By Dan Molinski
BOGOTA--Labor talks are set to restart later Thursday with an
aim to end an 11-day workers strike at Colombia's main railway that
has paralyzed more than half of Colombia's coal exports, said the
rail operator's president, Peter Burrowes.
Colombia is one of the world's top coal exporters, and as the
strike drags on it is raising concerns global coal prices may soon
rise as a result of fewer supplies. The multinational companies
that rely on the railway to transport coal from mines in Colombia's
interior to ports on the Atlantic are Glencore International PLC
(GLNCY, GLEN.LN), Alabama-based Drummond and Goldman Sachs Group
Inc.'s (GS) local unit CNR.
"This has really paralyzed everything at the port for these
companies," Burrowes, president of the Fenoco railway, said in a
telephone interview. "There isn't even one kilogram of coal at the
port."
The Fenoco railway, a concession that's jointly owned by the
coal firms that use it, normally carries 160,000 tons a day of
coal. It has been completely shut down since the strike began July
23 when 600 unionized railway workers walked off the job demanding
higher salaries and other benefits.
A source close to the situation said Thursday that Glencore,
which is facing a parallel strike that also began in July by its
workers at the La Jagua mine, has had to declare force majeure on
"less than a handful" of cargoes due to the strikes. Force majeure
is invoked when conditions beyond the control of the company make
it impossible for it to fulfill terms to which it originally
agreed.
"There's no blanket force majeure by Glencore," the source said.
"They are being declared on a case by case basis."
It wasn't clear whether the Goldman Sachs' unit or Drummond had
also declared force majeure on any cargoes, but railway president
Burrowes said he wouldn't be surprised because of the scarcity of
coal at the ports.
Officials from those companies weren't immediately
available.
The labor negotiations for the railway strike are due to begin
Thursday afternoon in Bogota and are the first since Saturday.
Those Saturday talks went nowhere, Burrowes said, because the union
is demanding first that 17 railroad workers who were fired by
Fenoco after an "illegal" 27-day strike in 2009 be reinstated as
employees.
Burrowes said Fenoco won't rehire those workers.
He added that he's somewhat encouraged by the new round of talks
because it will for the first time include a deputy minister from
the Labor Ministry, David Luna. He said he expects the ministry to
be more firm with the union.
Colombia produced 87 million metric tons of coal last year and
was hoping for nearly 100 million tons in 2012. The Fenoco railway
is planning to carry some 52 million tons this year along 220
kilometers of rail lines.
Unaffected by the Fenoco railway strike or the walkout at the
Glencore mines are operations at Cerrejon LLC, Colombia's largest
coal exporter, which is equally-owned by Xstrata PLC (XTA.LN),
Anglo American PLC (AAUKY, AAL.LN) and BHP Billiton Ltd. (BHP,
BHP.AU).
Write to Dan Molinski at dan.molinski@dowjones.com
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