At Least 15 Ships Now Seek Other Cargoes as Columbian Coal Miner Declares Force Majeure

By John McGarrity

LONDON, Feb 19 (Reuters) – Colombia’s largest coal exporter Cerrejon has declared force majeure on at least some of its cargoes as a strike looks set to enter a third week, its CMC marketing arm said Tuesday.

A joint venture between Anglo American, BHP Billiton and Xstrata, Cerrejon accounts for around 36 percent or 32 million tonnes of Colombia’s output, and supplies power generators mainly in Europe.

Around 10 vessels have been unable to load coal since workers downed tools on Feb.7 in the mine’s first strike since 1990, CMC Chief Executive Howard Gatiss said.

“Force majeure has been declared on at least some of these vessels. As long as the strike continues we are unable to comply with our obligations to customers,” he said.

“No-one knows how long the strike will continue and we are in discussion to reschedule shipments.”

Force majeure allows a company to suspend contractual obligations in the face of unexpected events including strikes and natural disasters.

Preliminary talks between unions and management stalled at the weekend, thwarting attempts to negotiate a deal on wages and benefits. No new talks have been scheduled, Gatiss said. [ID: mnL1N0BH35Y]

Port data seen by Reuters shows utilities including Germany’s Steag, Britain’s Scottish and Southern Energy, and Sweden’s Vattenfall as customers for 15 ships that were scheduled to load coal at Puerto Bolivar in north-eastern Colombia between Feb. 7-18.

Some of those vessels have now set sail away from Latin America, according to shipping data tracked by Reuters, possibly in search of other cargoes after declaration of force majeure, said a coal analyst with a trading house.

A ban on the loading of coal at Colombia’s second-largest producer Drummond, imposed on Feb. 5 following an environmental investigation, means that utilities won’t be able to divert ships to pick up alternative supplies from Colombia’s other main coal port of Santa Marta, another trader said.

CMC’s Gatiss said he could not comment on whether buyers or sellers will ultimately have to pay the costs of chartering a ship while it is unable to take delivery.

“Each sales contract has slightly different terms,” he said.

So-called demurrage costs could amount to $10,000-20,000 a day, coal shipping sources said.

Prices for physical coal delivered into northwestern Europe for March are were bid at $88.25/tonne on Tuesday, up from $87.10 at the close on Monday and around $2 higher than before the strike.

However, traders said plentiful supplies of coal from the United States, Russia and South Africa, and weak demand for electricity in Europe, has averted major tightness in the market.

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