Coal mine Cerrejon to reduce output amid low prices, possible court ruling

El Cerrejon coal mine, Colombia | (Image from Wikimedia Commons)

Cerrejon, one of Colombia’s largest coal mines, will reduce its operations by up to 18% because of a fall in international prices and amid an ongoing court case, the company’s chief executive said on Monday.

Colombia, the world’s fourth-largest exporter of coal, faces a potential spending crunch next year as royalties from the fuel decline amid a supply glut and slowing economic growth in China.

Cerrejon, owned by BHP Group Ltd , Anglo American Plc and Glencore, will have output of just 26 million tonnes for the next five years, compared to the more than 30 million it was regular producing until last year, Chief Executive Guillermo Fonseca told local paper La Republica.

Cerrejon, owned by BHP Group Ltd , Anglo American Plc and Glencore, will have output of just 26 million tonnes for the next five years

The mine’s cash flow will de reduced by $170 million this year, because of low prices and global moves toward renewable energy, Fonseca told the newspaper.

“To adjust we’re reformulating the operation of the mine,” he said. “Accepting that prices are going to stay there, the decision was taken to reduce the size of the mine.”

“The mine will be reduced between 15% and 18% as a result of what we’re seeing,” Fonseca added.

Cerrejon did not respond to a Reuters request for comment.

It is possible the mine will be shuttered this month by the Council of State – Colombia’s top administrative tribunal – Fonseca added.

The court may order the closure while it deliberates a suit brought by communities around the mine in northern La Guajira province, who allege that Cerrejon has caused water shortages, food scarcity and other environmental problems.

“If (the closure) happens while they decide, which could take five or six years, the operation would not be worth it and Cerrejon’s history would end this year,” Fonseca said, adding the company’s concession lasts until 2034.

(By Nelson Bocanegra and Julia Symmes Cobb; Editing by David Evans)

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