Colombia coal output slides 21.4 pct in 1st qtr - gov't

BOGOTA Wed May 15, 2013 12:22pm EDT

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BOGOTA May 15 (Reuters) - Colombia, the world's fourth-largest exporter of coal, said on Wednesday it produced 18.4 million tonnes of coal in the first quarter, a drop of 21.4 percent from the same quarter last year, due to labor disputes as well as port and rail disruptions.

Workers at Colombia's top coal miner, Cerrejon, walked off the job for more than a month in February, demanding better wages and benefits. Weeks of tough negotiations led to the signing of a three-year agreement in March, but Cerrejon said it will likely miss its 2013 output goal of 34 million tonnes.

Loading at a coal port controlled by U.S.-based Drummond Ltd , the country's second largest coal miner, was suspended by Colombia's environmental regulator in February after bad weather caused a coal spill from a barge into the water.

"Among the reasons that led to this performance are the stoppage at Cerrejon for 32 days and the suspension on loading ships at Drummond's port for 23 days," the government-run National Mining Agency said in a statement.

Meanwhile, transport on overnight trains at the country's main coal railway was halted for nearly a month over noise concerns.

Data released last week by the country's statistics agency, DANE, showed that the value of coal exports decreased by nearly 45 percent in the first quarter, which contributed to a 9.5 percent drop in the value of total exports for the period.

A drop in exports, as well as shrinking industrial output and retail sales, are expected to drag down economic growth in the first quarter. The Andean economy grew 4 percent in 2012, a slowing down from 6.6 percent the previous year.

ONGOING PROBLEMS

Last year, coal miners were hit by a spate of labor disputes, including a strike at the key coal railway and a walkout at a Glencore-owned mine, as well as delays in environmental permits and a rise in guerrilla attacks.

Coal production last year missed the government's target by nearly 9 million tonnes, even though national output rose 4 percent to 89.2 million tonnes.

The government forecasts this year's coal output at 94 million tonnes.

The majority of Colombia's coal goes to the United States and Europe, but the industry has increasingly looked to diversify into Latin American and Asian markets given the planned shutdown of coal-fired plants in Northern Hemisphere economies.

The country's coal sector is dominated by major producers such as Glencore, Drummond and Cerrejon, which is jointly owned by BHP Billiton Plc, Anglo American Plc and Xstrata Plc. Their output accounted for nearly 80 percent of all the coal produced in Colombia in the first three months of the year.

All major producers are expanding mines and infrastructure, and production is expected to increase to over 100 million tonnes in the coming years.

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