Glencore International’s Prodeco coal mining operation in Colombia turned in production 4.2 million tonnes in the first quarter, an increase of 10% compared to 3.8 million tonnes in the year-ago quarter, Glencore reported May 9.
That production hike came despite exceptionally heavy rains. The weather conditions had an impact on sales volumes due to the strong winds prevailing at the Prodeco port, where this coal is loaded to ship for the seaborne market, with some corresponding increase in transport costs.
Expansion plans at Prodeco remain on schedule to deliver annual production of 21 million tonnes by the fourth quarter of 2013 and the new direct loading port (Puerto Nuevo) is on track to be commissioned in the first quarter of 2013.
The Prodeco expansion is among several expansions underway at various Colombia coal operations, including the Cerrejon mine that is partially owned by Xstrata, which is in the process of merging with Glencore. Colombia is a heavy shipper of coal into the Gulf and Atlantic coast thermal coal markets in the U.S.
“Global thermal coal markets experienced increased pressure and disruption from the boom in shale gas production in the US,” said Glencore. “This has largely manifested itself in the form of increased supply of US exports into the Atlantic market, which in turn has had some knock-on effect on other coal markets, with prices generally 3-4% weaker in Q1 2012 versus Q4 2011. It should however be noted that the worldwide coal burn rate is at record levels, including Europe. We expect to see material reductions in US thermal coal production if US domestic gas prices remain at current low levels.”