* Output to jump above 33 mln tonnes from 2015 onwards
* Drummond confirms exports to resume before end March
* Lower coal prices dissuade expansion - Cerrejon (New throughout, adds more forecasts, comment from Cerrejon CEO Pombo)
By Peter Murphy
CARTAGENA, Colombia, March 12 (Reuters) - U.S. coal miner Drummond has cut its forecast for 2014 production from its mines in Colombia after the sudden three-month shut down of its private port, but expects output to rise to unprecedented levels from next year onwards.
The resumption of exports by Colombia’s second biggest coal miner due in late March, should draw a line under more than a year of turbulence in the Andean nation’s coal sector, the world’s fourth-biggest exporter, after a run of strikes and logistics woes.
Drummond Ltd’s chief executive for Colombia, Jose Miguel Linares, said the company was now working with a lower 2014 production forecast of 25 million to 26 million tonnes, down from a previous forecast for this year of around 30 million.
Its exports were suddenly shut off by the government in early January because the company was unable to immediately comply with a new environmental law banning loading of coal using cranes and barges, outlawed for the pollution it causes.
Drummond had expected to have a legally-compliant conveyor belt-based ship loading system ready in time but Linares said a seven-week labor strike on top of environmental licensing delays meant it was unfinished before the new law took effect.
“We’ll be very pleased to open the port and export again,” Jose Miguel Linares, chief executive of Drummond Ltd in Colombia, told the IHS McCloskey coal conference taking place in the colonial city of Cartagena.
“I don’t want to commit to an exact date but (exporting) is going to be before the end of this month,” he later told reporters separately.
Linares said the company expects output to rise to 33.2 million tonnes in 2015 then again to between 35 million and 35.3 million per year for the 2016-2018 period, a significant increase from 22.8 million in 2013 when a strike slashed output.
A return to 26 million tonnes this year would already take production back to the 2012 level, one of the company’s best years in Colombia in output terms.
Drummond accounts for nearly a third of Colombia’s coal production in Colombia. News of the sudden shutdown to its port initially rattled the European coal market but prices have eased in recent days in anticipation Drummond will resume shipments.
Cargoes for delivery in May to the ports of Amsterdam, Rotterdam and Antwerp (ARA) were trading at $76.50 a tonne, up $1.60 from the previous settlement, with 50 lots traded. Europe is the biggest importer of Colombian coal.
The resumption of Drummond’s exports will also be welcomed by Colombia’s government because of the royalties it receives from the country’s most valuable commodity in export terms after oil.
Linares said Drummond would be able to ship immediately when the construction work at the port was completed, when asked about talk in the market that there might be additional delays, first loading Panamax ships then Cape Size from April onwards.
The new conveyor belt ship loader, part of a $360 million upgrade to the company’s port, comprises of two separate belts and ship loaders, one of which will not operate until August. When it does, annual loading capacity will far exceed current production, at 60 million tonnes, or a rate of 8,000 tonnes per hour, Linares said.
Roberto Junguito Pombo, chief executive of Colombia’s biggest coal miner Cerrejon - a joint venture between Anglo American Plc, BHP Billiton and Glencore Xstrata Plc - said it was also upgrading its logistics with an additional berth to increase loading capacity.
But he said investment in the sector in general was now difficult to justify based on current coal prices.
“That is one of the challenges we are facing right now. We are working very hard to become more competitive and more productive,”Pombo said.
Cerrejon has used conveyor belt loading from its outset in the 1980s, meaning it was already compliant when the new environmental law took effect on Jan. 1. (Editing by Franklin Paul and David Gregorio)