Industry Trend Analysis - Colombia Coal To Power Through Operational Disruptions - DEC 2017

BMI View: We have lowered Colombia ' s coal production growth forecasts in 2017 and 2018 du e to operational challenges and highlight additional downside risks from the weak outlook for global thermal coal prices . Nonetheless, Colombia's coal sector will be well-positioned to gain market share in Asia with competitive exports.

We have revised down Colombia's coal production growth forecasts, to a 5.0% contraction and 2.5% growth in 2017 and 2018, respectively, from previous forecasts of 4.0% and 4.5% growth. Over Q2-Q317, heavy rainfall dented output at key coal mines in Colombia, including Glencore's Prodeco operations and the Cerrejon mine, owned by Glencore, Anglo American and BHP Billiton. Over the first three quarters of 2017, Glencore reported a 10% y-o-y decline in production, to 11.7mnt at Prodeco. Also over this period, Cerrejon, the country's largest coal mine, experienced a 3% y-o-y decline in coal output to 23.1mnt. Both operations cited heavy rainfall over Q2-Q317 as the reason behind lower-than-expected production.

Despite the operational disruptions, Colombia's coal sector will continue to benefit from elevated prices over 2017. In September, the country's coal exports more than doubled y-o-y in value, to USD834mn. Over the first three quarters of 2017, Colombia's coal exports increased by nearly 20% y-o-y to 75.8mnt, the value of which increased by nearly 55% to USD5.1bn.

Strong Export Market To Counter Operational Disruptions
Colombia - Coal Exports By Value (USDmn) & Volume (mnt), monthly
Source: DANE

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