Trapped Colombian coal trickles into port

OREANDA-NEWS. September 22, 2015. Coal trapped in Colombia by Venezuela?s controversial border closure is trickling into an alternative Colombian port on the Caribbean coast, as Colombian president Juan Manuel Santos meets his Venezuelan counterpart Nicolas Maduro in Ecuador in an effort to resolve the month-long crisis.

Colombian coal shipper Sociedad Portuaria Coal delivered approximately 3,500 tonnes of Norte de Santander thermal coal and 500 t of Boyaca metallurgical coal to the Caribbean port of Barranquilla yesterday, the president?s office said today.

Exporters are sending thermal coal from Norte de Santander province mines by truck to the Magdalena river port of Capulco in Gamarra municipality, Cesar province. From there, the coal travels by barge to Barranquilla.

The 4,000 t belong to C?cuta-based CI Interamerican Conminas, Norte de Santander's main coal exporter through Venezuela. The president?s office says the firm had been exporting 600,000-800,000 t per year of Colombian coal through Venezuela for the last 20 years before the outlet was cut off.

The river route is one of three alternative transit routes the Santos government is promoting after the border closure first ordered by Maduro on 19 August trapped over 220,000 t of thermal coal from Norte de Santander mines.

Transporting coal by river gives exporters a 10,000 t per month capacity outlet, well under the approximately 120,000 t per month capacity that exporters need, according to Asocarbon, the association that represents around 250 mines and five exporters in the province.

Santos said on 3 September that the government would seek emergency measures to provide transporters and port operators with incentives to take Norte de Santander coal to Colombian terminals.

Colombia's government is eyeing total capacity of 60,000 t by rail, 30,000 t by river and 30,000 t by road.

Asocarbon tells Argus that river transport could increase to 45,000 t per day from a current 10,000 capacity limit, but "it would require a lot of investment… a lot of things need to happen before we reach that number."

Exporters represented by Asocarbon are still negotiating with truckers for more competitive tariffs for routes from Norte de Santander mines to Barranquilla and Santa Martha ports.

No deals have been reached, says Asocarbon.

On 7 September, the government issued a decree establishing emergency measures to cope with the border crisis, including fuel subsidies for coal transportation. The decree lifted railroad operator Fenoco's nighttime ban on railings, clearing the company to conduct nighttime deliveries of Norte de Santander coal only, but Asocarbon says no agreement on tariffs with the operator has been reached.

Fenoco is run by Glencore's Prodeco, US Drummond and US Murray Energy subsidiary CNR.

At this afternoon?s meeting in Quito, Santos and Maduro will be accompanied by Ecuadorean president Rafael Correa and Uruguayan president Tabar? V?squez.

Maduro first ordered the closure of the C?cuta-San Antonio del Tachira border crossing in Norte de Santander, the principal crossing where exporters used to send thermal coal overland to the Venezuelan port city Maracaibo for export. The closure has since been expanded to other border crossings in an official effort to choke off smuggling and paramilitary activity.

Norte de Santander exporters relied on the Venezuela route for a \\$15-20/t discount compared to Colombian routes, which are less competitive because of poor road conditions to Colombian ports.

"If the Venezuela border opens, we would maintain both options – through Venezuela and Colombia – because that would let us increase production," says Asocarbon.

Asocarbon says that with added transport and export capacity, miners could raise production to 8,000 t/d from a current 6,600 t/d.