Colombia needs $6.8 bln to hit coal ouput target

* Estimates proven, potential reserves at 24 bln tonnes

* Minister says investment to be private-sector led

By Jack Kimball

BOGOTA, Nov 9 (BestGrowthStock) – Colombian Energy Minister Carlos
Rodado said on Tuesday the nation would need $6.8 billion in
private investment over the next 10 years to hit its 2020 coal
production goal of 160 million tonnes, double current output.

Colombia, the world’s No. 5 coal exporter, is enjoying an
oil and mining boom thanks to a U.S.-backed security campaign
launched by the former government to remove leftist rebels from
their rural strongholds across the South American country.

The local unit of Birmingham, Alabama-based Drummond Co Inc
[DRMND.UL] is among the miners planning to boost investment in
the country, Rosado told journalists at a coal conference in
the Colombian capital.

“Drummond has expansion plans, others have expansion
plans,” Rodado said. “All of this is private investment.”

According to a presentation by Rodado, Colombia will need
$6.8 billion in private investment from 2011 to 2020 to double
output from the current 80 million tonnes target this year. The
nation expects $800 million investment this year in coal.

Colombia’s largest coal exporter, Cerrejon, is trying to
expand production some 25 percent to 40 million tonnes annually
by 2014 while its second largest producer, Drummond, is eyeing
expanding its El Descanso mine and port infrastructure.

Coal production is dominated by big thermal producers with
their own port and rail facilities like Glencore, Drummond and
Cerrejon, a joint venture owned by BHP Billiton (BLT.L: ), Anglo
American (AAL.L: ) and Xstrata (XTA.L: ).

Colombian thermal coal exports to Asia have increased this
year, particularly to China, due to a demand slump from Europe,
Colombia’s major market. The coal market closely monitors
China’s huge external demand for the material.


Colombia coal exports to China:

Take a Look on Colombia’s coal: [ID:nN17159080]


Rodado estimated that Colombia has 24 billion tonnes of
proven and potential coal reserves.

The energy minister — who also headed the ministry in the
early 1980s — said that Colombia expected to see port capacity
rise to 151 million tonnes a year in 2019 from 80.6 million
tonnes annually currently — funded by private investment.

That number includes planned port expansions and the
construction of a Prodeco’s Puerto Nuevo. Current port
utilization is 86 percent, he said.

Colombian coal industry sources say that infrastructure
issues are still hobbling the sector, especially for
metallurgical coal.
(Editing by David Gregorio)

Colombia needs $6.8 bln to hit coal ouput target