UPDATE 4-Colombia's commodity sector gets respite, woes persist

Fri Mar 1, 2013 5:45pm EST

* Drummond coal loading suspension lifted after three weeks
    * Railway had been running at 75 pct since early February
    * Cerrejon workers still on strike, wage talks continue
    * Stoppage by coffee farmers enters its 5th day


    By Carlos Vargas and Jack Kimball
    BOGOTA, March 1 (Reuters) - Colombia's troubled coal sector
received a respite on Friday after a regulator lifted
suspensions on the country's No. 2 exporter, Drummond Ltd
, and on the main railway.
    But Colombia's top coal miner was still on strike and coffee
farmers entered a fifth day of stoppages. The two commodities
are the top foreign currency earners after oil and key drivers
for economic growth, which is slowing.
    President Juan Manuel Santos is under increasing pressure
and attacks by rivals for his handling of the myriad problems in
the coal sector, which shut down nearly all output, as well as
angry coffee farmers demanding more government aid.
    The coal sector in the world's fourth-largest exporter of
the material has been reeling from a series of stoppages since
early February. The lifting of suspensions on the rail line and
Drummond is seen as a relief to both producers and end users.
    Luz Helena Sarmiento, general director of the National
Environmental Licenses Authority, known as ANLA, said that the
body had approved Drummond's updated contingency plan and would
end a loading suspension at its port.
    ANLA halted coal loading at Drummond's harbor on Feb. 6
after bad weather caused a coal spill into the nearby waters.
    "The reopening of loading activity with barges does not mean
the end of this investigation. It is an ongoing punitive process
that will determine whether it was an accident or negligence,"
Sarmiento told journalists.
    "It is possible it is a serious offense and, if applicable,
the penalty shall be proportionate to the damage and exemplary."
    
  
    Sarmiento also said a ban will be lifted on overnight
transport on Colombia's main coal railway, known as Fenoco.
    A regional environmental body ordered Fenoco to stop running
trains near populated areas overnight so residents would not be
disturbed. The company has complied with the order since early
February, cutting train shipments by 25 percent.
    Located in the northern province of Cesar, Fenoco
shareholders include Drummond, the Prodeco unit of Glencore
International Plc and a Goldman Sachs Group Inc 
affiliate.
    After the announcements, physical coal registered its first
trade of the day on the GLOBALcoal platform since traders had
been waiting for more clarity on the situation in Colombia.
    European physical coal for delivery in April traded at
$89.50 a tonne, down around $0.50.
    
    CERREJON STRIKE
    Meanwhile, workers at Colombia's biggest coal exporter,
Cerrejon, have been on strike since Feb. 7. The labor union and
the company restarted talks this week to try to end the walkout.
    Cerrejon is a joint venture between Anglo American Plc
, BHP Billiton Ltd and Xstrata Plc and
accounts for nearly 40 percent, or 34 million tonnes, of
Colombia's annual output. It supplies power generators mainly in
Europe. 
    The union says that if talks set to end on Saturday do not
lead to a deal, it will continue the strike.
    Cerrejon had to declare force majeure on some shipments due
to the walkout. The over supplied global market has largely
sheltered coal prices from steep changes.
    Last week, Colombia's central bank said the economy would
take a hit in the first quarter in part due to lower coal
exports. Growth slowed in the third quarter of 2012, the last
reported economic data, on problems in the coal industry.
    
    COFFEE STOPPAGE 
    A strike by coffee farmers in some top bean producing
provinces that began on Monday has lead to some clashes with the
police in a protest against low global prices and the
strengthening peso currency, which has hurt exporters.
    Colombia is the world's biggest producer of high-quality
Arabica beans.
    Regionally, Brazil, another top Arabica producer, has seen
increased lobbying from farmers hit by a slump in prices.
Government officials will meet next week to decide on what
measures they could take to help growers. 
    The government provides farmers with a subsidy, but the
sector says it is not enough and is demanding more.
    Santos says his administration has invested about $555
million to help coffee farmers since he took office in mid 2010
and called on strikers to reflect on that investment.
    The government met coffee protest leaders for hours on
Thursday without reaching a deal to lift the walkout. 
    "Santos' government belittles the harm done to national
agricultural production and denied a deal after 12 hours of
negotiations," the leftist Polo Democratico political party said
in a message on Twitter.
    Santos met key ministers on Friday over the dispute.
    "Dialogue has been suspended, hereafter we'll continue with
the coffee leaders who are acting within the law, who are not
promoting old solutions and therefore are not clogging the roads
and highways of our country," Interior Minister Fernando
Carrillo told journalists after the meeting.