Cerrejon coal mine

{{#badges: CoalSwarm|Navbar-Colombiacoal}}The Cerrejon coal mine, which is located near the village of Albania in the La Guajira department of Colombia. The mine is owned by the Cerrejon Coal Company, which in turn is equally owned by subsidiaries of BHP Billiton plc, Anglo American plc and Xstrata plc.

The Cerrejon mine comprises four zones: the North Zone, the Central Zone, the Patilla area and the South Zone.

BHP Billiton boasted on its website in 2011 that "Cerrejon's open cut mines now represent one of the biggest earthmoving operations worldwide. Approximately one million tonnes of material are moved every day, 365 days per year. To achieve this, the operation runs one of the biggest fleets of shovels and trucks in the world. The company employs nearly 4,000 people, with approximately the same number engaged as contractors."

Corporate history

On its website, Xstrata Coal states that "in December 1976, an Association Contract was signed between Carbocol S.A., a state owned coal company, and Intercor, an ExxonMobil affiliate, for the development of Cerrejón North Zone. In January 1999, an agreement with the Government of Colombia extended this phase an additional 25 years more, until 2034. In November 2000, the Colombian Government sold Carbocol S.A.’s (50%) participation in Cerrejón North Zone Association Contract, to a consortium made up of subsidiary companies of BHP Billiton plc, Anglo American plc and Glencore International AG. In February of 2002, the consortium acquired the remaing 50% from Intercor and merged Intercor with Carbones del Cerrejón S.A to create Carbones del Cerrejón LLC, Cerrejón."

Production

Cerrejon has a resource base of about 5 billion tons, of which 2.1 billion tons are currently measured and indicated to be of export quality, according to the companies. Xstrata said it is one of the largest coal deposits in the world.

Xstrata Coal states that the mine employs 8,400 people and has a "reserve base in excess of 900 million tonnes."

In its 2014 Annual Report BHP Billiton stated that total production in the 2013/2014 financial year was 36.9 million tonnes with the mining complex having a "a reserve life of 17 years."

Cerrejon Coal Company stated that in 2009 56% of its production was exported to Europe, 17% to North America, 12% to Central and South America and 15% to "other destinations". Since 1985, Cerrejon Coal Company has exported over 500 million tonnes.

Coal from Cerrejon is marketed by CMC Coal Marketing Company, a company owned equally by BHP Billiton plc, Anglo American plc and Xstrata plc. CMC Coal Marketing Company is headquartered in Dublin, Ireland but also established a subsidiary office in Atlanta in 2005.

In February 2011 BHP Billiton's website stated that coal from Cerrejon was "exported largely to Europe, but also to the USA and South America."

Consortium proceeds with P40 expansion plan

In August 2011, three of the U.K.'s largest listed miners - Xstrata Coal, BHP Billiton, and Anglo American - in the Colombian Cerrejon thermal coal mine approved a US$1,311 million billion project to expand the coal mine's output by 25%. Each company owns a 33.3% stake in the mine and committed to invest US$437 million in the expansion. The approved Cerrejon project will increase coal output by 8 million tons to 40 million tons a year, as well as expand the coal handling facilities and the fully-owned Puerto Bolivar port, adding an extra loading berth.

In a media release announcing the go-ahead for what was dubbed the P40 project, BHP Billiton stated that:

"Construction will commence in the 2011 calendar year with completion expected in the 2013 calendar year. Ramp up to expanded capacity of 40mtpa is expected by the end of the 2015 calendar year. The expansion project will see BHP Billiton’s estimated share of production and sales from this long life, tier 1 asset increase from 10.7mtpa to 13.3mtpa."

BHP Billiton' Energy Coal President, Jimmy Wilson proclaimed:

"Today’s announcement highlights our commitment to invest in growth throughout the cycle and to continue to produce at maximum volumes to take advantage of the strong demand for energy coal."

In its 2014 annual report BHP Billiton stated that:

"Construction commenced in CY2011 and the project handled its first coal in the December 2013 quarter.The port expansion associated with the Cerrejón P40 project is currently being commissioned, although operational issues are expected to constrain capacity to approximately to 35 Mtpa (100 per cent basis) in the medium term. At 30 June 2014, the project was 94 per cent complete."

In BHP Billiton's production review for the half year to the end of December 2014, the company stated that "anticipated drought conditions constrained production volumes at Cerrejón given the need to manage dust emissions."

... but the global thermal coal market sours

While the expansion project had been predicated on a booming market, the global seaborne thermal coal price fell dramatically. With European coal markets the dominant destination for Cerrejon's coal, the project had been hit hard by a 30 per cent fall in coal prices in the year to early 2015.

In March 2015 Cerrejon Coal Company's Chief Executive Officer, Roberto Junguito, said that Cerrejon was losing money on "a little less than 11 percent" of its current production of 33.7 million tonnes in 2014. “If there’s already a fraction that’s close to the profitability threshold, it’s very hard to justify additional investment ... Our objective is to continue implementing initiatives to ensure that we can at least maintain our current production in a profitable way,” he told Bloomberg.

Junguito stated that the joint venture expects to export about 34 million tonnes in 2015, well under its 40 million tonnes per annum capacity.

Exports

Colombia's Cerrejon projects 2011 coal exports will reach 32 million mt

It was announced in September 2011 that Cerrejon coal mine, which owns Colombia's largest coal mine, projected it will export about 32 million mt in 2011, up from 30.2 million mt from 2010.

At the projected level, exports from Cerrejon would account for 42.6% of Colombia's total coal exports. Colombia is among the worlds top-five coal exporters with Australia, South Africa, Indonesia and Russia.

Articles and resources

Related SourceWatch articles

• BHP Billiton's coal interests
• Colombia and coal

External resources

• BHP Billiton, "Cerrejon Coal Company", BHP Billiton website, archived from February 2011.

External links

• La Buena Vida, A Documentary about the Involuntary Resettlement of Indigenous Communities in Colombia affected by Cerrejón coal mine, 2015.