Colombian coal company and workers in final bid to avoid strike

Thu Feb 7, 2013 10:52am EST

Related Topics

* A strike must happen before Friday cut-off date

* Union and Cerrejon discuss compensation and benefits

* Coal sector faces other problems in major producers

By Jack Kimball

BOGOTA, Feb 7 (Reuters) - Colombia's largest coal exporting company Cerrejon and its workers are meeting on Thursday to try to avoid a strike over wages that would pile pressure onto an already troubled sector.

Officials at the company and the union said the two sides are sitting down to discuss compensation and benefits in a last-ditch effort to avoid a walkout. One union leader said it is prepared to strike unless Cerrejon makes a generous new offer.

Laborers at Cerrejon, a joint venture between BHP Billiton , Anglo American and Xstrata, voted on Jan. 29 to strike. By law, however, they cannot walk out on the first or last of a 10-day window, which ends on Friday.

A strike at Cerrejon would add to problems in the Andean country's coal industry, which is facing an environmental inquiry into Drummond, the second largest exporter, and a payment dispute at a Goldman Sachs Group Inc affiliate.

In total, about 85 percent of Colombia's daily coal production would be shut off.

Traders said that prompt prices were up about $0.50-$0.80 per tonne on Thursday on the possibility of a strike.

During the last wage talks in 2011, Cerrejon and the union were able to reach agreement. The last time Cerrejon had a strike was in the 1990s.

Ten years of U.S.-backed military operations against leftist rebel groups have opened up large swathes of territory to new investment and helped secure areas where exploration and production were already happening.

Like other commodity-exporting countries, Colombia has faced increased environmental and social demands, which some analysts say have replaced guerrilla violence as the main risk for mining investors in the world's fourth-largest coal exporter.

WORKER DISPUTES

The coal sector faced a series of worker disputes last year, including a strike at the country's main coal railway, that dragged down growth in the third quarter as stoppages bit into exports and regional economies.

On Wednesday, Colombia suspended coal loading at Drummond's port after a possible spill last month, a government agency said. The suspension will be lifted once Drummond presents a contingency plan.

Drummond, which is 20 percent owned by Japan's Itochu Corp , produces about 80-90,000 tonnes per day from its mines in the northern Cesar province. The company will also hold wage discussions with workers later this year.

Nearby, Goldman Sachs affiliate Colombian Natural Resource's La Francia thermal mine has been shut since around Jan. 21 due to a pay dispute with the operator, union officials said.

The mine produces around 10-20,000 tonnes per day.

Nationally, Colombian production is around 220-250,000 tonnes daily.

Latin America's fourth-largest economy wants to boost coal output this year to around 98 million tonnes mainly due to expansion projects at Cerrejon, Drummond and Glencore's Prodeco unit from around 90 million tonnes last year.

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