Canacol gas curbs force Colombia’s Cerro Matoso ferronickel mine to cut output

Colombia’s Cerro Matoso ferronickel mine said on Wednesday it was cutting operations by 25% after Canada’s Canacol Energy reduced natural gas supply to the plant, threatening jobs, supplier contracts and fiscal payments.

Cerro Matoso, owned by CoreX Holding and located in Colombia’s northern Cordoba province, said Canacol cut gas deliveries to 7,000 MMBtu from July 1, a 55% reduction from contracted volumes.

The miner said the cut followed Canacol’s move to seek creditor protection in a Canadian court and request the early termination of several gas supply contracts in Colombia, including Cerro Matoso’s contract, which runs through 2029.

Canacol’s Colombia office declined to respond to a request for comment.

Cerro Matoso said the reduced gas supply would partially suspend some operating processes and could force it within days to halt one of its two production lines if the restriction remains in place or worsens, potentially cutting output by half.

The company said the disruption could affect hundreds of jobs, goods and services contracts, and payments tied to royalties, taxes and local purchases.

Under Colombian law, the final decision on whether the Canadian court ruling can take effect in the country rests with Colombia’s Superintendency of Companies, Cerro Matoso added.

(By Nelson Bocanegra and Luis Jaime Acosta; Editing by Franklin Paul)