UPDATE 2-Weather sinks Colombia coal barge, exports suffer

* Vale 70 tonne barge sinks off Rio Cordoba

* Force majeures expected -- exporters, Euro buyers

* Coal prices seen rising sharply - traders, utilities

(Updates throughout, adds quotes, background)

LONDON/RIO DE JANEIRO, Dec 17 (Reuters) - Severe weather and high waves caused a 70 tonne coal barge to sink off the Colombia coast this week, and more significant disruptions to shipments from the country, one of the world’s top five coal exporters are likely, Colombian miners and European buyers said on Friday.

The Vale VALE.N barge sank near Rio Cordoba port, exporters said, and the company confirmed the sinking.

Although the 70 tonnes lost in Vale’s barge and the nearly 3,000 tonnes lost by another exporter are relatively tiny amounts, the significance of the sinking is that it shows the weather-related problems are worsening, buyers and traders said.

Colombia’s coal problems coupled with growing disruption to Indonesian and Australian exports, also due to severe weather, have pushed delivered Europe prices up $45 percent to $125 a tonne since October. [ID:nL3E6N61WA] [ID:nL36NF0OG].

Exporters and European utility buyers said the fact that the severe rains of the past several months are forecast to last until the second quarter makes them expect force majeure declarations by the bigger mining companies.

“I do expect that more problems in Colombia will occur. I do think there is strong potential to see further delays and possible force majeure of Colombian coal shipments,” said Jeffrey Landsberg, managing director of U.S. dry bulk consultancy Commodore Research.

“It’s just a matter of time before there are force majeures and it probably won’t be very long, given the weather forecast,” one of Europe’s largest coal buyers said.

“The rain is hitting all the Colombian producers hard, they’re all struggling and it’s getting worse, Q1 is going to see a sharp rise in prices,” a major Europe-based trader said.

“You could see another $20 or so on top of current prices of $125 very easily,” he added.

Colombian mine production has already been hit hard by unusually severe and prolonged rains through most of this year. [ID:nLDE6B71HT]


Colombian industry sources said in November output for 2010 would be a couple of million tonnes below the 80 million target for the year because of heavy rains but the final impact is likely to be worse if the rains continue until March or May as forecast [ID:nN10209534].

Rains and flooding have caused up to $5.2 billion in damages, its worst natural disaster, Colombian President Juan Manuel Santos said on Monday [ID:nN13219371].

This has already caused export shipments to be pushed back into 2011 and led to current loading delays of up to two weeks, exporters and buyers said.

Heavy Caribbean seas are affecting load operations at Colombia’s Atlantic coal ports and the anchorage facility in particular, shipping sources said.

According to a local Colombian press report, 2,800 tonnes of Drummond coal was lost due to bad weather.

“There have been lots of problems with loading at Colombia’s Caribbean ports because of the bad weather, and the ship incidents have further slowed things down,” a Colombian shipper said.

“There has been some severe weather which has pushed things back further but no force majeures as yet,” one of Colombia’s biggest exporters said.

Venezuelan miner Guasare, which ships from Maracaibo, close to the main Colombian ports, a week ago declared force majeure on December shipments after rains caused flooding and landslides, closing roads. [ID:nLDE6B61PS]

Guasare’s FM was seen by many market players to herald further problems with Colombian shipments.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic: Graphic: here Graphic: Take a Look on Colombia's coal: [ID:nN17159080] For a Factbox on Colombia's coal production and exports see [ID:nN17455580] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Jackie Cowhig, Jonathan Saul, Henning Gloystein and Denise Luna; editing by Anthony Barker and James Jukwey)