The Cerrejon North Coal Project In Columbia ? Background

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, Colombia's position as a major coal exporter began in earnest in 1985 with the first commercial exports from the Cerrejon North Block Project. By way of background: ? The mine is located on the Guajira peninsula in Northeast Colombia, about 90 miles from the coast, as shown in Figure 1. ? In addition to the mine itself, the project involves construction of a dedicated railroad and port, which form 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 and Intercor has the additional responsibility of managing operations on behalf of both 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 (2-3 billion tonnes') of high quality bituminous coal. ? Exports began in the first quarter of 1985 at modest levels through what we call Early Coal Facilities, designed and constructed apart from the permanent coal handling system. ? Production will increase rapidly in each of the next few years, reaching the design capacity of 15 Mt per year in 1939. Based on available resources, however, the resource will support expansion, and continued growth n production into the 1990s appears feasible.