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Colombia Fines Drummond for Dumping Coal

Colombia's government Thursday handed Drummond Co. a $3.6 million fine for dumping hundreds of tons of coal into the Caribbean Sea earlier this year in an incident the U.S. mining company failed to immediately report to authorities.

In announcing the fine, Environment Minister Luz Helena Sarmiento said the amount of coal dumped into the sea was nearly 1,900 metric tons rather than the "about 300 tons" Drummond claimed. The company, Colombia's second-largest coal producer, has said it had to dump the coal to prevent its barge from sinking in choppy seas.

Drummond didn't notify environmental authorities about the incident until more than a week later, after photos of the incident were apparently revealed and posted on social-media sites.

The incident has proved costly for the Birmingham, Ala., company. In addition to the fine, the government suspended all Drummond's coal exports for nearly a month in February as it investigated, forcing the company to slow down production as its warehouses became overfilled. Drummond normally exports 80,000 metric tons a day of thermal coal.

Colombia is among the world's top coal exporters. The country's largest coal producer is Cerrejon, a joint venture of mining companies Glencore Xstrata GLNCY -0.69% PLC, Anglo American AAL.LN +0.43% PLC and BHP Billiton Ltd. BHP.AU +0.29%

Ms. Sarmiento said Drummond will also have to pay for an extensive cleanup this year of the beaches and coastline near the port in Santa Marta where it loads its coal onto ships for export.

A spokeswoman for Drummond reached in Bogota on Thursday said the company doesn't plan to comment on the government's moves until Friday.

Meanwhile, Ms. Sarmiento also warned Drummond that it faces daily fines starting Jan. 1 if it doesn't upgrade its port facilities to provide a covered loading system to prevent coal and coal dust from falling into the sea. Drummond's current system uses open-air cranes to load the coal onto barges, she said.

Drummond, which has operated in Colombia since the 1990s, is privately run, though Japanese trading house Itochu Corp. 8001.TO -0.08% has a 20% stake. Coal accounts for 12% of Colombia's exports.

Last month, Colombia's government said coal output would likely fall to 85 million metric tons this year from 89 million tons in 2012, partly because of the problems at Drummond.


Source: Wall Street Journal