Industry Trend Analysis - Coal Production Growth To Accelerate Through 2020 - MAR 2016

BMI View: Colombia ' s coal sector will experience slower production growth than previously expected over the coming quarters , owing to logistic s disruptions and persistently low coal prices. Despite this near - term slowdown, the country ' s coal sector production will accelerate over our forecast period to 2020.

Colombia's coal sector will remain a key production growth bright spot, supported by low operating costs and vast reserves over our forecast period to 2020. In the near term, however, Colombia's coal production growth will slow slightly, following a contraction in 2015 due to logistics disruptions, and low prices deterring investment. Over the first three quarters of 2015, the Colombian government banned night-time rail transport and in August, the Venezuelan government closed the border shared with Colombia, both of which led to a bottleneck of coal unable to reach ports. As a result, Colombian coal production fell by 3.5% in 2015 and thermal coal exports declined by 16.2%, from 89.1 million tonnes (mnt) in 2014 to 74.7mnt in 2015.

We have revised down our coal production growth forecast slightly from 4.0% to 2.0%, and 4.3% to 4.0% in 2016 and 2017, respectively, as miners will be reluctant to ramp up production in a weak price environment. We expect Colombia's coal output to increase from 87.2mnt in 2016 to 105mnt by 2020, averaging 4.2% annual growth.

Exports, Production Set To Ramp Up
Colombia - Coal Mine Production & Exports (mnt)
f = BMI forecast. Source: Bloomberg, BMI, EIA

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