MPX Delays $4 Billion Colombia Coal Project Amid Price Drop
MPX, based in Rio de Janeiro, may begin exporting from the Canaverales mine in northern Colombia during 2014, with output rising to 35 million tons from the complex within nine years, Luis Caceres, projects manager at the company’s Colombian coal unit, told reporters at an industry conference today in Bogota. The company had earlier targeted first output later this year.
Coal demand may slow in Europe and China, the world’s largest energy consumer, weighing on prices and prompting a delay in mine expansion plans, said Andres Jimenez, head of international sales at Interbolsa SA, Colombia’s largest brokerage. Caceres said the later start date reflects changes to a prior plan that would have begun production with 5 million tons of coal and had maximum output of 20 million tons.
“Batista is having his difficulties with a choppy market,” Jimenez said. “Commodities may have a correction and that includes coal.”
Coal futures in northwestern Europe have dropped 10 percent in six months.
MPX’s Chief Executive Officer Eduardo Karrer said Aug. 19 that output was previously set to start in the fourth quarter of 2012 and reach 35 million tons by 2020.
The project is now estimated to cost about $4 billion and will produce about 1 million tons of coal in its first year of output, according to Caceres.
“In 2014, we would like to be in conditions to start an aggressive ramp-up,” he said.
MPX will use the coal to supply its own energy plants in Brazil and Chile, later shipping the excess to export markets like China and India, he said.
MPX is planning to spin off the coal assets and list them as a separate company called CCX, Batista, Brazil’s richest man, said Jan. 11.
The company is addressing points raised by Colombian regulators about environmental permitting at Canaverales, Caceres said. The mine would be the first to begin production at the complex in the Colombian province of La Guajira, which also will include underground mining and a railway and port, Caceres said.
MPX slid 0.2 percent to close at 48.6 reais in Sao Paulo, snapping two days of gains.
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