Asia demand to push Colombia coal to Europe-Cerrejon

Wed Feb 16, 2011 9:01pm GMT
* Port to close for routine maintenance for 20 days
* Asian demand to draw Colombian coal to Europe
* Firm to present expansion plan in next few months
By Jack Kimball

BOGOTA, Feb 16 (Reuters) - Colombia's largest coal exporter, Cerrejon, sees Asian demand propelling more Colombian coal to Europe and that demand will also keep prices at current
levels, the company's president said on Wednesday.

The overall trend for coal prices this year is upward but a series of price shocks is likely as the market reacts to supply disruptions and the sudden appearance and disappearance of
Chinese spot buying, analysts say.

"Long-term (the current price of coal) is relatively sustainable because of the dynamics of supply and demand in the world," Cerrejon President Leon Teicher told reporters.

"China, India, Asia (are) growing and taking a lot of the volume from South Africa and therefore leaving more space open for us in Europe," he said in Colombia's capital, Bogota.

Prices hit a peak of $130 a tonne early in January when sentiment after Australian floods sent prices to a 12-month high. An April Colombian only cargo was bid on Wednesday at $115.00 against an offer at $117.50.

Colombia -- one of the top producers of high-quality thermal coal -- saw a dramatic increase in exports to China last year although the main markets for Colombian material
remain the United States and Europe.

Neither coal exporters, analysts nor officials believe the destination make-up of Colombian coal exports will shift dramatically -- though the Latin American nation has also seen increased exports to Japan and South Korea.

Teicher said the company -- a joint venture between BHP Billiton (BLT.L: Quote), Anglo American (AAL.L: Quote) and Xstrata (XTA.L: Quote) --had sent less than half a million tonnes to Asia so this year.

Cerrejon and union workers signed a two-year compensation agreement earlier this month, avoiding a strike at a time when the company is trying to recover production following heavy
rains across the country last year.

Teicher said Cerrejon exported 31.5 million tonnes in 2010 but produced only 30.3 million tonnes. "We had intensive use of our inventories," he said.

The company still expects production to hit 32 million tonnes or the mine's nominal capacity in 2011, while Teicher also said he expected a shareholder decision on the mine's expansion plan later this year.

Canada's SNC-Lavalin Group Inc (SNC.TO: Quote) and a partner have been awarded the expansion contract for a project to boost output to 40 million tonnes annually.

"I have not yet presented the expansion project for shareholder approval," Teicher said, adding that he expected to do so in the "next few months".

Cerrejon will close its port for 20 days from around Feb. 20 for routine maintenance and clients have been advised, Teicher said. It plans to replace parts of the shiploader.
(Editing by Dale Hudson, sourced:ThomsonReuters)

Tags:Asia coal demand, Colombian coal, Europe, Cerrejon, coal exporters, coal prices, thermal coal, BHP Billiton, Anglo American Plc, Xstrata, SNC Group Inc., raw material, South Africa

Colombia coal union, Cerrejon near deal - officials

Sat Feb 5, 2011 8:28pm GMT
* Discussions have been ongoing since early December
* Officials say workers, company near to a deal
BOGOTA Feb 5 (Reuters) -
Colombian coal workers are expected to decide on Sunday about a new compensation deal with Cerrejon, the country's largest exporter, their union said, with officials saying the two sides were near an agreement.
Cerrejon produces on average 85,000 tonnes a day of high-quality thermal coal, and any prolonged stoppage at the mine would hurt output at a time when global supplies are tight due to issues in almost all major thermal producers.

"We should have a decision by Sunday morning. Today we're going to talk to two groups of workers and tomorrow another group," Sintracarbon union president, Igor Diaz, told Reuters by telephone on Saturday.
Diaz had said on Friday that he expected a decision by midnight Saturday.
Another union official and a company negotiator said the two sides had reached an "initial" deal though it was still up to workers to accept the pact and a strike was still possible.
Originally all sides had said the deadline to decide on a strike was this weekend under Colombian law, but the company and the union said that deadline was set back to Tuesday after discussions with the labor ministry about the law.

Cerrejon and workers have been in talks since Dec. 9.
Cerrejon -- unlike privately owned Drummond and Glencore, Colombia's other top coal producers -- has listed partners, BHP Billiton (BLT.L: Quote), Anglo American (AAL.L: Quote) and Xstrata (XTA.L: Quote).
Adding to pressure to reach a deal with workers, its partners have had lower output from mines in Australia due to flooding.

