Colombia’s coal industry is experiencing one of the worst crises in its recent history. The Covid-19 pandemic has compounded problems including labour strikes, criticism of its environmental and human rights standards, and a decline in sales to its traditional customers, which began at least five years ago.<\/p>\n
In the midst of the gradual loss of European markets as they transition towards clean energy, coal companies have looked to China – the country’s second largest trading partner and a coal importer – as a possible destination for part of their future production.<\/p>\n
However, any hopes China will save the day seems a remote possibility.<\/p>\n
September 2020 began with a strike at El Cerrej\u00f3n, the country’s largest coal mine, after labour negotiations collapsed between its operator Carbones del Cerrej\u00f3n and Sintracarb\u00f3n, the workers’ union. Almost at the same time, BHP Billiton, one of three companies along with Glencore and Anglo American that own the mine in equal shares, announced that it would sell<\/a> its 33.3% stake.<\/p>\n A few weeks later, David Boyd, the UN\u2019s special rapporteur on Human Rights, called on<\/a> Colombia to halt production at the mine until there were safeguards in place to protect the social and environmental rights of the surrounding indigenous communities.<\/p>\n “I call on Colombia to implement the guidelines of its Constitutional Court and to do more to protect the vulnerable Way\u00fau community in the Provincial indigenous reserve against contamination from the El Cerrej\u00f3n mine and against Covid-19,” he said.<\/p>\n These labour and social crises have coincided with a progressive reduction in international demand for coal and a loss of markets for Colombia, the world’s twelfth largest producer. For years, coal has been the country’s second largest export and an important source of national income.<\/p>\n However, figures for reveal a downward trend. “In terms of volumes, we think Colombia’s coal exports will fall to at least 58 million tonnes in 2020, compared to 74 million tonnes in 2019. And they could fall further if there is a long strike at El Cerrej\u00f3n,” said Guillaume Perret, director of London-based market analysis consultancy Perret Associates.<\/p>\n This fall in exports has been accompanied by a fall in prices and production. Largely because of the pandemic, the country’s production fell by 7% in the first quarter of 2020 compared to the previous year and by 48.8% in the second quarter. Likewise, Colombian coal averaged US$38 per tonne between March and June 2020, and has fallen further to $33 \u2013 the lowest price since 2004, Claudia Bejarano, president of El Cerrej\u00f3n, told economic daily La Rep\u00fablica<\/em><\/a>.<\/p>\n We are going to have a serious problem with financial flows and employment generation in producing areas in about ten years<\/p><\/blockquote>\n Three large coal companies in the country has felt the impact: Cerrej\u00f3n, Drummond and Prodeco. “The mine that Glencore has in Colombia, through the company Prodeco, which it owns, has not been operating since March 23 […]. Prodeco has asked not to produce coal from its mines for four years, but the Colombian mining authorities have refused to give this authorisation,” Perret said.<\/p>\n Meanwhile, the price of gold<\/a> has risen by 14% in the second quarter of 2020. Anticipating a shift in focus towards a more profitable product, Diego Mesa, minister of mines and energy, said in an interview with Reuters<\/em><\/a> on October 2, that the future of Colombian mining was in metals: “The great opportunity for Colombia is in metal minerals because they are in the greatest demand at this time and in the future.”<\/p>\n Mesa\u2019s statement statement sent shokewaves through Colombia\u2019s coal industry. Silvana Habib, a consultant on mining issues and a fromer president of the National Mining Agency, said; “when you talk about Colombia as a mining country, you are talking about a coal-producing country.<\/p>\n “Right now we need all sectors to help improve accounts and have more resources. In my opinion, there is no other economic activity at the moment that can replace what coal generates, not only in terms of royalties and employment, but also in terms of social investment,” Habib added.<\/p>\n Coal accounts for 77% of Colombia’s mining exports and 18% of its total exports. This year, its GDP could contract by 7.8%, according to the International Monetary Fund, and unemployment rose to 16.8% in August because of the pandemic. The stakes are high.<\/p>\n Covid-19 represents the latest in a number of challenges for Colombia\u2019s coal industry, which faces a black future as global demand centres shift amid countries\u2019 structural energy transformations.<\/p>\n The main market for Colombian coal has traditionally been Europe, which between 2011 and 2013 accounted for 50% of exports. However, the market has since collapsed as some of its main clients, such as the Netherlands and Germany, implemented energy transition policies, switching from thermal electricity sources to clean technologies. Today the EU buys only 10% of Colombia’s coal exports.<\/p>\nUS and European markets dwindle<\/h2>\n