Cerrejon, an open-pit coal mine in Colombia, has declared force majeure halting operations due to lack of gasoline availability amidst a social unrest caused by its former employees who are demanding to be reinstated.
Under the force majeure norms, from now onwards, worker and contractor contracts within the mine will remain suspended. As per a tweet by the Mines and Energy Ministry of the country, the two blockades have halted the export of 0.2 million tonnes (mn t) of coal, causing a loss of 80 billion pesos ($0.22 billion) for the industry.
Damages caused by blockades
The two main blockades mounted by the protestors have disrupted transport of coal and delivery of water from the mine. Arrival of essential supplies for continuing mining operations also has suffered a blow.
Coal shipments have come to a standstill as the 150 kilometre rail line connecting the mine to its export terminal, Puerto Bolivar Port, has been blocked.
Cerrejon’s railway line has a capacity to ship around 148,500 tonnes of coal per day, while the Puerto Bolivar Port has a capacity to store up to 1 mn t. The port handles all coal exported from the Cerrejon mine and is responsible for most of the shipments to Central and, South America, and several parts of Europe.
Several key roads, including the one that link the municipality of Barrancas with the Cerrejon mine and the one that link the mine with the town of Albania, have also been blocked by the former workers.
Cerrejon, jointly-owned by the BHP Group, Anglo American plc and Glencore plc, produced 12.4 mn t of coal in 2020, down almost 52% year-on-year (y-o-y). Exports from the mine also fell to their lowest level in the past 18 years amidst Covid-19 restrictions and falling global demand for coal.
Why the unrest?
In February, Cerrejon began reducing its human resources as part of a cost restructure amidst weak seaborne demand and lower coal prices.
Rail shipments from the mine to Puerto Bolivar Port were disrupted because of the 11-day blockade in February, which resulted in a drop of 1.3 mn t of exports. In March, however, the company’s thermal coal shipments recovered to 2.2 mn t.
After months of protests, ex-employees of the company began the first blockade on Cerrejon’s railway line on 5 May’21 wherein they rejected the dialogue with the company.
Residents of the Media Luna community caused the second blockade on a road out of the port, the company had said in a statement.
Way ahead
As per latest reports, the blockades are unlikely to be lifted anytime soon as the workers demand their jobs to be reinstated.
The damages caused by the blockades along with the ongoing anti-government protests in the country, which have already caused transportation problems around Colombia and have costed the government a hefty sum, are further likely to delay a settlement of the crisis.
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