Anglo, BHP, Xstrata to expand Colombian coal mine

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Anglo American, Xstrata and BHP Billiton have approved a $1.3-billion (U.S.) expansion of Colombia's largest coal mining operations, Cerrejon, the companies said Thursday.

Cerrejon is the largest coal producer and exporter in Colombia, the world's No. 4 exporter of the material, and its expansion plans are key for the Andean country as it hopes to double coal output in the coming years.

The diversified miners – which own Cerrejon – said that they would invest equal amounts in the project, which will increase production and export capacity by 8 million tonnes per annum to 40 million tonnes per annum by the end of 2015.

Construction is set to start in the third-quarter and be completed by 2013. The project will expand the mine, coal handling facilities and the port.

"Ramp up to expanded capacity of 40 million tonnes per year is expected by the end of the 2015 calendar year," BHP said in a statement.

Last year, Cerrejon exported 31.5 million tonnes but produced only 30.3 million tonnes due to heavy rains that battered the nation. The company hopes to produce the mine's nominal capacity of 32 million tonnes this year.

In the second-quarter, output in Guajira province – where Cerrejon has four of five licenses to mine – fell nearly 11 per cent to 7.79 million tonnes versus the same period last year, the regulator said.

Cerrejon contains an estimated 5 billion tonnes of coal, of which 2.1 billion tonnes are at a measured and indicated export quality status.

Colombia's coal industry is dominated by big thermal producers with their own port and rail facilities such as Cerrejon, Glencore and U.S. miner Drummond.

Cerrejon President Leon Teicher said in an interview with a local financial daily that he hoped the 32 million tonne exports would fetch the firm $3.2-billion this year.

"We have almost all the 2011 production sold, and external prices are high. For 2012, we don't see a substantial fall in prices," he told Portafolio newspaper.