January 10, 2014 / 3:35 PM / in 4 years

Colombia looks into alternative coal loading for Drummond -report

BOGOTA, Jan 10 (Reuters) - Colombia’s government is looking into alternative ways for U.S.-based miner Drummond to export its coal after shutting down the company’s port loading operations, newspaper El Espectador reported on Friday.

Wednesday’s shutdown, which resulted because Drummond was violating a new environmental law, came as a surprise for the European coal market since the government had made arrangements in December that would have enabled the company to keep loading and pay fines until it could comply. The government backtracked this week, however, and shut down Drummond’s port.

The decision is likely to slash exports of coal from Colombia, the world’s fourth-biggest exporter, by around a third if no work-around solution is found.

Mines and Energy Minister Amylkar Acosta said in an interview with El Espectador that other private and already legally compliant ports had the capacity to load more coal. Acosta cited Prodeco, which is owned by Glencore Xstrata Plc and whose Puerto Nuevo facility is right next to Drummond’s shuttered one.

“We are seeing what capacity Puerto Nuevo has and the port of Santa Marta,” Acosta said. “Private companies cannot shut their conveyor belts off and prevent access to the ports.”

Those words suggested the government might somehow be able to force Prodeco to carry Drummond’s coal. A source at small Colombian miner CNR, which is owned by Goldman Sachs Group Inc and whose exports have also been halted by the new law, said Prodeco operated Puerto Nuevo under some kind of public concession which could see it obliged to open the facility to third parties.

The new law, which took effect on Jan. 1, requires coal exporters to use enclosed conveyor belt systems that stretch far offshore to waiting ships, to drop coal directly into the vessels’ holds.

Drummond and CNR do not yet have the infrastructure in place, but the new law, aimed at tackling environmental pollution, bans them from continuing to load using cranes and barges, which cause dust and lumps of coal to fall into the sea.

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