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Colombia Coal Railway's Overnight Ban to Take Effect

Posted by February 7, 2015

Photo courtesy Colombia Coal Railway


A ruling ordering Colombia's Fenoco coal railway to stop running trains overnight after noise complaints by nearby residents could take effect from next Friday, a court source told Reuters, potentially cutting capacity for several large miners to export.

The railway operated by U.S.-based miner Drummond Co Inc , Glencore's Prodeco unit and Goldman Sachs affiliate CNR was banned by the Constitutional Court last month from running between the hours of 10:30 p.m. and 4:30 a.m. local time (0330 and 0930 GMT).

The train is still operating normally because Fenoco has still not been formally notified of the ruling, but this would likely happen on Tuesday, said an employee of the Administrative Tribunal of Cesar Province that expects to send it next Tuesday.

"They (Fenoco) should be complying with this order by next Friday," said the employee who was not allowed to speak on the record about the issue and asked to remain anonymous. The company would have three days to either appeal or comply.

Industry sources in Colombia contacted by Reuters have speculated there will be an attempt to appeal or block the ruling that could potentially cut by one quarter the capacity of the line which moves more than half the country's coal exports.

The company was banned from running trains at night near populated areas in early 2013 by environmental authorities but the decision was overturned within weeks.

The world's fourth-biggest coal exporter is already reeling from the plunging price of its top export, crude oil, which forced the government to reorganize its finances. It will be loathe to see another cut in royalties and tax income.

Colombia's biggest coal miner, Cerrejon, a joint venture between Anglo American Plc, BHP Billton Ltd and Glencore Plc (GLNCY), has its own railway and is not affected.

The court ruling is the first major disruption to Colombia's coal sector in almost a year. Output was hit in 2013 and early 2014 by strikes at the country's biggest miners and problems affecting ports and railways.

The complaint was brought by 139 residents of the town of Bosconia in Cesar, which lies about halfway along the 226-km (140-mile) track. They complained of noise from the train passing overnight as well as coal dust they say it disperses.

European prices for thermal coal, which Colombia exports mainly to Europe for power generation, rose this week to $60.75 a tonne from a nine-year low of $55.60 on Jan. 26. (Editing by Lisa Shumaker)

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