Canacol gas restrictions force Colombia's Cerro Matoso ironickel mine to reduce output

On Wednesday, Colombia's Cerro Matoso Ferronickel Mine announced that it would be cutting operations by 25 percent after Canacol Energy, of Canada, reduced the 'natural gas supply' to the plant. This threatened jobs, supplier contracts, and fiscal payments.

Cerro Matoso is owned by CoreX Holding, located in Colombia's northern Cordoba Province. Canacol has cut gas deliveries from July 1 to?7,000 MBtu, a 55% decrease compared to contracted volumes.

The miner stated that the cut was made after Canacol moved to?seek creditor protection before a Canadian court, and requested the early termination of?several contracts for gas supply in Colombia, which included?Cerro Matoso?s contract?which runs until 2029.

Canacol Colombia's office refused to comment on a comment request.

Cerro Matoso stated that the reduced gas supply will partially suspend certain operating processes. It could also force the company to stop one of its production lines within days if this restriction continues or worsens. This could potentially reduce output by half.

The 'company' said that the disruption would affect hundreds of workers, contracts for goods and services, payments related to taxes, royalties, and local purchases.

Cerro Matoso said that under Colombian law the decision to whether the Canadian court's ruling could be implemented in Colombia rests with the Colombian Superintendency for Companies. Reporting by Nelson Bocanegra, Luis Jaime Acosta and Franklin Paul.

(source: Reuters)