Signature Sponsor
Cerrejon and Union Deadlocked Over Coal Strike


By Diana Delgado

September 12, 2020 - Colombian coal mining firm Cerrejon and its largest union Sintracarbon are stuck at an impasse regarding strike action.

Cerrejon and Sintracarbon have accused each other of failing to initiate a dialogue to resolve the dispute, as the strike reaches its 11th day. Around 56,000 t/d of supply could fail to reach the market during the strike, meaning more than 500,000t may already have been lost this month.

Cerrejon is "open to negotiating an agreement that is beneficial for workers" but that the union had not "approached the company directly to dialogue in a respectful and transparent manner within the framework of the collective convention", the firm said.

Sintracarbon said Cerrejon has not contacted it and claimed the firm wanted the strike to take place.

The union's president, Igor Diaz, said Cerrejon failed to attend a virtual meeting convened by the lower house and attended by Labour minister Angel Custodio Cabrera, which Diaz says is proof of the company's lack of desire to find a resolution to the strike.

The dispute stems from failed labour contract negotiations last month, with Cerrejon's decision to implement new working shift patterns a major point of contention.

Cerrejon has reiterated that changes to working shifts are needed to ensure the survival of the company and has proposed solutions to ensure their "safe and successful implementation", which the mining firm says demonstrates its "openness to dialogue".

The union has fiercely opposed changes to working shifts as it will result in the elimination of 1,250 posts, equivalent to one fifth of jobs. The union is also unhappy with plans to discontinue bus services that transport workers from cities to the Cerrejon mines, which Sintracarbon says will force workers to layover in towns closer to the complex at their own cost.

Weaker global prices and demand and disruption because of Covid-19 have forced Cerrejon to transform itself to remain viable, the firm said. It submitted an improved offer with "excellent economic benefits" despite recording losses of 368bn pesos ($98.9mn) in the first half of the year.

The strike at Cerrejon is an additional curb on Colombian seaborne supply at a time when all mining firms are either idle — Prodeco and CNR — or operating at reduced capacity, in the case of Drummond and Cerrejon itself before the strike began.

Cerrejon's production costs are around $35-40/t according to figures provided by former president Roberto Junguito, and one analyst said it may be more economic for the company to endure the disruption of the strike rather than produce coal at current prices.

Argus has assessed NAR 6,000 kcal/kg Colombian coal within a $40-50/t fob Puerto Bolivar range since June 2019, down from more than $90/t as recently as November 2018.