Colombia blocks Prodeco request to return coal titles
The Colombian government has rejected Switzerland-based Glencore's request to relinquish the three main mining titles associated with its Prodeco unit, regulator ANM has told Argus.
ANM declared the request to return Prodeco's 044-89, 285-95
and 109-90 licences "unviable", claiming that it has no certainty
about whether the licences comply with the conservation and maintenance of the
facilities and equipment.
"In order to safeguard the interest of the nation and
protect the net worth of the state, it was considered appropriate to deny the
request for the resignation of the aforementioned mining titles," ANM told
Argus.
The three titles accounted for 8.8mn t, 3.7mn t and 1.5mn t
of Prodeco's 2019 production, ANM data show, more than 99pc of its output that
year.
Prodeco has appealed against the ruling and expects a final
decision on 20 July, it told Argus.
Prodeco has also appealed against an earlier ANM decision to
reject the return of its smaller DKP-141 and HKT-08031 titles. The regulator
had until 18 June to consider the appeal, but has not yet published a decision.
Prodeco told Argus that the government had not accepted the
company's initial request to halt mining activities for four years, nor to
return its mining titles, but that it must continue with costly maintenance of
the mines and equipment. The unit has been on care and maintenance since March
2020, when operations were first suspended during the first Covid-19 lockdown
in Colombia.
Prodeco told Argus that its decision to halt coal mining in
Colombia is unchanged when asked if it would consider resuming operations to
take advantage of firm seaborne prices.
Argus assessed NAR 6,000 kcal/kg Colombian coal at $100/t
fob Puerto Bolivar last week, the highest since Argus launched the assessment
in 2013. Colombian coal prices have risen by more than 130pc over the past 12
months, as the Prodeco suspension has compounded wider supply tightness in the
global market just as economies begin to recover from pandemic-induced lows in
2020.
The latest ANM decision means that the Prodeco saga remains
at an impasse, sources said, as the ruling does not oblige the firm to resume
operations.
One government source from the mining and planning unit said
solving a dispute about the programme of works and investments and establishing
a programme for the mine closure could help break the deadlock.
But there is also a risk of further litigation, with JcF
Energy and Mining analyst Jaime Correal saying that Glencore could file a
lawsuit against Colombia for refusing to allow the titles to be relinquished.
"Glencore invested over $3bn in Colombia and the
company one way or another is going to seek a return for that investment. Given
the long track record of Glencore filing lawsuits against Colombia, I am
confident that the miner will most likely sue the nation," Correal added.
Glencore declined to comment.
Prodeco has produced and exported limited amounts of thermal
coal despite the suspension.
Prodeco three months ago received authorisation from
environmental regulator ANLA to produce 7,000t of thermal coal from its Calenturitas
mine as the coal was catching fire. But a Prodeco worker said the amount mined
at Calenturitas was 80,000t.
Some of the Calenturitas coal has been blended with supply
from the eastern province of Norte de Santander, on the Venezuelan border,
which Prodeco has procured from small producers in the region to fulfil two
orders.
A 35,000t vessel will arrive at Puerto Nuevo on 29 June and
a 22,000t vessel will arrive on 4 July, sources said, with Prodeco understood
to be railing 9,000 t/week on the Fenoco railway.
Thermal coal exports through Puerto Nuevo totalled 125,000t
in January-May, according to figures from shipping agency Naves.
Prodeco is reported to have rehired some workers in Cesar
province to operate the railway and the port.
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