June 25, 2014 / 3:50 PM / 4 years ago

UPDATE 2-Colombia Cerrejon coal stocks near-depleted by port protest

(Adds coal price, security company quote, background on protest)

By Peter Murphy and Luis Jaime Acosta

CARACAS/BOGOTA, June 25 (Reuters) - Joint venture Cerrejon, Colombia’s biggest coal miner, says it could run out of stocks at its port in one or two days and default on export commitments, as third-party workers blocked its private railway for the sixth day on Wednesday.

Colombia is the world’s fourth-biggest exporter of coal and ships the fuel mainly to Europe for power generation. A halt to Cerrejon’s exports would slash the Andean nation’s coal exports by about a third and could raise European coal prices.

“There are more or less two days worth of coal at the port to load and we have supplies to keep the mine running for about the same time,” said Cerrejon’s Vice President of Public Affairs, Juan Carlos Restrepo.

“We’re looking, together with our lawyers, at the possibility of declaring force majeure given the inability to adhere to our trading commitments, if the situation persists,” he said.

Restrepo said security guards employed by contractor Sepecol were blocking Cerrejon’s 150-km (93-mile) railway line about 34 km (21 miles) from the mine to protest the upcoming loss of several hundred jobs after Sepecol’s contract, which expires on June 30, was not renewed.

Sepecol workers blocking the line since last Friday have refused talks which the company, Restrepo said. Cerrejon has asked the government to try to facilitate dialogue.

The company hopes to increase exports this year from 33 million tonnes last year, when a month-long miner’s strike hampered operations.


European physical coal prices edged lower on Wednesday amid expectations of warm temperatures and weak demand, but traders said the risk of supply disruption at Cerrejon could boost the market in coming days.

Colombia’s coal sector has faced repeated disruption since late 2012 between a run of logistics problems and strikes by coal miners, but international steam coal prices remain comparatively low, with the market still fairly well supplied.

Sepecol General Manager Oscar Santiago Silva told Reuters the protesting contractors were angry that the two new security companies will slash jobs.

He said Sepecol had tried to persuade workers to abandon the railway blockade and that it was working to pay severance this week, sooner than legally required, amid worker fears Silva said were unfounded, that they might not be paid.

“It may help them re-think their hard position,” he told Reuters. “We have spoken to some leaders and told them Cerrejon won’t change its position” on contract renewal, he said.

Some Sepecol workers come from far-away cities for six-day stints, sleep at a camp near the mine and get transport home for rest days. Silva said Sepecol lost out in the bidding as it maintained certain worker benefits, which the incoming companies would scrap.

Silva said there were about 850 security workers at Cerrejon but, under new contracts with two other security companies chosen through the bidding process, the number would likely be reduced by around 350. (Additional reporting by Luis Jaime Acosta; Editing by Jeffrey Benkoe and Gunna Dickson)

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