The Colombian Government has banned coal loading by Drummond Co., and suspended shipments of coal from the company until the coal producer finishes mandatory port enhancements to avoid spills.
Environment Minister, Luz Sarmiento told reporters that Drummond, Colombia’s second-largest coal producer, was ordered to stop loading ships at its Caribbean port until a conveyor belt system replaces the current arrangement of barges and cranes. According to reports, Drummond estimates its direct loading system will be in place by March.
“We know this is a very costly decision from a royalties point of view, but what’s at risk is the country’s environment,” Sarmiento said. “If they don’t do things properly, we’d prefer not to have this money, and they have to learn that Colombia must be respected.”
New rules were introduced by the Colombian Government on January 1 that require producers to load coal directly onto ships. While other producers of Colombian coal, including BHP Billiton Ltd and Glencore Exstrata, met the deadline, Drummond continued to load by barge.
Logistical obstacles will prevent Drummond from exporting coal through other Colombian ports, according to Mines and Energy Minister, Amylkar Acosta. Drummond has the capacity to store about one and a half months of output, but “once this storage is full, they’ll have to halt production,” Acosta said.
European coal prices rose yesterday, after Colombian President, Juan Manuel Santos, currently bidding for a second-term in office in elections set to be held in May, sent Sarmiento to Santa Marta to investigate Drummond’s loading operation.
Coal for delivery next month to Amsterdam, Rotterdam or Antwerp rose 3.2% to US$ 81.50/t, which was the biggest increase since October 24, according to broker data compiled by Bloomberg.
According to latest data from coal association Euracoal, Colombia is the biggest supplier of coal to Europe after Russia. Coal prices in the continent have been subdued in recent months by a global oversupply of the fuel. The halt to Drummond’s exports would likely be supportive of prices, according to Trevor Sikorski, head of natural gas, coal and carbon at Energy Aspects Ltd.
Last year, Drummond was fined US$ 3.6 million after a sinking barge dumped roughly 500 t of coal into the Caribbean. The company will now face another fine for violating the new rules this month, according to Sarmiento.
Lawyers and activists have criticised Drummond’s failure to meet the new ship-loading rules, as they point to the potential environmental damage caused by the company’s outdated loading methods.
Edited from various sources by Sam Dodson
Read the article online at: https://www.worldcoal.com/handling/09012014/drummond_co_coal_shipments_suspended_390/