Coal news and updates

The Colombian government will not extend the compliance period for coal producers to convert export terminals to direct loading operations beyond a January 1, 2014 deadline, a spokesman for the country's mining and energy ministry told Platts Tuesday.

 

"The [end of year] deadline cannot be extended for any company ... it is a part of a law and the ministry cannot modify it," the spokesman said.

 

Colombian law requires all coal export terminals in the country to be using direct loading by the start of 2014, a stipulation that most large miners have already complied with.

 

However, sources say the country's second-largest miner, Drummond -- which produces around a third of the country's thermal coal, and Goldman Sachs' Colombian Natural Resources unit will not be able to meet the deadline.

 

Colombia's vice minister for mines Natalia Gutierrez told reporters Monday that Drummond's upgrades were "very delayed", and the ministry is reviewing the impact of its non-compliance on coal royalties, taxes and jobs.

 

The consequences for producers missing the deadline is unclear, but market sources say the fear is that miners will not be allowed to export coal until the direct loading systems are operational.

 

If that is the case, sources say spot European-delivered CIF ARA thermal coal prices may spike if Drummond cannot load cargoes as expected. Decreased supplies from Colombia and Russia in the third quarter of 2013 have left a tighter market ahead of the northern hemisphere winter.

 

Platts assessed the price of physical CIF ARA thermal coal basis 6,000 kcal/kg NAR and for delivery within the next 15-60 days at $84.35/mt Tuesday, up $1 compared with Monday.

 

COAL PRODUCTION TARGET SLIDES TO 85 MILLION MT: MINISTRY

 

Colombia's mining ministry expects the country's coal production to reach 85 million mt in 2013, down from its original target of 94 million mt, the spokesman said.

 

He attributed the revised target to a series of strikes at the country's main coal producers, a month-long coal export ban at Drummond at the beginning of the year, and reduced transportation on the main Fenoco coal rail line due to environmental sanctions in the first quarter of the year.

 

The spokesman said that the ministry also expects coal exports to match production figures for the year.

 

Data from Colombian mining agency ANM showed its 2012 coal production was 89.199 million mt, up 4% year on year, while statistics department DANE reported coal exports in 2012 were 77.4 million mt, down 4.7% year on year.

 

 

Source: http://www.platts.com/