Andean Group - February 2013 (ISSN 1741-4466)

Labour unrest and allegations of environmental abuses severely impacted Colombia’s coal exports in early February. On 7 February thousands of workers at Cerrejón, a joint venture between BHP Billiton, Anglo American and Xstrata, went on strike, the first in two decades, after failing to reach an agreement over wages and benefits. Cerrejón produced 34.6m tonnes (t) of coal last year, 4% more than expected. It exported 32.8m t, 2.5% above its goal, in 2012.

The strike follows the suspension of activity at Drummond, the second-largest exporter, after photos emerged showing the company dumping around 500t of coal into the sea. President Santos said that the temporary suspension of Drummond’s coal loading licence was imposed “to set a precedent”, so that no local or foreign companies would contravene environmental regulations. He said that the measure would remain in place until Drummond presented a contingency plan. Drummond, the second-largest coal producer in Colombia, produces about 29% of country’s total coal output.

In total, about 85% of Colombia's daily coal production has been shut down as a result of the suspension of Drummond’s licence and the strike at Cerrejón. Coal has become the second most important of Colombia’s exports after oil and accounts for more than three times what the country has earned from its traditional coffee exports. Revenues from coal exports reached US$8bn in 2012.

Slowing growth: Further interest rate cuts are being actively considered by the central bank following signs of slowing growth. In January, the board reduced its overnight lending rate to 4%, but with inflation still at the lower end of the bank’s target, some members have been calling for a steeper cut. Colombia grew by 2.1% in the third quarter of 2012 and 4.9% in April to June 2012. The finance ministry says that it expects better growth in the final quarter of 2012.

Weak third-quarter numbers set off alarms that the global crisis had hit Colombia harder than previously thought and was damaging the nation's economic drivers. The central bank expects full-year 2012 growth of between 3.3% and 3.9%.

In a quarterly presentation on 8 February, central bank chief, José Darío Uribe, said that inflation this year would likely come in below 3% versus 2.44% last year with 2013 economic growth of between 2.5% and 4.5%.