The rush towards building an industrialized Colombia in the 1980s modernized the ports of Cartagena, Barranquilla and Santa Marta. While protectionist economics limited the import of foreign goods, the country opened up its natural resource base and mines such as Cerrejon in the La Guajira department began shipping high-grade coal to Europe and North America.
In Santa Marta, a coal port was constructed in 1982 along the main Santa Marta to Cienaga road and operated by Productos de Colombia S.A. (Prodeco). With a large metal pier supporting a conveyor belt to move ore to waiting barges, the coal transport center became a symbol of progress and the growing global demand for fossil fuels. The operation moved 8,000 tons daily through Santa Marta and fueled the nation’s economic engine, but it also impacted Santa Marta’s tourism potential adversely.
A line in the sand
As cold currents of the Sierra Nevada mountain range meet the warm winds of the Caribbean, the open coal port of Santa Marta turned sandy beaches black with floating and airborne soot. Despite long term and costly efforts to curb the environmental impact of coal dust washing ashore near hotels and the resort communities of Rodadero and Pozos Colorados, last month Alabama-based Drummond Co. had its coal license revoked by the country’s Ministry of Environment after coal was dumped into the sea when a barge began sinking in bad weather.
While arguably avoiding a maritime disaster, Drummond informed national authorities of the incident after more than a week had passed. “In these types of emergencies, the government should be the first to be notified,” stated Juan Gabriel Uribe, Colombia’s Environment Minister, as the reasoning behind the government’s action.
Facing scrutiny by environmental agencies and a possible heavy fine, the Drummond coal crisis was followed by an announcement this month that workers at Cerrejón, the world’s largest open pit mine, would walk off the job. Producing 34.6 million tons in 2012, Cerrejón and Drummond account for 80 percent of all coal exports from Colombia. As the largest supplier of coal in South America, a prolonged strike by the country’s Coal Industry Workers Union (Sintracarbon) could grind to a halt all operations in many of the country’s mines: BHP Biliton, Xstrata Plc and Anglo American Plc.
Energy industry in crisis
Employing 5,900 workers and responsible for the livelihoods of some 12,000 residents of the Guajira peninsula, the Cerrejón strike compounded with Drummond’s dumping charge have sounded warnings of a potential energy crisis in Colombia. Drummond announced in the first week of February that it would take “corrective” measures to improve the loading of coal at the Caribbean port, yet an agreement over wage increases with striking workers at Cerrejon remains elusive.
President Santos has asked his Labor Minister to form a commission in order to facilitate talks between union representatives and mining companies. Talking on a radio program, Santos remarked that trouble in the coal industry is a lose-lose situation for the country. “Every day that goes by is lost royalties and lost income, which in its vast majority goes to social investment.”
As the strike enters its first week, the global impact of Colombia’s coal troubles has so far been minimal. Meeting supply from the U.S. and Russia, the mild seasonal weather in Europe has also kept the price of coal steady. The challenge in the weeks ahead lies in reaching a “compromise” between the mining powers that be and workers. For Drummond Ltd, the crisis will surely pass once the multinational presents a contingency plan for the port. The company expects its operations should be up and running again by the end of February.