Colombia coal output likely to hold steady in 2019, companies say

Image courtesy of  Drummond Company, Inc.

Colombia’s coal production and exports are likely to remain steady this year, companies said on Wednesday, amid predictions international prices for the fuel will fall in 2019.

The Andean nation is the world’s fifth-largest exporter of coal. 

Fitch Solutions reduced its Colombian coal production growth forecast from 4.5 percent to 0 percent in January due to price declines

Overall Colombia production figures for last year are expected to be released sometime after Friday. Annual output in 2017 was down 1.2 percent from the year before, to 89.4 million tonnes.

Third quarter production in 2018 was 20.3 million tonnes, down 5.6 percent from the same period the year before.

Analyst Fitch Solutions reduced its Colombian coal production growth forecast from 4.5 percent to 0 percent in January, citing possible production stagnation due to price declines  that disincentivize higher output.

Thermal coal prices will fall to an average of $85 per tonne in 2019, from $101.4 per tonne last year, Fitch Solutions said in a note.

Drummond Co Inc, the country’s largest exporter of coal, expects to maintain production and exports levels in 2019, a company source told Reuters.

Output last year hovered around 31 million tonnes, while exports were 31.6 million tonnes, the source said. The company expects to produce between 31 million and 32 million tonnes this year.

Alabama-based Drummond’s forecasts are not necessarily connected to price predictions, the source said.

Meanwhile Cerrejon, which operates an open pit mine in northern La Guajira province, will be working to avoid a repeat of production headaches from last year.

The company, which is equally owned by BHP, Anglo American and Glencore, produced 30.7 million tonnes in 2018 and exported 30.5 million tonnes, it said in response to emailed questions from Reuters, and expects similar volumes this year.

Output was damaged by judicial rulings which prevented Cerrejon from accessing part of its concession and by heavy rains in May, September and October.

“Those factors, as well as others that are out of our control, will influence results in 2019, when we will seek to counteract the trend toward contraction in our operations,” said the company.

Colombia’s two other major coal producers, Murray Energy Corp, which controls miner Colombia Natural Resources, and Prodeco, a subsidiary of Glencore, both declined to comment.

(By Julia Symmes Cobb; Editing by Helen Murphy and Marguerita Choy)

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