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Drummond Colombia Coal Workers Vote to Strike Over Pay

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July 18 (Bloomberg) -- Workers at Drummond Co., Colombia’s second-biggest thermal coal producer, may strike as early as July 20 after rejecting the company’s latest pay offer.

About 3,000 port and mine workers overwhelmingly rejected Drummond’s offer of a 4.5 percent wage increase, said Humberto Suarez, Sintramienergetica’s union negotiator. Union leaders will study the company’s response before deciding whether to go on strike, he said.

“We have the votes to strike, but we are waiting to see what the company does,” Suarez said late yesterday in a phone interview from Santa Marta, Colombia.

A strike would cost the government 2 to 3 billion pesos ($1.1 million to $1.6 million) a day in lost royalties, according to Mining Ministry estimates, and could hurt the government’s attempt to reverse a slowdown in growth. Coal is Colombia’s biggest export after oil.

“When a project like this stops, the impact is huge,” Javier Garcia, director of corporate mining at the Ministry of Mines and Energy, said in a July 17 interview in Medellin. “We are working to resolve the problems quickly.” Colombia’s Labor Ministry will broker a meeting between the two sides today.

The company didn’t reply to an e-mail seeking comment sent outside normal business hours.

February Disruption

On July 12 Drummond offered workers a three-year pay deal of a 4.5 percent pay rise, followed by an increase of 1.25 percent plus inflation in the second year, then inflation plus 1.5 percent. Workers were seeking an increase of about 8 percent, union official Alberto Solano said July 12.

Exports from Drummond were interrupted in February, after the company’s loading license was suspended when a sinking barge dumped coal into the sea. On Feb. 7, workers at Cerrejon, Colombia’s biggest coal mine, which is jointly owned by BHP Billiton Ltd., Anglo American Plc and Xstrata Plc, went on strike for more than a month in a dispute over pay and benefits.

Colombia’s central bank cited “paralysis” in the Andean nation’s coal industry in a decision to cut its benchmark interest rate half a percentage point to 3.25 percent at the March policy meeting. The Finance Ministry estimates that the slump in coal output cut first-quarter economic growth by half a percentage point.

The economy expanded 2.8 percent in the first quarter from the year earlier, compared with 4.8 percent growth in Peru and 4.1 percent in Chile.

To contact the reporter on this story: Andrew Willis in Bogota at awillis21@bloomberg.net

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

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