Prodeco must merge Colombian coal operations

Prodeco, the Colombian coal miner owned by Glencore Xstrata, has been told by the Colombian government it must merge operations at one of its mines, and pa higher royalties. These are the terms set out by the Mines and Energy ministry as part of government conditions to extend Prodeco’s mining contract.

Prodeco is the South American country’s third largest exporter of thermal coal. It is looking to extend its contract at the La Jugua coal mine in northern Cesar province.

"In Prodeco's case, an aspect we see of great importance is that of integration," Amylkar Acosta, the Mines and Energy minister, said. "For us that is an immovable condition to award the extension."

Small-scale mines pay the government 5 percent of their total monthly production in royalties, while large-scale mines must hand over 10 percent, and so the government wants Prodeco to pay the higher tariff, Acosta said.

Acosta added that the company had been receptive to the conditions and keen to move ahead with extending the contract.

Potentially lucrative CBM deal confirmed

Prodeco works in Colombia’s coal sector alongside major companies Drummond and Carrejon.

A potentially lucrative deal to extract coalbed methane (CBM) from a coal mining area owned by Carrejon has now been confirmed by Acosta.

The minister confirmed that Drummond and Carrejon had “reached a deal that they are perfecting and soon will be able to extract industrial scale CBM in Colombia," Acosta said.

Drummond holds the rights to extract CBM from a site at which Carrejon has developed a mining area.

Acosta said the two companies would work in a joint venture to develop the CBM reserves.

Colombia has included CBM in its tender for oil and gas exploration and production contracts this year.

Edited from various sources by Sam Dodson

Read the article online at: https://www.worldcoal.com/coal/17072014/prodeco_told_to_merge_colombian_coal_operations_1098/