The Council of State said that there are no impediments to the extension of the La Loma concession contract that expires in 2019.
Colombia is the fifth largest coal exporter in the world.
Photo: Archive
The Council of State yesterday issued a favorable concept for the Government to extend for up to 30 more years a Drummond coal exploitation contract in a mine in the north of the South American country under new conditions.
The high court said that there are no impediments for the Government to extend the La Loma concession contract that expires in 2019 with Drummond, Colombia's second largest coal producer.
The current contract was signed in 1988. “If the extension of the contract is considered convenient for the public interest and the two parties agree on the terms and conditions that should govern the contract during the new term, it would be legally viable to extend the aforementioned contract. contract for up to 30 more years,” the court stated.
However, the concept admitted the possibility that the Government could renegotiate the contractual clauses under more favorable conditions for the State in environmental, social and royalty terms.
A Drummond source said that although the concept authorizes the Government to extend the contract, the two parties must sit down to negotiate the terms.
The company produces thermal coal in its Pribbenow and El Descanso mines, located near the municipality of La Loma, in the department of Cesar.
The company's coal production in Colombia in 2015 reached 25.8 million tons and exports exceeded 28 million tons.
Colombia, the world's fifth largest coal exporter, had set a production goal of 87 million tons for last year, but the National Mining Agency has not yet revealed the official figure.
In addition to Drummond, the Colombian coal sector is dominated by Cerrejón, jointly owned by BHP Billiton PLC, Anglo American Plc and Glencore Xstrata plc; and Prodeco, a unit of Glencore Xstrata.
THE EXPORT GOAL FOR 2016
The American mining company Drummond plans to increase its coal exports by between 34 and 35 million tons this year.
“We would expect to have export levels of 35 million tons, with a production level that may be close to that,” declared the president of Drummond in Colombia, José Miguel Linares.
Source: Portfolio
