Colombian coal railway spat may be resolved in days - source

Fri Dec 21, 2012 1:34pm EST

Related Topics

* Railway moves up to 160,000 tonnes of coal per day

* Measure could cost Colombia $470 mln a year

* If implemented, measure may cut exports by 23 mln T

By Jack Kimball

BOGOTA, Dec 21 (Reuters) - A dispute between Colombia's top coal railway, Fenoco, and a regional environmental authority over nighttime noise will likely be resolved in the coming days, a government source said on Friday.

The Regional Autonomous Corporation of Cesar, which oversees environmental issues in the northern province, has ordered Fenoco to stop running trains near populated areas at night in Colombia's top coal producing region.

Problems at Fenoco this year such as a five-week labor strike have reverberated through Latin America's fourth-largest economy, contributing to weak GDP growth in the third quarter and forcing the government to cut coal forecasts.

The government source told Reuters that if the order were implemented, the Andean country's coal exports would fall by 23 million tonnes per year and it would cost around $470 million annually in royalties.

On Thursday, the company, its shareholders, the regional environmental authority, lawmakers, the mining ministry and other officials met to try to work through the impasse.

While the regional body's decisions are binding, under Colombia's system, the National Environmental Licensing Authority, known as ANLA, can overturn the resolution.

"We think this will be resolved soon, in a question of days because the ANLA understands what impact this would have," said the source, who was not authorized to speak to the media.

A source close to the companies said earlier this week that Fenoco - whose shareholders include Glencore International Plc's Prodeco unit, Drummond and Goldman Sachs Group Inc - was still moving at night.

The regional authority issued an order on Dec. 10 telling Fenoco that it could not transport coal through areas less than 100 meters from communities between the hours of 2230 and 0430 so residents' sleep would not be disturbed.

Fenoco transports up to 160,000 tonnes daily to ports it serves and the railroad has an annual capacity of more than 42 million tonnes, according to the company.

Colombia's mining sector has been hit this year by a spate of labor disputes, delays in environmental permits and a rise in guerrilla attacks against installations.

Worker unrest in the mining sector was partly responsible for the contraction of the economy by 0.7 percent in the third quarter from the second quarter.

The sector grew a paltry 0.5 percent at an annualized rate while it fell 1.2 percent in the July-September period from the previous three months.

Finance Minister Mauricio Cardenas, formerly the energy chief, said he expected the mining and energy sector to grow at an annual rate of 5 percent to 6 percent in coming years.

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