Drummond declares force majeure

US-BASED producer Drummond Coal has confirmed declaring a force majeure on its export coal from its Colombia port amid that government’s order to halt work for noncompliance infrastructure.
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Donna Schmidt

“We regret to inform you that Interocean must declare force majeure as a result of actions taken against Drummond in Colombia at our port in Cienaga,” a statement read.

Drummond, which experienced another force majeure earlier this year when its workers went on a two-month strike, said that its automated loading project – required under Colombian regulations as of January 1 – was also delayed.

“[The company] undertook intense talks and negotiations with the Colombian government to delay the implementation date of a direct ship loading system for three months to allow us to complete the construction,” it said.

“However, yesterday [January 9] Drummond received notice that as of Monday night, January 13, 2014, the Colombian government will be closing the port until the direct ship loading system is completed. This action leaves us no choice other than to declare force majeure effective January 13.”

The producer, which has estimated March for the completion of the system which will bring them into compliance, said that it is still working with government officials to find an alternative.

“[A]bsent consideration of other possible alternatives by the government, we anticipate loading will be suspended until March 2014.”

The Colombian government reportedly said Friday that it was looking at Glencore Xstrata’s nearby Prodeco port to allow Drummond’s exporting to continue, but an unidentified industry source told Reuters Monday morning that it is not a viable option.

According to the source, Prodeco is operating at full capacity and has no room to carry additional tonnage.

The company has not issued a public statement on the situation or its current port status.