* New coal agreement increases royalties paid by PazdelRio
* Latest renegotiation to better terms for state
* Expects coal production to hit 2.5 mln tonnes in 2019
By Jack Kimball
BOGOTA, Jan 10 Colombia's government on Thursday
extended a contract to the metallurgical coal operations of
Brazil's Votorantim local unit for two decades and raised
Colombia authorized Minas PazdelRio S.A, a local unit of
Brazil's Votorantim, to continue mining metallurgical coal until
2039 from a previous date of 2019, and increased the royalties
the company would pay, the National Mining Agency said.
Under the new deal, PazdelRio will pay 15 percent for
production of 2.5 million tonnes or less, up from 10 percent
previously, and 19 percent for volumes above that.
The company currently produces around 200,000 tonnes of coal
annually from Boyaca province in the center of Colombia, which
should grow to 2.5 million tonnes in 2019, according to the
agency and PazdelRio.
The Colombia-based firm also said it would also work with
the government in a public-private partnership to develop the
long-delayed Carare railway project that looks to link central
producers with the main rail line to the coast.
The government had said it would not support bills in
Congress to raise royalties for the mining industry, but
renegotiating contracts allows Bogota to raise royalties on a
At the end of 2012, Colombia agreed with Cerro Matoso, a
unit of BHP Billiton, to update certain parts of its contract
and increased royalties paid to the government.
Colombia has attracted record foreign investment in recent
years as a U.S.-backed offensive against Marxist rebels and drug
gangs made doing business in the oil and mineral-rich mountains
much safer and easier.
The country is the world's fourth-largest exporter of
thermal coal, but its metallurgical coal sector is fairly small
given infrastructure restraints and lack of investment.