Cerrejon Coal Company

This article is part of the CoalSwarm coverage of Colombia and coal.
Related articles:
Existing mines Cerrejon coal mine La Loma mine El Descanso mine El Hatillo mine Coal terminals Puerto Bolivar coal export terminal Puerto Drummond coal port Puerto Brisa coal terminal Puerto Prodeco coal port (decommissioned) Puerto Nuevo coal terminal Mining companies and agencies Proposed coal plants

Cerrejon Coal Company

http://www.elempleo.com/images/logos_empresas/626.gif
Headquarters	La Guajira, Colombia
Area served	Europe, North America, Central and South America
Key people	León Teicher (President)
Products	Coal
Revenue	2007 Net Exports in USD1,490,000,000 (29,800,000 tons of coal produced)
Employees	5,343
Website	http://www.cerrejon.com/

Cerrejon Coal Company (formerly know as Carbones del Cerrejón LLC, is the largest coal mining company in Colombia, with major mines in the Department of la Guajira. It owns and operates the Cerrejon coal mine and the Puerto Bolivar coal export terminal in northern Colombia.

The company is a joint venture of Anglo American (33%), Glencor International (33%) and BHP Billiton (33%). It operates the Cerrejon Centro mines, Cerrejon Sur mines, Cerrejon Zonoa Norte and Oreganal mines in the La Guajira Department.

In its 2014 Annual Report BHP Billiton stated that "the majority of production is exported to European, Middle Eastern, North and South American customers." The company stated that production in the 2013/2014 financial year was 36.9 million tonnes with the mining complex having a "a reserve life of 17 years." BHP Billiton states that the mining leases expire in 2034 and describes the coal produced at the mine as being "a medium rank bituminous thermal coal."

In September 2014 BHP Billiton proposed a major restructuring of its assets, with most of its more marginal assets to be spun off into a new company called South32. The company's interest in Cerrejon would remain within BHP Billiton's portfolio of assets.

Company History

1976: an association contract was signed between Carbocal S.A., a state owned coal company, and Intercor, an ExxonMobil affiliate, for the development of Cerrejón North Zone. This contract consisted of 3 phases.
1977-1980: Phase 1: Exploration
1981-1986: Phase 2: Construction
1986-2009: Phase 3: Production
1995: Central Deposit was acquired
1999: January: Carrejón made an agreement with the Colombian government to extend phase 3 for an additional 25 years (until 2034)
2000: November: the Colombian government sold 50 percent of Carbocal S.A. to a consortium whose members were subsidiaries of BHP Billiton
2002: In February, this consortium acquired from Intercor the other 50 percent (owned by ExxonMobil. In November, the merger between Intercor and Carbones del Cerrejón S.A. was legalized and Intercor’s name was changed to Carbones del Cerrejón Ltd. The sale price and terms, the companies stated, "have not been disclosed for confidentiality reasons."

History

On its website, BHP Billiton states that "BHP Billiton acquired a one third interest in the CdelC mining operation from Anglo American and Glencore in September 2000. In November 2000 the consortium, consisting of Anglo American, BHP Billiton and Glencore successfully bid for 50 per cent interest of the neighbouring CZN mine. The remaining 50 per cent of CZN was held by Intercor, the mine management company owned by ExxonMobil. Recognising that a combined operation of CdelC an CZN would generate synergies, the consortium commenced negotiations with ExxonMobil to acquire CZN's mine management company. The transaction was completed in February 2002. The combined operations of CdelC and CZN became known as Cerrejon Coal Company (CCC)."

At the time of the buyout of Exxon's 50% share of Intercor, BHP Billiton's President Energy Coal, Mike Oppenheimer, stated in a media release that the deal was an important part of BHP Billiton's energy coal strategy":

"Extending our Colombian supply position, in conjunction with our partners, is an important component of our strategy for servicing continued strong growth in global markets for seaborne traded coal. The Colombian operations are low-cost and have significant expansion potential. Their geographically advantaged position opposite the United States and Europe offers exciting prospects for growing our share of these major energy coal markets and securing full value for our high quality products."

Business Strategy

To be acknowledged in the international thermal coal market as well as in Colombia as the most efficient and trustworthy world class producer and exporter; as an excellent partner that complies with the highest standards in terms of safety, health, environment and sustainable development; as a corporation with exemplary ethical behaviour, respectful of human rights; and as an effective contributor to the welfare and development of the communities where it operates and of the country, that promotes participation, development and excellence among its people and achieves the highest profitability for its shareholders.

