Colombia to spend nearly $1.3 billion in coal-related ports expansions

Colombia’s leading coal producers are increasing investments dramatically to improve and expand their ports, in what is considered a key move for rising coal production in the country to 120 million tons within by 2014, reports local newspaper La Republica.

This year will be critical for projects lead by Drummond, Cerrejon and Prodeco, as the three companies have put in march projects with investments valued in about $1.3 billion.

The massive investments will guarantee the industry’s long-term development, says Alfonso Saade, executive director of Fenalcarbon, the national federation of coal producers in Colombia. He added that coal mines in the mineral-rich regions of Cesar and La Guajira, in the north of the country, alone, will be producing 200 million tons a year by 2030.

La Republica quoted Saade as saying that planned investment to expand port infrastructure increases the likelihood for the government to meet production targets.

Augusto Jimenez, chairman of Drummond Colombia, said that work has begun on the company’s main port projects, which will allow its company to load coal directly. The coal producer will invest $450 million in its ports during this stage.

Prodeco, a subsidiary of the Swiss trading company Glencore, has begun construction of Puerto Nuevo at Cienaga, Magdalena, by the Caribbean Sea.

The project will require a $600 million investment and will include an 8.5 kilometre-long and 20.5 metre-deep access canal.  Vessels with up to 8,000 tons of coal will be leaving that port.

Cerrejon, a joint venture between BHP Billiton, Anglo American and Xstrata, as well as Colombia’s largest coal producer, is working intensively to expand the port in order to increase exports.

The company, which currently produces 30 million tons of coal a year, is expanding Puerto Bolivar, considered the largest complex of its type in Latin America.

Cerrejon President, Leon Teicher, said in a statement that the company plans to spend 50% to 60% of a $1.3 billion expansion budget on construction and the rest on equipment to boost output to 40 million tonnes of coal per year.

The project has an estimated cost of $238 million. The company plans to increase production to 40 million tons a year by 2015, requiring it to expand its transport capacity.

Colombia hopes to double coal output in 2012. Currently, the country is the world’s No. 4 coal exporter.

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