Colombia will honour the terms of coal mining firms' contracts and is not forcing companies out of the industry, which is instead under pressure from market conditions, mining regulator ANM president Alvaro Pardo said.
"Today, no thermal coal owner in the country can say that the state violated their rights," Pardo told Argus on the sidelines of the Colombia Genera conference in Cartagena. "We are respectful of their contractual rights."
The administration of Colombian president Gustavo Petro has made several anti-fossil fuel statements, and is working on moving to less carbon-intensive energy sources — although it has not included coal in its list of strategic minerals and intends to honour existing coal mining licences until the end of their terms, Pardo said.
Instead, market factors are likely to end coal production before the government does, he added.
Colombia's thermal coal exports increased by 8.8pc on the year in 2024, but revenues of Colombia's largest thermal coal producers declined by 25pc over the same period, reflecting the difficult market conditions of lower coal prices and tighter margins, Pardo stressed.
The government is concerned with the drop in international thermal coal prices because it fears that the large open-pit coal mines including Drummond and Cerrejon may hand back the coal titles to the government as Glencore did in 2021.
With global coal prices falling this year, coal demand has also shifted to Asian markets, such as South Korea, India, Japan and China, but freight costs for Colombian coal to reach these markets are around $37/t, compared with $16-17/t to traditional markets such as Europe.
"Europe is no longer demanding Colombian coal nor is Chile," Pardo said.
When asked whether the government may consider cutting royalties on coal mining firms, Pardo said ANM will not reduce royalties. But the Colombian mining association has stressed that the Colombian mining sector, including coal, has the highest tax rates among peers. The government recently slapped an additional 1pc surcharge on coal exports.
The government will not grant new contracts to large open-pit thermal coal mines, Pardo said.
The IEA predicts that global coal demand will plateau through 2027, although it reached a record high in 2024 of 8.77bn metric tonnes (t).
Anticipating the downturn, the Petro administration is looking at how to convert mining areas to other uses such as for renewable energy, tourism or production of other minerals, Pardo noted.