Expansion

In August 2011, Cerrejon said it plans to spend $1.3 billion to expand coal output to 40 million tonnes per year. 2011 production is at 32 million tonnes per year, with a goal of rising to 34 million tonnes in 2013, 37 million tonnes in 2014 and 40 million tonnes in 2015. To handle the coal, Cerrejon plans to build a second berth at its port with two loading points and also another shiploader with a capacity of 12,000 tonnes per hour. Cerrejon said the shareholders had the money to fund the project. Colombia's energy ministry expects coal output in 2011 to jump 17 percent to 87 million tonnes versus 2010, close to the capacity limit of ports. Cerrejon said the company was mulling an expansion plan to boost annual production to 60 million tonnes.

In its 2014 annual report BHP Billiton stated that:

"Construction commenced in CY2011 and the project handled its first coal in the December 2013 quarter.The port expansion associated with the Cerrejón P40 project is currently being commissioned, although operational issues are expected to constrain capacity to approximately to 35 Mtpa (100 per cent basis) in the medium term. At 30 June 2014, the project was 94 per cent complete."

Political and Public Influence

Citizens Groups Tracking Cerrejón

• Mineral Policy Institute (Australia) - http://www.mpi.org.au

Corporate Accountability

Human Rights

May 27, 2008
A terrorist attack in the morning against a train hauling coal from the mine to Port Bolivar resulted in no injuries to train operators or to people in the surrounding area.[1]

November 2007
In 2001, Cerrejón’s bulldozers demolished most of the neighboring village of Tabaco. Another assault occurred in 2002 and the rest of the village was destroyed. Several other communities face displacement because of the planned expansion of the mine.

El Cerrejón Norte in Colombia:
The mine borders and partly covers reservation land of the indigenous Wayuu people. To expand the mine in August 2001, the community of Tabaco was bulldozed flat. The 700 residents, pushed out by 500 soldiers and 200 police who accompanied the mine operator, didn't even have time to retrieve their personal effects. When the job was complete, the village's school and clinic were also razed and the cemetery desecrated. There was no compensation.
In June 2004, Cerrejón again forcibly displaced a number of Wayuu Indigenous and Afro Colombian communities with no compensation to make way for the expansion. Sintracarbon, a Colombian coal mining union representing workers at El Cerrejón, has been engaged in collective bargaining with the firm since December 2004. But in the weeks leading up to those negotiations, bargaining team members began receiving calls from unknown members of paramilitary groups demanding payments. The extortion calls also involved death threats on family members of Sintracarbon’s bargaining team. Members of the European Parliament and the international trade union federation ICEM called upon the company’s owners to condemn this extortion.

November 12, 2007
The illegally armed group (FARC 59th Front) has made a series of extortion threats related to the Sotrans Company which is Cerrejón’s transport contractor.[2]

December 12, 2006
Cerrejón created a human rights program and describes the following voluntary principles.[3]

Development, Peace and Human Rights in Colombia: A Business Agenda
This document addresses the development of the first Peace Laboratory. It mentions that the Fundación Ideas para la Paz has joined together with Cerrejón to test the Conflict Sensitive business practice tool risk analysis and management methodology.

Social Responsibility Initiatives

During 2007, Carbones del Cerrrejón invested over 5 million dollars in its social responsibility actions. Today, La Guajira's economy depends to a considerable extent on coal exports and this is reflected in the Company's intention to help to generating the means and alternative projects for the "Guajiros" to take advantage of the mining wealth resources to prepare for a better future. The new foundation system includes:

• The Cerrrejón Foundation for Progress in La Guajira which is focused on promoting projects to guarantee the sustainable development in the area, particularly entrepreneurial ventures and the strengthening of both professional and working abilities.
• The Cerrrejón Foundation for Water in La Guajira, focusing on the search for solutions to sanitation and hygiene.
• The Cerrrejón Foundation for Indigenous Development in La Guajira, which is dedicated to improving the indigenous communities’ living conditions.
• The Cerrrejón Foundation for Institutional Strengthening in La Guajira, which guarantee projects of good investment of mining royalties and other resources in the region.

Cerrejón also contributes to the improvement of the community’s living conditions with generation of employment, demand for goods and services, the payment of royalties and taxes to the development of the following benefit programs: health, education, culture and recreation, small business development support groups, a comprehensive aid plan for the indigenous community, and water solutions. Cerrejón gives back 84 percent of its royalties to La Guajira Department and the municipalities involved in the company’s operations for investment in their economic and social development programs. [4]

Contact Information

Cerrejón Coal Company
Calle 100 No. 19 – 54, 12th Floor
Bogotá, Colombia

Articles and Resources

Related GEM.wiki articles

• BHP Billiton's coal interests
• Colombia and coal

External Articles

• BHP Billiton, Cerrejon Coal Company, BHP Billiton website, accessed June 2008.
• Patrick Markey, "Colombia coal train bombed, exports unaffected", Reuters, May 27, 2008.