Drummond Slows Output at Colombian Coal Mines, Union Says

Drummond Co. has slowed production at its coal mines in Colombia after a strike halted a railway used to carry the fuel to port, a union leader said.

Closely held Drummond, based in Birmingham, Alabama, has reduced workers’ shifts to 8 hours from 12 hours at its El Descanso and Pribbenow mines in northern Colombia, Ever Causado, a union leader at a workers’ group known as Sintramienergetica, said today in a phone interview.

Railway workers and a separate union at a mine owned by Glencore International Plc walked off the job last month to demand higher wages as production climbs in Colombia, South America’s largest coal supplier. Workers at the railway, called Ferrocarriles del Norte de Colombia SA, will meet for negotiations today with management and government officials, union leader Sergio Becerra said in an interview. The strike began July 23.

The trains carry Drummond’s coal to a port on the Caribbean coast of northern Colombia, where the company produced about 25 million tons of the fuel last year, according to its website.

If prolonged, the strike may be “a positive” for thermal coal prices, Serene Lim, an analyst at Standard Chartered Plc in Singapore, said yesterday in a note. The railway also carries coal from mines owned by units of Glencore and Goldman Sachs Group Inc. (GS), which along with Drummond hold stakes in the railway company.

Workers at Glencore’s (GLEN) Prodeco Group have no negotiations scheduled at the La Jagua coal mine in northern Colombia, Becerra said. A walkout at the mine began on July 19. La Jagua and the nearby Calenturitas mine produce 14.5 million metric tons of coal annually, according to Glencore’s website.

Output in Colombia will rise to as much as 100 million tons this year from almost 86 million tons last year, according to a forecast by the National Federation of Coal Producers. Colombia primarily produces thermal coal used by utilities and exports metallurgical coal used for steel production.

To contact the reporter on this story: Heather Walsh in Bogota at hlwalsh@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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