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Colombia Coal Railway to Boost Cargoes as Strike Ends

Colombia’s largest coal railway plans to increase cargoes after workers ended a 25-day strike that halted trains and increased stockpiles at units of Glencore International Plc, Drummond Co. and Goldman Sachs (GS) Group Inc.

Ferrocarriles del Norte de Colombia SA probably will be able to carry as much as 165,000 tons of coal a day to trim stockpiles at mines, compared with about 145,000-to-150,000 tons shipped daily prior to the strike, company President Peter Burrowes said in a telephone interview today from northern Colombia. Trains ran today for the first time since July 23.

“They’re carrying a lot of coal,” he said.

The end of the walkout has trimmed prices of coal, extending a decline this year as demand weakened in Europe and exports rose from the U.S., Indonesia and Colombia, said Karim Kanji, director of coal trading at Barclays Capital in London. Coal for delivery next year in northwestern Europe fell 3.2 percent this week as the railway company anticipated an end to the walkout. The price has fallen 13 percent in six months.

Birmingham, Alabama-based Drummond said last week it was reducing production because storage facilities at the mine were filled. The company cut output by about one-third after the strike began last month, according to union leader Ever Causado.

Units of Drummond, Goldman Sachs and Glencore also own stakes in the railway, which will increase transport capacity to about 52 million tons of coal this year from 40 million tons last year, according to Burrowes.

Pay Demands

Workers have demanded higher pay in Colombia as coal production rises to a record of as much as 100 million metric tons this year from almost 86 million tons last year, according to a forecast by the National Federation of Coal Producers.

Workers at Glencore’s (GLEN) Prodeco Group in Colombia extended a strike that has suspended production at the La Jagua coal mine in northern Colombia since July 19, union leader Ricardo Machado said. No talks are scheduled. La Jagua and the nearby Calenturitas mine produce 14.5 million metric tons of coal annually, according to Glencore’s website. A court is scheduled to rule on whether the strike is legal on Aug. 27.

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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