalled.
Coal shipments account for 12% of the Colombia’s total exports, placing them second to oil, which makes up 40% of all exports. Exports of the commodity now outpace the South American country’s more well-known products, such as coffee and bananas.
Some of the world’s top mining companies have operations in Colombia, including Anglo American (LON:AAL) and BHP Billiton (ASX:BHP), which jointly own Cerrejón, the country’s largest coal producer.
