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BOGOTÁ: Coal production in Colombia, one of the world’s largest exporters, is set to fall next year as miners respond to prices near the lowest in at least eight years.
Cost-cutting measures by mine operators including Glencore Plc, BHP Billiton Ltd. and Drummond Co. will curb output in 2016, according to the Colombian Mining Association. The association expects prices to remain low into 2018.
The cutbacks threaten to shrink the supply of coal available to Europe’s electricity producers. Output from the Andean nation had already fallen by 3.5 percent in the second quarter, and the third quarter “won’t be any higher,” association president Santiago Angel said.
“There’s a point when costs become prohibitive so you start to focus on the most profitable parts of a mine,” Angel said in an interview in his Bogota office Wednesday. “It’s going to be felt in 2016, and we’ll see the first symptoms this year.”
Target Miss
Without a production gain in the third quarter, Colombia may miss its target to produce more than 90 million tons this year. Coal for European delivery fell in October to the lowest since at least September 2007.
A nighttime transportation ban on Colombia’s main railway, Fenoco, has also hit production this year as miners run out of storage space. The restriction between 10:30 p.m. and 4:30 a.m. on the railway that connects mines in northern Colombia with Caribbean ports, were temporarily lifted in October.
“The fall in production won’t only depend on the ability to resist adversity,” Angel said. “Transport must be efficient.”
