Nena News

Colombia coal output to stall in 2016 – mining association

(Montel) A slump in global coal prices will see Colombian coal production stall in 2016, at below 90m tonnes, as companies cut investment in new capacity, the Colombian Mining Association said late on Thursday.

Output in 2015 will be between 86.3m and 88.3m tonnes – below the official target of 90m tonne – the mining association said in a statement, adding investment cuts were a “bad omen” for government expectations of breaking the 100m-tonne goal by 2018.

“For now, even reaching the 90m-tonne goal has become a slippery feat,” it said.

Around 35% of Colombia’s coal mining firms will not increase investment in 2016, according to a survey cited by the mining association, which noted the coal price slump affected the country’s two largest producers, Cerrejon and Drummond.

The Global Coal Des ARA index, which reflects the price of coal delivered to northwest European ports, ended December at USD 48.21/t, down 28% year on year.

In light of this, Cerrejon chose to keep production levels stable, at around 33m tonnes this year, while Alabama-based Drummond has had to make investment cuts, particularly for new projects, sources told the association.

“The balance of the Atlantic market is crucial, and for Colombia it’s a fair to say they should not see any growth in their sales this year,” said Hans Gunnar Nåvik, analyst with Oslo-based consultancyNena.

In terms of investment, Colombia will simply join the global trend, Nåvik said. “Every miner is cutting into their investment budget and trying to improve productivity. But the impact of this will not be noticeable until 2018-2019.”

Reporting by:
Andrés Cala
14:40, Friday, 8 January 2016