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Cerrejon calls force majeure in light of strike

TOP Colombian coal exporter Cerrejon, at the center of the country's latest labor strike that is ...

Donna Schmidt
Cerrejon calls force majeure in light of strike

According to Reuters, the company’s CMC marketing said around 10 vessels had been unable to load coal since the walk-off began on February 7.

“As long as the strike continues, we are unable to comply with our obligations to customers," chief executive Howard Gatiss said.

“No one knows how long the strike will continue and we are in discussion to reschedule shipments.”

It is Cerrejon mine’s first strike since 1990.

A market source told Reuters the force majeure had been declared on approximately 600,000 tonnes and end-use customers in the US, Spain, Canada and Turkey, among others, would feel an impact.

According to port data the news service has received, utilities including Germany's Steag, British-based Scottish and Southern Energy and Vattenfall of Sweden were all set to receive ships that were scheduled to load at Puerto Bolivar between February 7 and 18.

A loading ban at Drummond, Colombia's second-largest exporter, is adding to the growing problem; its stoppage was imposed two weeks ago due to an environmental issue that is currently under investigation.

Drummond, however, has reportedly not declared force majeure, an unnamed source told Reuters.

In the meantime, negotiations in the Cerrejon strike have broken down between the operator’s management and the union. No new talks have been scheduled as of Tuesday afternoon.

If no deal is reached within 60 days, the dispute will be sent to an arbitration panel, whose decision is binding.

Significant production, transport and fulfillment issues could also continue to stem from the stoppage, further complicating existing problems in the Andean nation.

The combined loss from the stoppages could be as great as 85% of Colombia’s daily coal production.

Cerrejon is owned by Xstrata, Anglo American and BHP Billiton.

Colombia is the world’s fourth-largest coal exporter.

It produced 87 million metric tons in 2011, falling short of a 100Mt goal, in part because of a 25-day coal railway strike that forced output target cutbacks.

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