Colombian coal railway to comply with nighttime train ban

Reuters News
Posted: Feb 09, 2013 9:46 AM

BOGOTA (Reuters) - Colombia's top coal railway, Fenoco, will comply with a ban on nighttime trains issued by a regional environmental authority to reduce noise, the company said late on Friday.

The announcement adds to problems that have forced top producers at the South American country to shut down shipments from the world's fourth-largest coal exporter, sending global prices rising.

On December 10, the Regional Autonomous Corporation of Cesar, which oversees environmental issues in Colombia's top coal producing region, ordered Fenoco to stop running trains near populated areas between 10:30 p.m. and 4:30 a.m. so residents' sleep would not be disturbed.

"The company will abide by and respect the measure, and will proceed, as of today, February 8, 2013, to stop the movement of trains during the night in the Cesar region, as ordered by said administrative decision," Fenoco said in a statement.

A government source told Reuters late last year that if the order were implemented, Colombia's coal exports would fall by 23 million metric tonnes per year and it would cost the Andean country some $470 million annually in royalties.

Fenoco transports up to 160,000 tonnes daily, according to the company.

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

Colombia's mining sector has been hit in recent months by a spate of labor disputes, delays in environmental permits and a rise in guerrilla attacks against installations.

In the first strike in almost two decades at Cerrejon, Colombia's largest coal exporter, workers walked off the job earlier this week to demand higher wages and more benefits.

Cerrejon - a joint venture between BHP Billiton, Anglo American and Xstrata - produced 34.6 million tonnes of coal last year and exported 32.8 million tonnes.

On Wednesday, Colombia's National Environmental Licensing Authority suspended loading at Drummond's port after a coal barge nearly sank in bad weather last month. The suspension will be lifted once Drummond presents a contingency plan.

A source close to the company on Thursday said that operations would likely be up and running in seven to ten days.

In total, about 85 percent of Colombia's daily coal output is shut as a result of the problems at Cerrejon and Drummond as well as at a mine owned by a Goldman Sachs affiliate, according to calculations by Reuters and industry sources.

The problems at Cerrejon and Drummond's port sent global prices rising on Friday.

(Reporting by Eduardo Garcia; Editing by Vicki Allen)