Colombia labor minister to join Drummond, coal miner pay talks

Mon Jul 22, 2013 2:16am EDT

Related Topics

* Minister's attendance shows high stakes of strike action

* Union must begin pre-agreed strike this week if no deal

* Strike could shut off about 1/3 of Colombia's coal output

BOGOTA, July 22 (Reuters) - Colombia's labor minister will join negotiations between U.S. coal miner Drummond and union leaders in a bid to reach a deal on pay that has eluded the sides in two months of talks - an effort that underscores the high stakes of potential strike action for the economy of the world's No.4 coal exporter.

Drummond employs about 10,000 at its two mines and private port. Strike action, which workers have agreed to in principle, could instantly cut output from the key supplier nation to European importers by about a third if it goes ahead.

"If there's no deal, there'll be a strike," Cesar Flores, one of the negotiators from the Sintramienergetica union, told Reuters on Sunday, confirming talks would resume around 11 a.m. local time (1600 GMT) on Monday.

Union members voted in favor of strike action last Wednesday and, according to Colombian law, a walk-out must begin within 10 days of workers voting in favor of a stoppage - meaning by the end of this week. Both Drummond and the union have been making use of the 10-day window to continue negotiating.

A stoppage by Drummond workers would mark the second this year in Colombian coal after miners at rival Cerrejon held a month-long strike in February. Two stoppages combined could dent economic growth in 2013 with coal a top export earner for the country.

If a long strike were to ensue, resulting tighter supplies on the world market could also raise the price of European physical coal as buyers contemplate making purchases ahead of winter.

Drummond, which a week ago raised its pay rise offer to 4.5 percent on top of a one-off bonus, has said the union's recent demands for much more were beyond what would be sustainable for it or any other mining company to pay. The union, which has previously demanded a 10.7 percent rise, has since said the company's offer is nearing a level acceptable to it.

A sticking point, however, remained the fate of around 400 workers, many of whose jobs will go when conveyor belt loading of coal replaces the existing, more labor intensive system at Drummond's port in early 2014.

A strike would worsen the government's headaches over labor disputes, as coffee growers threaten a possible strike or protest in mid-August, unsatisfied at how a subsidy to prop up producers facing low prices, is distributed.

Producers of other agricultural crops plan to join them around the same time for a broader farming-sector protest.

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