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Talks to end Colombian coal workers strike suspended

18 Feb 2013 13:26:24 | csd

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Colombia's largest coal producer, Cerrejon, and the union representing its workers, Sintracarbon, have failed to agree on how to proceed with negotiations over wages, both sides said on Sunday.

The workers downed tools on 7 February and have been on strike since then. European coal swaps prices were initially bullish after the strike started, but the bears took over towards the end of the last week, as the coal market was still considered to be well supplied.

On Monday morning, the front quarter was trading about $0.50/tonne higher than at Friday's close, while gains on the front month were more muted.

Cerrejon - a venture between mining giants Anglo-American, BHP Billiton and Xstrata - said it wants a time limit on future talks and for parties to define in advance an alternative dispute resolution if the talks were not completed within the agreed time. The coal giant said neither of the conditions were agreed, and so talks are suspended.

In a statement, Sintracarbon said it will never submit to arbitration, and that the company had not returned to the negotiating table with the intention of restarting talks. Under Colombia law the strike can last for 60 days and it will then go to arbitration, however.

Colombian exports to Europe have been also been affected by other problems with the supply chain. US-based producer Drummond had its licence to load coal onto barges suspended, while Colombian freight company Fenoco is no longer allowed to transport coal between 22:30-04:30.

Sources have told ICIS that with South American supply restricted, eastern Europe producers have been looking to push their coal supply into the international markets. Russian and Baltic coal has struggled to gain a strong foothold into the global coal markets given that it trades at a premium to most other sources, however. South African coal is also looking to price into Europe. No physical DES ARA or FOB RB deals were reported to ICIS on Monday morning. Fionn O'Raghallaigh

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