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Coal railway workers in Colombia in pay dispute with Fenoco

World Coal,

A key artery for Colombia’s coal exports, the main coal railways Fenoco, could be impacted by industrial action after workers on the railway demanded higher pay.

Colombian law stipulates that talks between workers and companies should last between 20 to 40 days. Workers at the Fenoco railway are in talks with the company for a 15% pay rise.

Discussions between the two sides began August 29, according to Reuters.

Felix Herrera, president of the Sintraime union, which Herrera said represents roughly 50% of workers employed directly by Fenoco, said workers were seeking a 15% increase in pay, while the company was offering a raise equal to the inflation rate. However, Herrera said this increase had been the standard increase for Fenoco employees for several years.

Annual inflation through August was 2.27%.

Possible strike action

Discussions between the parties remain at an early stage, and Herrera said it would be “premature to talk about a strike.”

The Fenoco railway transports about half of Colombia’s coal exports. If negotiations between workers and the company fail to reach a resolution that is agreeable to both parties, the possibility of strike action will nonetheless worry Colombian authorities.

Colombia’s coal sector has been rocked by strike action twice already in 2013, with continual disruptions affecting coal exports: a major course of income for the country.

In 2012, Fenoco workers went on strike for 23 days, cutting coal exports by about half. With a poor road network, keeping the railway open is crucial to Colombia’s coal industry.

The rail line passes through Cesar, a key coal mining province in Colombia, and runs to the Caribbean coast. It collects material from coal mines along its route.

Colombian law

Colombian law stipulates that negotiations must run for 20 days. This number may be extended by a further 20 days if both sides so wish.

It is only once talks have been concluded and these 20 to 40 days of negotiations have ended that a strike or arbitration be considered.


Fenoco’s main shareholders are Goldman Sachs, Glencore Xstrata Plc, and US based Drummond International, with each company managing its own rolling stock.

Drummond’s Colombian operations have already been affected by industrial action this year, with strikes shutting down its two coal mines, as well as the company’s private port.

Coal forecast and global impact

Colombia is the world’s fourth largest coal exporter, and is an important source of coal for Europe. The country recently cut its coal production targets for 2013 by 4 million t – to 94 million t down from 98 million t. In 2012, the country’s coal sector produced 89.2 million t.

The industrial action against Drummond’s operations has cut Colombia’s coal output by about a third.

Though the effect of the strike may cause global coal prices to rise, the effect will likely be minimal, as a result of a significant market oversupply. Weak demand for coal, and alternative supply from Russia, the US and South Africa fill the gaps caused by the lost Colombian coal.

Edited from various sources by Sam Dodson

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