Bloomberg Agency, EL ESPECTADOR, February 4, 2021
(Translated by Eunice Gibson, CSN Volunteer Translator)
The announcement came after Colombia’s National Mining Agency (ANM in Spanish) rejected Prodeco’s application to maintain the Calenturitas and La Jagua mines merely under upkeep and maintenance. An analysis by the company concluded that renewing the operations would not be profitable.
Glencore, the largest coal producer in the world, said that it would begin to discontinue the mining contracts that Prodeco Coal maintains after the Colombian government refused to permit it to prolong a closedown of the operation.
Glencore suspended the mining at the onset of the pandemic, stating that it could not guarantee safe operation of the mines, but it had already been facing economic problems because the European coal market, its chief customer, had been strongly affected by the low prices of gas and weak demand for coal.
The announcement of the discontinuation came after the decision last month by the National Mining Agency (ANM) to reject Prodeco’s application for permission to maintain the Calenturitas and La Jagua mines merely under upkeep and maintenance, stated Glencore in a communication this Thursday. An analysis by the company concluded that renewing the operations would not be profitable.
In fact, the National Mining Agency (ANM) indicated that it had received “this Thursday February 4, 2021 an application for the surrender of mining rights held by the Prodeco Group in Colombia. After the company’s announcement, the ANM evaluated the application that had been filed with the objective of determining whether that would be viable legally. The evaluation process includes a rigorous review of the company’s compliance with the legal and contractual obligations that are based on the mining rights. That includes environmental, social, and economic obligations.”
With the pandemic, Glencore had already depreciated the value of the mines in the amount of more than USD$500,000. It is not known how Colombia will respond to Glencore’s action.
While rival mines are abandoning coal in an attempt to calm investors who want to lessen its environmental impact, Glencore has committed to reducing its shares for 2050, and, having done that, convert to carbon neutral. The company still owns part of a Colombian coal mine, Cerrejón.
The mines will be kept up and maintained until the contracts are formally discontinued, while the program of voluntary termination is taken up, stated Glencore. The Prodeco port will continue to operate.
Traditionally, coal has represented approximately one third of Glencore’s profits, and competes with copper as the largest profit source for the basic products giant, even though it’s expected that its contribution will diminish drastically when this month’s results are reported after reducing production this year.