Europe Coal Jumps Most in 7 Weeks as Drummond Faces Colombia BanRachel Morison
European coal for delivery next month climbed the most since Nov. 20 as Colombia’s second-largest producer, Drummond Co., was investigated for breaches of fuel-loading rules that took effect on Jan. 1.
Next-month coal for Amsterdam, Rotterdam or Antwerp, Belgium, rose 2.5 percent to $81 a metric ton, according to broker data compiled by Bloomberg. The March contract gained 2 percent to $80.40, the highest since Dec. 18, the data show.
Colombia’s Environment Ministry and Environmental Licensing Agency will today suspend Drummond’s environmental license, preventing the company from exporting coal until it is able to comply with new rules on direct loading, W Radio said today on its website, without saying how it obtained the information. The ministry and agency didn’t reply to e-mails seeking comment and Drummond didn’t return a phone call.
“If Drummond can’t export for two months lost exports could be as high as 4 million tons,” or about 15 percent of the company’s shipments from the nation last year, Paolo Coghe, an analyst at Societe Generale SA, said by phone from Paris. “The next-month contract has risen because people like to be safe rather than sorry, so they are willing to pay a premium for higher delivery certainty.”
The South American nation, the second-biggest coal supplier to Europe, is tightening regulations for exporters of the fuel after a sinking Drummond barge dumped coal in the Caribbean Sea 11 months ago. Colombia accounted for 24 percent of Europe’s imports in 2011, according to the latest data from coal association Euracoal.
Birmingham, Alabama-based Drummond has continued to load coal in its port near Santa Marta this week despite regulations that enforce the direct loading of coal onto ships and ban the use of barges and cranes, Cesar Flores, a Sintramienergetica union spokesman, said today. Drummond said Jan. 3 that it will be ready to comply with the new rules by March.
Colombian President Juan Manuel Santos asked Environment Minister Luz Sarmiento to travel to Santa Marta, a city on the nation’s Caribbean coast, to investigate direct coal loading, according to a post on the president’s Twitter Inc. account yesterday. She will make a declaration at 2 p.m. local time, the Environment Ministry said in a post on its Twitter account today.
“The Colombian government needs this major export so maybe they will be willing to work with Drummond,” Coghe said. “Everything points to a positive resolution.”
European coal prices rose for seven weeks during a 53-day strike by miners at Drummond’s Colombia operations that ended on Sept. 16. The mineral is Colombia’s main export after oil, with the government losing an estimated 1.6 billion pesos ($830,000) in royalties for each day of the strike, according to the national mining agency.