Colombia's main railway, workers at impasse over stuck trains

Reuters News
Posted: Jul 30, 2012 4:16 PM
Colombia's main railway, workers at impasse over stuck trains

By Jack Kimball

(Reuters) - Colombia's main coal railway, Fenoco, and striking workers are at an impasse over demands that laborers first allow trains stuck on the tracks to be moved before any talks over pay and working conditions can move forward, officials said on Monday.

The loss of cargoes due the rail strike and another walkout out at the La Jagua mine of Glencore's Prodeco unit have not yet had an impact on prices because there are high inventories at load ports, mines and discharge ports, but the disruptions may start to be felt in another week, end users say.

Negotiations between Fenoco and union members have failed to move past discussions over 10 coal trains carrying around 60,000 tonnes of coal - less than one Panamax cargo - that have been idled since the walkout started last week.

"There haven't been talks with the company since Saturday. Until now, there hasn't been a call from the company," Felix Herrera of the Funtraminergetica union told Reuters.

Fenoco President Peter Burrowes said that the company was working to resolve the issue with laborers.

Shareholders in Fenoco include Glencore International Plc's Prodeco unit, Drummond International and Goldman Sachs Group Inc's Colombian unit.

The mining companies are among the top coal producers in Colombia, and a strike at the rail line is hitting exporters that account for more than half of Colombian coal shipments.

Daily coal supply to ports via Fenoco is up to 160,000 tonnes and the train has an annual capacity of 42 million tonnes or more, according to the company.

Fenoco has moved to declare the walkout illegal, filing a motion with the courts. A 27-day strike in 2009 was later declared illegal -- that type of verdict allows a company to fire workers who take part in stoppages, analysts say.

Fenoco says it believes there were irregularities with the voting process this year but the union denies that, saying the company is using the accusation as a distraction.

Drummond, one of the country's two biggest exporters of coal, may have to declare force majeure within a week unless customers agree to defer shipments, Colombian logistics sources said late last week.

Drummond's European customers were unfazed by the prospect of shipment delays or cancellations because they can easily be accommodated in the current oversupplied market.

Colombia's coal industry is dominated by big thermal producers with their own port and rail facilities such as Glencore, Drummond and Cerrejon, which is owned equally by BHP Billiton, Anglo American and Xstrata.

The country is the world's fourth-largest exporter of the material, mostly high-grade thermal coal, and has seen record foreign investment, mainly into the oil and mining sectors, over the last decade after a U.S.-backed military crackdown.

Colombia's thermal coal industry, however, has been suffering from a spate of bomb attacks and strikes over the last year -- rebels have blown up sections of the Cerrejon and Fenoco railways in 2012.

A strike at the La Jagua mine of Glencore's Prodeco unit entered into its 12th day on Monday, with the union saying that syndicate and the company had not met to discuss the workers' petitions since the walkout started.

On July 19 when the strike began, Prodeco said it regretted that the union's "inflexible position and excessive demands" led to a strike - charges the union denied.

Latin America has a history of tense ties among mining companies, unions, indigenous people and environmental groups.

Unions use strikes for leverage in bargaining talks with mining and oil companies, which have been returning to Colombia after a fall in guerrilla violence.

(Reporting by Jack Kimball; Editing by Kenneth Barry)