* Stoppage halts all Drummond Colombia output immediately
* Union would suspend strike if acceptable offer made
* Coal prices could rise at loss of 1/3 of Colombia coal
By Peter Murphy
BOGOTA, July 23 Workers at the Colombian
operations of U.S. coal miner Drummond went on
indefinite strike late Tuesday, in a move set to cut output in
the world's No.4 coal exporter by around a third and bolster
Drummond, which has two mines and a port in Colombia, and
the Sintramienergetica union, which represents about half of
Drummond's roughly 10,000 workers, had been in negotiations for
weeks over pay and upcoming job cuts among port workers.
"It is indefinite. Unfortunately the company wouldn't budge.
It's a pity," Edgar Munoz, vice-president of Sintramienergetica
told Reuters. He said the union remained open to dialogue and
could suspend the strike if the company improved its offer.
A Drummond spokeswoman confirmed the strike and said all the
firm's output from Colombia would be shut off as a result.
Stocks at Drummond's own port would be unable to be shipped, she
said, since workers there were part of the strike action.
Although the seaborne coal market is well supplied, a
prolonged strike combined with upcoming stock purchases ahead of
winter could puncture that surplus and push up prices in Europe,
where much of Colombia's supply is consumed.
Drummond produced 26 million tonnes of coal, or almost
one-third of the country's total output in 2012. Coal is one of
Colombia's biggest exports.
One local coal source told Reuters he understood there was a
ship at port which was 33,000 tonnes short of loading its
scheduled 170,000-tonne cargo. It was not clear whether the
union would allow it to finish loading and depart.
Though Colombian output is small compared to the United
States and China, it is a major player in the seaborne or coal
export trade since those countries consume much of their own
production for electricity.
PICKET AT THE GATES
The union has demanded a 9 percent pay increase with smaller
inflation-linked increments in subsequent years. In a statement
hours before the strike, Drummond said its latest offer was 4.75
percent for the first year plus a one-off bonus of about $3,700.
"We are convinced that it is an excellent proposal,
especially taking into account current low prices for coal in
the industry and those expected in coming years," Drummond's
Prices for coal destined for Amsterdam-Rotterdam-Antwerp
(DES ARA) and delivery in September traded around $76.20 a tonne
on Tuesday, up $0.20 from the previous day's close, with 50,000
tonnes changing hands, as hopes for a deal dimmed.
That is 15 percent less than coal bound for the same
destination a year ago, pressuring miners' margins and limiting
Drummond's room for maneuvre in negotiations.
In the market for coal futures, API2 futures for 2014
delivery traded at $85.80 a tonne on Tuesday, up
$0.65 from the previous settlement.
Munoz said Drummond's pay offer came close to what the union
would accept, but he said the company would not concede to their
demands for a fixed monthly base salary plus hourly wage,
instead of by-the-hour wages only.
A major bone of contention has been the fate of 400 port
workers, some of whom would be laid off when conveyor belt
loading begins at Drummond's port early next year. The union has
demanded all those workers be offered alternative positions
while the company has promised to retain 70 percent.
Munoz said workers were setting up camp in front of
Drummond's installations, where they would remain for the
duration of the stoppage. The workers would rotate during the
picket, enabling them to return home for some of the time.
"The strike has begun calmly and peacefully," Munoz said,
adding workers were stowing valuable equipment and would agree a
contingency plan with Drummond to preserve its infrastructure.
A senior labor ministry representative joined last-ditch
talks on Monday and Tuesday, underscoring the high stakes of a
strike for the government. A month-long stoppage at rival miner
Cerrejon in February was one factor behind slower growth in the
first three months of the year.
The government has also been confronted since last week with
a strike by artisanal and small-scale miners, some of whom have
blocked roads, demanding provisions be made for them within the
country's mining code.