Colombia's Drummond coal miners likely to vote for strike -union

Wed Jul 17, 2013 11:14am EDT

* Vote counting from 7pm local time, result hours after

* Union says pay offer nearly enough but no deal on job cuts

* Strikes could hit GDP growth after Cerrejon stoppage

By Peter Murphy

BOGOTA, July 17 (Reuters) - Workers at Drummond Co Inc's coal mining operations in Colombia were almost certain to vote in favor of a strike action late on Wednesday after failing to reach an agreement during weeks of talks over pay and conditions, a union leader said.

"The majority will vote for a strike because they're seeking better proposals from the company," Edgar Munoz, vice president of the Sintramienergetica union, told Reuters in an interview.

A stoppage by Drummond workers would mark the second major walkout in the Colombian coal industry this year after miners at rival Cerrejon held a month-long strike that began in February. Combined, the strikes could further dent economic growth in 2013, as coal is a top export earner for the Andean nation.

A prolonged stoppage at Drummond, which produces more than a quarter of the coal from the world's fourth-biggest exporter, could raise the price of European physical coal if it has an impact on supplies as buyers contemplate buying for the winter months.

Physical coal prices for delivery to Europe are currently trading around $75.60 a tonne, up from just above $70 in late June.

The country's artisanal and small-scale miners, which produce a limited amount of Colombia's coal, also began a strike on Wednesday to demand licenses to operate and that the outlawed activity be made legal.

"We have been forced to beg in our own territory for our own riches," said Ruben Dario Gomez, a spokesman for Conalminercol, the small miners' union.

The miners began blocking roads early Wednesday.

If Drummond workers vote to strike, the stoppage would have to begin after Friday and before the end of next week, to comply with local labor laws, Munoz said, but it could still be called off if Drummond made a satisfactory improved offer beforehand.

"Even after (Wednesday), there is still a possibility of reaching an agreement," Munoz said.

"We understand the importance of this for the country and the government's royalties. Striking means a big economic loss for the workers and for the company. That is why we are trying to find a solution without a strike," he said.

The Drummond strike would also be another headache for the government as it tries to boost sluggish economic growth amid a slew of labor disputes across the nation. Strikes in the coal sector slowed GDP growth in the first quarter and could hobble expected acceleration in the second half.

It also would come on the heels of an already difficult year for Drummond. Loading at a port it controls was suspended in February after bad weather caused a spill from a barge into the water and there was a ban on night-time railway use on a line part-owned by Drummond.

A Drummond spokesperson offered no comment on the issue when contacted by Reuters.

UNION SEES PAY DEAL CLOSE

Ballot boxes in which workers have been casting votes the last few days at the mines and in surrounding towns will be recovered by 7 p.m. local time (8 p.m. EDT/0000 GMT) on Wednesday for results to be calculated and announced an hour or two later.

The union demands reached as much as a 10.7 percent pay increase and a one-time bonus of 7 million pesos ($3,700), among others.

Drummond, which last weekend increased its pay raise offer to 4.5 percent on top of a one-time bonus, has said the union's demands for much more were beyond what would be sustainable for it or any other mining company to pay.

But Munoz said he was confident the union could reach a deal with Drummond over pay as the company's offer was near a level it would accept. Negotiations to retain 400 workers at Drummond's seaport, many of whose jobs Munoz said were threatened by technological changes, were proving to be difficult.

Drummond had sought to cut some or all of the 400 workers, Munoz said. The company said in a recent statement that it was trying to find new positions for some of the employees and devising a "withdrawal plan" for those it could not.

"On the question of salary, we can reach a deal," Munoz said. "The difficult part of the negotiation is to do with the relocation of the (port) workers."

Drummond employs about 10,000 workers across its main Colombia operations, about half of which are direct hires represented by Sintramienergetica and the other half contractors represented by a separate entity. They would follow the outcome of Sintramienergetica's members' vote, Munoz said.

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