UPDATE 3-Workers strike at Glencore coal mine in Colombia

* Separate strike avoided earlier this week at Drummond

* Prodeco’s production seen at 15 mln tonnes this year

* Shipments unlikely to be hit unless strike drags on

(Adds analyst, trader comments, details)

BOGOTA, June 17 (BestGrowthStock) – Coal workers at Glencore’s
[GLEN.UL] La Jagua mine went on strike in Colombia on Thursday
over working conditions at one of the Andean nation’s largest
coal exporters, a labor union said.

Colombia is the world’s fifth largest coal exporter and
Glencore’s La Jagua — one of two mines it owns in the nation
— has some of the highest quality coal. The strike could cut
mine output as much as 20,000 tonnes per day, analysts say.

Unless the strike drags on for weeks, however, shipments
are unlikely to be disrupted, traders said. Still, the market
is watching closely because the quality of coal the mine
produces is in relatively tight supply.

“We have been on strike since five in the morning,” union
representative Stevenson Avila told Reuters by telephone.

Glencore’s Prodeco Group said it would release a statement
later. The unit operates the Calenturitas and La Jagua mines,
has its own port facilities and part ownership of a railway.
Calenturitas is unaffected by the strike, sources said.

“Prodeco has a high level of inventory at the port. If the
strike lasts less than two weeks I don’t think we will feel any
impact in the international market other than an increase to a
bullish market sentiment,” said Jaime Correal, a senior analyst
at Wood Mackenzie.

“If the strike takes more than 15 days we could see some
impact in the quality of the coal deliveries.”

Prodeco — which Glencore bought back in March from Xstrata
(XTA.L: ) — said earlier this month it had been talking with
workers for more than 40 days without a deal. In 2008, the firm
and workers reached a two-year pact, avoiding a walkout.

Glencore aimed to boost output at the mines to 22 million
tonnes a year by 2014 from around 15 million this year,
according to a source close to the March buyback.
[ID:nLDE6240AK]

La Jagua’s coal is very high quality and sought after by
end-users in Europe and Asia. It is sold out for 2010 and the
company could need to defer or cancel shipments if the strike
is protracted, industry sources said.

“It’s a problem potentially but not a major issue. They
have had problems in the past and either they or customers have
been able to manage to find alternative coal,” one European
trader said.

IMPACT?

High energy, low sulphur content coal similar to La Jagua
from Australia or Russia is in extremely tight supply and
trading at nearly $100 a tonne free-on-board.

Prodeco’s Calenturitas coal is of a slightly lesser quality
than La Jagua and has not been fully sold out for this year,
Colombian industry sources said.

Stockpile space at the Santa Marta port used to export
Prodeco coal is limited to around 250,000 tonnes, Colombian
industry sources said. Stocks are relatively high so shipments
can continue for the time being, they added.

Traders familiar with La Jagua expected the strike to be
resolved quickly without severe disruption to exports.

Workers at U.S. miner Drummond’s operations in Colombia
reached a three-year deal earlier this week to avoid a strike
at the nation’s No. 2 coal exporter. A weeks-long 2006 walkout
at Drummond pushed up global coal prices. [ID:nN15264583]

Glencore’s La Jagua, located in northeastern Cesar
province, sends its coal to mainly Europe, the United States
and the Caribbean, according to the Glencore website.

The La Jagua impact is “simply a matter of how long does
the strike last. It’s a very big mine. It’s critical to
European and Indian coal supply. Some goes to China,” said Jim
Thompson, managing editor of the Coal & Energy Price Report.

“It’s a crucial mine for a lot of different reasons in the
world. And if the strike lasts for any extended period, it’s
going to have a substantial impact on thermal market.”

Stock Research

(For a Factbox on Colombia coal, click [ID:nN17455580])
(Reporting by Jack Kimball, Jackie Cowhig in London and Bruce
Nichols in Houston; Writing by Patrick Markey and Jack Kimball;
Editing by Lisa Shumaker)

UPDATE 3-Workers strike at Glencore coal mine in Colombia