Government does 'U-turn' on deal with Drummond, blocks coal-loading

Last week a regional environmental body in Colombia ordered Drummond, the country's second largest coal producer, to stop loading coal because the company had not completed upgrades to its loading system by the January 1 deadline.

New rules require all coal-loading work to be done through a direct-to-vessel system but US-based Drummond was unable to complete the work on time.

In December the company struck a deal with the government whereby it would continue loading with barges and cranes until March, but would pay a daily fee to do so.

Initially it was unclear whether the regional body's order could override the deal with the Colombian government, but on Wednesday Reuters reported that the government had made a "U-turn" on the deal.

"The national government has made the determination to suspend loading of coal until the direct loading system is put in place," Environment Minister Luz Helena Sarmiento said, as reported by Reuters. "This decision announced today is to be adhered to immediately."

See also: Colombia's second-biggest coal producer ordered to stop loading

Sarmineto, who inspected Drummond's port facilities on Wednesday, acknowledged that the move will result in the loss of royalty payments but said that "if they [Drummond] don't do things properly, we'd prefer not to have this money, and they have to learn that Colombia must be respected," the BBC reported.

She warned that if the company "breaks the law again," the government will be "forced to act as police, and that will aggravate its situation."

Colombia first announced the law in 2007. A conveyor belt system is expected to help cut pollution from coal-loading activities.