Eleven days into a labor strike at Colombia’s main coal railway U.S.-based mining company Drummond canceled coal cargoes and announced it is running out of stocks.
Drummond faces dwindling port stockpiles and has declared “force majeure,” a clause provided in contracts that allows buyers or sellers to renege on their commitment because of a situation beyond their control, on at least three cargoes, Reuters reported Wednesday.
“Drummond won’t have any coal from today,” an industry source told Reuters.
Glencore’s Prodeco has also declared force majeure on a case-by-case basis on less than five vessels due to the railway strike and another walkout at the company’s owned La Jagua mine.
Workers at Colombia’s main coal railway, the Fenoco, which is jointly owned by coal firms that use it, went on strike over pay and working condition on July 23. Labor talks are set to begin Thursday to end the strike that has paralyzed more than one-half of shipments from the world’s fourth largest exporter of coal.
The Fenoco railway normally carries 160,000 tons a day of coal. It has been completely shut down since the strike began.
Glecore’s Prodeco and Goldman Sachs have been using trucks to move some coal to the Caribbean ports.
The shortage of supply hasn’t lifted prices yet due to oversupplied markets but end-users believe the price impact may start to be felt this week if the strike continues.
Fenoco’s shareholders include Glencore International Plc’s Prodeco unit, Drummond Co Inc and Goldman Sachs Group Inc’s Colombian unit. The mining firms are among the top coal producers in Colombia.