Papal Critique Can’t Halt Colombia’s Coal Wager as Goldman BailsAndrew Willis
When it comes to coal, Colombia probably won’t be heeding the advice of the Pope or the example of Goldman Sachs Group Inc. anytime soon.
Colombia, the second-biggest coal supplier to European power stations, should continue growing the industry and is studying new ways to help producers battered by tumbling prices, according to the government’s mining and energy planning unit, known as UPME.
Despite concerns over global warming and advances in renewable energy technologies, many European countries continue to rely on coal to make electricity, presenting an opportunity for Colombia, UPME Director General Jorge Valencia said.
“This country continues to have a large potential,” Valencia said in an Aug. 12 interview in his Bogota office. “We should continue extracting and supplying markets with as much of our coal as possible.”
UPME expects to finish in December a study into mining industry competitiveness and will make recommendations to the government. Productivity, infrastructure and government take are among the elements under review, Valencia said.
Surging U.S. shale gas production has buffeted coal miners there as power producers switch feedstocks, contributing to a slump in global prices. A benchmark index for coal delivered in Europe has fallen 28 percent over the past year.
Miners in Colombia -- including operations owned by BHP Billiton Ltd., Anglo American Plc and Glencore Plc -- have sought to cut costs. Goldman sold its Colombian coal assets to Murray Energy Corp. in a deal announced last week.
Colombia’s economic growth has slowed to about half the rate of four years ago when prices of its raw-material exports were booming. The fossil fuel industries are among the country’s biggest employers and sources of government revenue.
Opposition to coal has intensified. In June, Pope Francis called for an urgent and drastic cut in emissions to pull “Mother Earth” out of a “spiral of self-destruction” that he blamed on rich nations. Ministers will discuss climate change at United Nations talks in December.
Colombia produced 88.6 million tons of coal in 2014 and is targeting over 100 million tons by 2018, Mines and Energy Minister Tomas Gonzalez said May 11.
The Andean nation may have to adjust its production levels if the supply of cleaner and cheaper energy sources erodes global demand, said Valencia, a supporter of renewable energy.