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Deal on coal

01 Feb 1999

INTERNATIONAL Colombia Resources Corp (Intercor) is in line to benefit significantly from extra traffic over its 150 km standard gauge line from the Cerrejon coalfield to the deep-water port at Bahia Portete. Opened 10 years ago, the El Cerrejon Mine Railway carries around 15 million tonnes of coal a year.

Intercor shares coal production with Colombian national producer Carbocol, and the two are in competition with US-owned Drummond, which exports coal from nearby deposits over an upgraded section of the 914mm gauge Ferrovías route from La Loma to Ciénaga and the port of Santa Marta. Drummond's switch to rail has replaced a 300 km road haul from mine to port. The improvement has put pressure on Intercor and Carbocol, which have now reached an agreement with mining companies Glencore, Rio Tinto and Amcoal for expansion of coal production in the central Cerrejon area and use of the El Cerrejon Mine Railway to Bahia Portete. The deal extends Intercor's concession by 25 years and could raise output by 6 million tonnes a year. In return for allowing erstwhile rivals to ship up to 18 million tonnes a year by rail to the port, the company will pocket an annual fee of over US$150m.