In June last year, workers at U.S. coal miner Drummond reached a three-year deal, while a month later laborers at the La Jagua mine of Glencore's Prodeco unit inked a two-year deal after a five-week walkout.
Global coal markets have been vulnerable to supply disruptions in many important exporting countries, such as Australia, boosting prices. (Reporting by Luis Jaime Acosta and Jack Kimball; Editing by Paul Simao,sourced:reuters)

Colombia's Cerrejon, coal workers see progress

Saturday Feb5,2011 12:24am GMT
* No deal reached after mediation, but progress made

* Union expected to decide on Saturday on strike

* Cerrejon, workers have been in talks since early Dec
By Monica Garcia BOGOTA,

Feb 4 (Reuters) - Colombian coal workers and the nation's largest exporter, Cerrejon, failed to reach a deal on Friday but made progress in pay talks after the government scrambled to avoid a looming strike, officials said. Cerrejon produces on average 85,000 tonnes a day of high-quality thermal coal, and any prolonged stoppage at the mine would hurt output at a time when global supplies are tight due to issues in almost all major thermal producers.

Sintracarbon union President Igor Diaz said that the syndicate would present the company's proposals to workers on Saturday. "It's the workers who will decide what will happen next," he told reporters. "There were advances in some areas," he said, adding that the company had increased the salary increment to 6.5 percent for the first year from 6.3 percent previously. The union has a midnight Saturday/Sunday deadline to decidewhether to walkout, accept the deal or workers would have tovote again on a strike, according to Colombian law. "We've made great progress ... now it's in the hands of the union," Cerrejon President Leon Teicher told reporters.

Cerrejon and workers have been in talks since Dec. 9. If workers strike, it will be the first walkout in twenty years, according to the company. Colombian Vice President Angelino Garzon held an hours-longmeeting on Friday with Cerrejon executives and union leaders totry to hash out a compensation deal. "I'm optimistic that due to the willingness of the companyand the union, we're very close to a deal," Garzon said. Cerrejon -- unlike privately owned Drummond and Glencore,Colombia's other top coal producers -- has listed partners, BHPBilliton (BLT.L: Quote), Anglo American (AAL.L: Quote) and Xstrata (XTA.L: Quote),to keep happy as well as its customers. Adding to pressure to reach a deal with workers, itspartners have had lower output from mines in Australia due toflooding and would not want to lose any more production in sucha tightly balanced market set to go higher. Global coal markets have been vulnerable to supplydisruptions in many important exporting countries, such asAustralia, and that has boosted prices.(Additional reporting and writing by Jack Kimball; Editingby Gary Hill, source:Reuters)

Euro Coal-Prices up $1-4 a tonne on Colombia strike, oil

* Cerrejon in talks to avoid strike this weekend
* Oil up sharply by $1.84/bbl on fast U.S. growth
* Reuters poll shows 5.5 mln T lost in Queensland floods
* March DES ARA trades at $119.50/T, up $1.00

LONDON, Jan 28 (Reuters) - Prompt coal prices rose $1.00-4.00 a tonne on Friday on stronger oil prices and market anxiety that a strike may start soon at Colombia's largest coal exporter Cerrejon.
Although coal prices have fallen over $12.00 a tonne from the peaks in early January, the market is still vulnerable to any fresh supply disruptions.
Buyers who face delayed or cancelled cargoes will be able to replace them but are likely to push the market higher in the process.

The market has adjusted to the loss of thermal coal from Australia due to Queensland's floods, because China and India have withdrawn from the spot market.
According to a Reuters poll on Thursday, around 5.5 million tonnes of thermal coal was lost in Queensland and 11.3 million tonnes of coking coal.
"Colombia and the possible strike is the talk of the market today but prices haven't moved up much, yet," one major European trader said.

Oil prices moved up sharply by $1.84 a barrel on better than expected U.S. economic data and this helped pull coal values higher, traders said [O/R].
Late on Thursday workers at Colombia's biggest exporter Cerrejon, voted overwhelmingly for a strike after failing to reach agreement on pay.
Under Colombian law, workers cannot strike in the first two days after the vote or on the last day of a mandatory 10-day period. After that they must vote again on whether to strike.
Cerrejon is still trying to reach a deal with the unions before the strike begins.
Colombian exporters including Cerrejon have ample stockpiles at the ports and would be able to ship from these for weeks without delays or cancellations, industry sources said.
The strike would have to be protracted to have any real impact, they said.
But the strike vote has given a fillip to bullish sentiment.

European utilities would be the hardest-hit by any disruption to Cerrejon's exports but they are still holding back from booking new cargoes, waiting for further falls in coal and freight and for the Rhine to reopen fully to barge traffic after an accident.
TRADES

A March delivery DES ARA cargo traded at $119.50 a tonne, up $1.00.

PRICES

A March loading South African cargo was bid at $118.60 with an offer of $119.00, up $4.00 on the bid.

A March delivery DES ARA cargo was bid at $120.00, up $5.00 on the bid, following the earlier trade at $119.50.
An April delivery DES ARA cargo was bid at $116.50 and offered at $119.00, also up $4.00 on the bid.(Reporting by Jackie Cowhig, courtsey sourced: af.reuters)