Drummond Says Colombia’s Railway Ban Cutting Output and ExportsAndrew Willis
Drummond Co., Colombia’s second-largest coal producer, says a ban on nighttime rail transportation is slowing production at mines and exports from its Caribbean port.
The miner is legally entitled to declare force majeure with clients if the ban continues, according to Jose Linares, president of Drummond’s Colombia unit. The restrictions threaten Drummond’s 2015 output target.
“It is already affecting our exports,” Linares told reporters in Cartagena Wednesday. “Most of the coal we move on the railroad goes directly to vessels, so we haven’t accumulated large inventories at the port.”
Colombia is among the world’s largest coal exporters, serving European power producers including Electricite de France SA and Germany’s EON SE. The Andean nation produced 88.6 million metric tons last year and is targeting approximately 100 million tons by 2018.
Drummond and railway operator Ferrocarriles del Norte de Colombia SA, or Fenoco, are asking Colombia’s Constitutional Court to lift a Feb. 13 ban on coal trains between 10:30 p.m. and 4:30 a.m. imposed following noise complaints from local residents.
The railway has taken steps to reduce noise, including greasing tracks and not using train whistles near the town of Bosconia where the noise complaints emerged, Linares said.
“We were looking at a production range for this year of 30 million to 32 million tons,” he said. “But with this situation we don’t know how much we’ll be able to accomplish.”
Glencore Plc subsidiary Prodeco, which also uses the Fenoco railway, did not respond to an e-mail asking how the ban was affecting its exports.
The transportation ban doesn’t affect Colombia’s top coal producer, Cerrejon, a company owned by BHP Billiton Plc, Anglo American Plc and Glencore, that uses a separate railway.