Thursday, February 2, 2023

Colombia’s main railway, workers to meet over coal strike


(Reuters) – Colombia’s main coal railway and striking workers will meet o n T hursday after nearly a week-long hiatus in government-mediated talks to try to break an impasse over a walkout in which major producers are starting to declare force majeure, officials said.

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Two of Colombia’s top coal exporters — Drummond International and Glencore’s Prodeco unit — have already canceled some cargoes due to an 11-day strike that may give support to global prices despite an oversupplied market.

Colombia’s labor ministry has called the Fenoco rail company and union representatives to Bogota for talks, Felix Herrera, president of the Sintraime union, told Reuters. The company and workers have not met since Saturday.

Peter Burrowes, president of the private company in charge of the railway concession, Fenoco, said he hoped the two sides could come to an agreement at the meeting, which will be led by the vice minister for labor.

“I certainly hope we can resolve this conflict today or tomorrow or the day after. The sooner the better,” he said.

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Fenoco’s shareholders include Glencore International Plc’s Prodeco unit, Drummond International and Goldman Sachs Group Inc’s Colombian units. The three companies account for more than 50 percent of total coal exports.

The rail line transports up to 160,000 tonnes of thermal coal from mines in the northern Cesar province to Caribbean ports. The last strike in 2009 at Fenoco lasted for 27 days and was declared illegal.

Drummond, whose Colombian coal operations are 20 percent owned by Japan’s Itochu Corp, and Glencore International Plc’s Prodeco unit have declared force majeure on some cargoes as the walkout starts to bite.

Glencore declined to comment and Drummond did not respond to requests for comment.

Talks have hit an impasse. Fenoco demands that trains stuck on the track first be moved before any negotiations, and the union calls for workers fired in the 2009 walkout to be reinstated.

Colombia’s coal industry ships most of its coal to Europe and the United States. While Asia has never been a key market for Colombian coal due to the distances involved, over the last few years it has sent some material to China and India.

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The Andean country expects to produce more than 90 million tonnes of coal this year, up from around 85 million tonnes last year as major producers continue to expand output.

On Monday, the company will make a declaration in front of the High Tribunal of Bogota after Fenoco moved to have the strike declared illegal through the courts, Burrowes said.

The union said that a decision could come as soon as a week.

Both sides could then appeal to the country’s high court.


The rail strike and another at Prodeco’s La Jagua mine come at a time when President Juan Manuel Santos faces increasing criticism for his handling of security, which has begun to eat into his once-commanding approval ratings.

Advances against leftist rebels have been key to a resurgence in foreign direct investment — mostly in the mining and oil industries — over the last decade as a U.S.-backed offensive opened up new areas for exploration and protected producing regions from guerrilla attacks.

“Santos may want to avoid allowing a strong government reaction or even siding with Fenoco or Prodeco at the workers’ expense, which could drag down his popularity further,” Eurasia Group analyst Heather Berkman said in a research note.

Colombia is trying to revamp the mining sector, which has been key to boosting economic growth in recent years, by legalizing informal miners and increasing supervision to prevent accidents. But delays over environmental licenses, more social protests and infrastructure problems still plague the sector.

Latin America has a history of tense ties among mining companies, unions, indigenous people and environmental groups.

Unions use strikes for leverage in bargaining talks with mining and oil companies, which have been returning to Colombia after the fall in guerrilla violence.

“It’s a normal conflict between the interest of workers and the company,” said Eduardo Chaparro, head of the mining chamber of the ANDI association of business leaders.

“Investors have continued arriving and we believe they will continue doing so, because they understand that this is a normal issue of a cyclical nature.”

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