Colombia mining minister sees coal exports hitting 100 mil mt by 2015
Bogota (Platts)--1Nov2011/622 am EDT/1022 GMT
Colombian annual coal exports should reach 100 million mt by 2015, up
33% from current levels, as a flood of foreign investment boosts coal
production, the new mining and energy minister, Mauricio Cardenas, said last
Colombia's coal projects were attracting investors because of ample
reserves, the coal's relatively high calorific value, and the country's
proximity to Atlantic ports, Cardenas said. Also, Colombia's largest mines
are open pit operations from which coal extraction is relatively
straightforward, he said.
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"We aren't in the big leagues of production, but we are in exports
partly because Colombia uses very little coal, generating most of our
electricity with hydropower," said Cardenas who took the cabinet job after
three years at the Brookings Institution research organization in Washington
"So we have a lot to export. And with coal prices where they are,
royalties are becoming a very important source of revenue for the
government," he said. The country will export 75 million mt of coal this
Colombian thermal coal was trading at about $100/mt on an FOB basis in
the week ended October 28, according to Platts assessments. This is five
times the average price of $20/mt 10 years ago, said Alfonso Saade of
Fenalcarbon, the Colombian coal producers' association.
Colombia currently ranks fifth in terms of coal exports, behind
Australia, Indonesia, South Africa and Russia.
The richness of Colombia's coal reserves is what led US oil major
ExxonMobil to invest billions in the country's coal industry in the 1970s as
the original developer of Cerrejon, the largest coal mine that is an open-pit
operation in Guajira province. It subsequently sold its interest in the mine
to a consortium comprising Glencore, BHP Billiton and Anglo American as equal
Guerrilla violence and drug wars kept many investors away from
Colombia's coal reserves until recently. Now with security improving thanks
partly to $7.6 billion in US military aid given under Plan Colombia. At the
same time, global mining companies are trying to position themselves for an
explosion in exports over the next decade as Chinese and Indian
coal-dependent economies continue to grow.
"Colombia is like the last frontier for many of these investors,"
Cardenas said. This year, Colombia expects to receive $4.5 billion in
royalties from natural resource sales, about double what it got in 2006, he
said. Coal, along with petroleum and tourism, are top generators of foreign
currency for the country.
The commerce ministry announced on Monday that foreign direct investment
in mining and petroleum projects reached $9.6 billion year to date through
October 14, a 52% increase over the same period in 2010.
Investment in energy and mining projects accounted for the lion's share
of 83.4% of overall year-to-date foreign direct investment in Colombia, said
Sergio Diaz-Granados, the minister of Commerce, Industry and Tourism.
Three Brazilian mining giants -- Vale, Votorantim and Eike Battista's
EBX Group -- are among the foreign companies that have established presences
in Colombia recently. In June, Drummond sold a 20% stake in its open pit mine
in northern Cesar state to Japan-based trading group Itochu for $1.5 billion.
Cardenas said construction of a new rail line to connect coal mines in
Cesar state to Colombia's Atlantic coast was almost 80% complete. The line
runs parallel to an already existing coal transport line owned by Drummond
and Glencore, which are financing the new line as well. Both companies are
planning to expand their Colombian mines in coming years.
Another 520 km of railroad is planned to connect coal mines in
Colombia's interior to its Atlantic ports, said Fenalcarbon's Saade.
--Chris Kraul, firstname.lastname@example.org