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Colombia Will Back Its Coal Industry For Decades To Come

The world’s fifth-largest coal exporter, Colombia, is confident that continued coal demand in Asia will warrant Colombian government support to the industry for at least two more decades, even after Glencore said it would relinquish its mining contracts in the country.

“Coal demand from China and India is going to continue. It’s impossible for them to switch their power matrix overnight and stop depending on thermal coal,” Colombia’s Mines and Energy Minister Diego Mesa told Bloomberg in an interview this week.

“We are going to continue to give support to the operations we currently have,” Mesa said, adding that the high-quality mines could continue to operate for “a couple more decades.”

Last month, Glencore said that its Colombian subsidiary Prodeco would begin handing back its mining contracts to the government after it found it would be uneconomic to restart operations at mines that were put on care and maintenance in March last year. Colombia’s National Mining Agency declined in January 2021 Prodeco’s request for the Calenturitas and La Jagua coal mines to remain on care and maintenance (C&M).

Glencore and Colombia’s Mines and Energy Ministry have been in contact with companies interested in potentially taking over the Glencore mines, minister Mesa told Bloomberg. There has been interest from Asia for the mines, he added.

Colombia is banking on coal demand from Asia, including China and India, to justify its support for coal mining in the country, while most developed economies are working to reduce their reliance on coal and phase it out as a source of electricity supply.

Related: Biden Is Playing A Dangerous Game In The Middle East

After a drop in 2020, global coal demand is expected to rebound this year, the International Energy Agency (IEA) said in its Coal 2020 report in December. Coal continues to be a vital part of China’s energy strategy, while India’s coal demand is set to expand despite plummeting in 2020, the IEA said.

Earlier this week, state miner Coal India approved as many as 32 new coal mining projects worth a total investment of US$6.4 billion, as one of the world’s largest coal consumers, looks to reduce its reliance on imports as its coal demand continues to grow.

By Tsvetana Paraskova for Oilprice.com

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  • George Kafantaris on March 14 2021 said:
    Yes, China and India will continue to demand coal from Colombia -- but not for 20 years. A more realistic timeline is less than 10 years. More importantly, that is all the open window for the entire fossil fuel industry has to make blue hydrogen. After that the preferred green hydrogen will sell at the same price as their blue hydrogen. When that happens, the bottom will fall. As such, Columbia might want to take a page from Australia’s playbook and start converting its coal into blue hydrogen. And the oil and gas folks had better triple their efforts to make blue hydrogen before it becomes obsolete.

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