BHP, Anglo’s Cerrejon to Miss Coal Output Goal After Storms

BHP Billiton Plc, Anglo American Plc and Xstrata Plc’s Cerrejon coal mine will miss its output target this year after rainstorms curbed production in Colombia.

Cerrejon will produce less than the 32.5 million metric tons it targeted after rains prompted mine stoppages to ensure the safety of workers, said the venture’s Chief Executive Officer Leon Teicher. Output at Cerrejon, the world’s largest open-pit coal mine for export, will be above 32 million tons, he said. The mine will export 32 million tons of coal this year.

“Whenever there is rain we stop the mine,” Teicher, who’s slated to step down this month, said in a telephone interview. “It’s had a major impact on our production in October, November and December, but we have been able to compensate.”

Rainfall, also hampering operations at mines owned by Glencore International AG’s Prodeco group, Drummond Co. and Itochu Corp., will limit the nation’s coal output through early next month, National Federation of Coal Producers President Jaime Olivella said today in a phone interview. Colombia is South America’s largest supplier of coal.

Colombia will produce 75 million to 80 million metric tons this year, below a government forecast for 85 million tons, said Olivella. Rain is flooding mining pits, forcing trucks and excavating equipment to operate more slowly and hampering some coal transport between mines and ports, said Olivella.

Across Colombia, 101 people have died since September because of floods, mudslides and storms.

December Rainfall

At Cerrejon, in northern Colombia, the number of days with rainfall in December has exceeded the amount expected for the whole month, Teicher said.

Last year, Cerrejon produced 31.5 million tons of coal and exported about 31.3 million tons, said Teicher. Next year, exports from Cerrejon to Latin America will likely surpass shipments to North America for the first time, because of growing demand from utilities in Chile and Brazil, he said.

“We’re about at the inflection point,” Teicher said.

In Chile, drought that limits hydroelectric production is increasing demand from utilities, while Brazil is considering new coal-fired plants, he said.

Cerrejon will increase production in 2013 as part of a $1.3 billion expansion plan approved this year. Output will rise to 34 million metric tons in 2013 and 37 million tons in 2014, before reaching a target of 40 million tons in 2017.

Management is at the early stages of studying an expansion to 60 million tons at the mine, which has enough coal resources to produce even more, according to Teicher.

Colombia mainly produces thermal coal and also has mines exporting metallurgical coal used for steel production. In the mountainous provinces of central Colombia, flooding is slashing production of metallurgical coal, according to the federation’s Olivella. Coal output next year in Colombia will rise to 100 million tons as mines expand, he said.

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