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Drummond slows amid Colombian strike

AS A strike in Colombia that has crippled operations and rail transportation nears the end of its...

Donna Schmidt
Drummond slows amid Colombian strike

Sintramienergetica union leader Ever Causado told Bloomberg that the Alabama miner had sliced worker shifts from 12 hours to eight at the El Descanso and Pribbenow operations.

The northern Colombia mines have been hit hard by the strike that began as a labor issue and quickly extended to a stoppage by the railway, Fenoco, that the region uses to carry coal to port.

The strike first began July 19 with workers at Glencore’s Prodeco unit, who voted to strike for higher pay and better working conditions. Fenoco was next on July 23.

Earlier this week, Glencore reportedly declared a force majeure on unfulfilled cargoes as a result of the strike.

According to a Reuters report, Glencore declared the force majeure on lost cargoes from less than five vessels due to the union actions and was handling the cargoes on a case-by-case basis rather than with a blanket force majeure claim.

The report noted the missing coal was from the Calenturitas mine and therefore a result of the rail strike rather than the La Jagua strike.

Following media speculation earlier this week that Drummond, a major exporter, could follow suit with its own force majeure, Reuters affirmed such in a Thursday afternoon report.

Drummond, however, had not released a public statement to confirm the move at press time.

Singapore-based Standard Chartered analyst Serene Lim told Bloomberg that, if the strike continued, it could actually become a “positive” for thermal coal prices.

Before the stoppage, the National Federation of Coal Producers estimated Colombian output could jump to as high as 100 million tons in 2012, compared to 86Mt last year.

Most Colombian thermal coal is used by utilities, while met output is exported for the production of steel.

Colombia is the world’s fourth largest coal exporter.

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