Colombia calls a truce in freshly declared war on coal

Colombia calls a truce in freshly declared war on coal

Drummond initially tried to cover up the massive coal dump, but was photographed by a local environmental activist and journalist. (Special thanks to Radio Caracol for providing this photo).

Drummond Co., Colombia’s No.2 coal producer, will be able to continue exporting the mineral even as it’s set to miss a Jan 1 deadline to convert its current export terminals to direct loading operations, and so avoid spills.

The country’s environmental authority fined the US coal giant for $3.5 million yesterday for having dumped more than 2,000 tons of coal in the Caribbean Sea near the city of Santa Marta. But it also decided to give Drummond an extension, while charging daily fines, Environment Minister Luz Sarmiento said in a statement (in Spanish).

Sarmiento warned the extension will be short, but did not disclose when the Alabama-based company will have to comply before its exports are halted.

The extension “can’t be a very extensive period,” Sarmiento said in audio comments published on the ministry’s website (Spanish language). “We will not allow companies to skip regulation and what has been ordered.”

Drummond initially tried to cover up the massive coal dump, but was photographed by a local environmental activist and journalist. According to the company, it was “forced” to dump the coal as the ship carrying the load was sinking.

Industry to authorities: “Take it easy”

Industry experts are saying Colombia, the world's fourth largest coal exporter, needs to avoid more troubles to the shipments of its key commodity. This considering that the sector’s production is now expected reach only about 85 million metric tons, quite less than the government's most recent production target of 94 million tons for the year.

Coal shipments account for 12% of the Colombia's total exports, placing them second to oil, which makes up 40% of all exports. Exports of the commodity now outpace the South American country's better-known products, such as coffee and bananas.

Some of the world's top mining companies have operations in Colombia, including Anglo American (LON: AAL) and BHP Billiton (ASX: BHP), which jointly own Cerrejón, the country's largest coal producer.

With almost 90 million tonnes of coal generated in 2012, Colombia is South America’s No. 1 coal producer, according to data from the World Coal Association.

The country's estimated reserves are predicted to last for at least another century. However, the sector faces major uncertainties that have left millions in losses and affected negatively the forecasted output for the year.