Colombia Coal Growth Hopes Dashed on Data Glitch, Miners Say

  • Mining association says industry won’t hit 90 million target
  • Future investments will depend on tax reform: Santiago Angel

Colombia will produce about 85 million metric tons of coal this year, missing a government target of 90 million tons because data collected earlier this year was inflated, according to the Colombian Mining Association.

A jump in second-quarter output from small and medium-sized miners in central Colombia was probably a result of improper data recording, rather than a real increase, according to association president Santiago Angel. Coal for European delivery in October rose 1.9 percent on Monday.

“As a result we think Colombian production will be very similar to previous years, around 85 million tons,” Angel said Friday in an interview in Bogota.

Larger miners in the Andean nation, including units of Glencore Plc, Drummond Co. and Murray Energy Corp., supply electricity producers mainly in Europe. Colombia’s coal industry has so far proved resilient to lower coal prices in recent years as companies limit expenses through more efficient use of machinery and contract renegotiation.

Despite the cost-cutting, companies will soon have to make far-reaching decisions on capital expenditures, with implications for future production, Angel said.

“There’s a key moment, and that’s when you have to replace existing machinery,” he said. “I think it’s getting close.”

The Colombian government plans to send a tax bill to Congress next month. Support in the bill for coal miners will be an important factor in determining the size and timing of future investments in the industry, Angel said.

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