$US1B Cerrejon expansion

COLOMBIAN coal producer Cerrejon will reportedly invest $US1 billion to up its coal production outlook by 25% over the next few years.
$US1B Cerrejon expansion $US1B Cerrejon expansion $US1B Cerrejon expansion $US1B Cerrejon expansion $US1B Cerrejon expansion

Image courtesy of Cerrejon Coal.

Donna Schmidt

According to the Dow Jones and Reuters news wire services, company president Leon Teicher said output would be increased from the company’s South American operation to as much as 40 million tonnes by 2014.

The plan does not yet have shareholder approval, but with that the project could be ready to start by the first quarter of 2011.

Teicher told the outlets that Cerrejon production has been negatively affected by heavy rains in the region, but is maintaining its 32Mt output target for the year.

"We're recalculating our projections and the next months will be critical," he said.

The Cerrejon joint venture is one-third owned by Xstrata, AngloAmerican and BHP Billiton.

The expansion could play a role in Colombia’s plan to double coal production by 2019.

Colombian Mining Minister Carlos Rodado said last month he expected total output to grow from 72Mt last year to 144Mt in 10 years.

The second-largest Colombian producer, Alabama-based Drummond, has already announced plans to boost production from 3Mtpa to 25Mtpa at its El Descanso mine. Its Pribbenow operation currently produces 20Mtpa.

Drummond operations president Mike Tracy said in late July that the producer was accepting bids to sell a stake in its operations, and also was considering releasing majority control over its South American mines, Reuters said.

Colombia is set to export 5Mt, or 15%, of its production in 2010, with the nation’s operators increasingly interested in the strong Asian export market.