Cerrejon North Block project is making Colombia a major coal exporter

Introduction The growing role of Colombia as a major supplier of internationally traded steam coal has been widely discussed in the industry. Although Colombian coal has been produced and exported in small quantities for a number of years, the country's position as a major coal exporter began in earnest in 1985 with the first commercial exports from the Cerrejon North Block Project. The mine is located on the Guajira peninsula in northeast Colombia, about 145 km (90 miles) from the coast (Fig. 1). In addition to the mine itself, the project involves construction of a dedicated railroad and port. This forms a modern, efficient, and integrated system. The project is embodied in a 50-50 association contract between International Colombia Resources (Intercor), a wholly-owned subsidiary of Exxon, and Carbocol, the Colombian state coal company. Intercor and Carbocol share investment and operating expenses equally. Intercor has the additional responsibility of managing operations on behalf of the partners. Each partner is entitled to 50% of the coal produced, and each markets its share separately. The project is a multi-seam, truck and shovel operation, based on large reserves (2 to 3 Gt or 2.2 to 3.3 billion st) of high quality bituminous coal. Exports began in the first quarter of 1985, at modest levels through what is called Early Coal Facilities. The permanent coal handling system began operation in February 1986. Production will increase rapidly in each of the next few years, reaching the design capacity of 15 Mt/a (16.5 million stpy) in 1989. Based on available resources, however, the resource will support expansion, and continued growth in production into the 1990s is feasible. Importance of transportation The success of a new coal export venture, such as Cerrejon, depends heavily on efficient transportation. In the international coal industry, overland and ocean transport can in some cases account for 40% to 50% of the final value of the product. Many coals, such as western US subbituminous coals, cannot reach export markets at all because of their low heat content and great distance from export markets. By the same token, low-grade resources are often commercially attractive for local markets even in the face of competition with much higher quality coals from distant sources. Figure 2 shows the growth in steam coal imports into Europe, the largest trading market. Through