Cerrejon to invest US$130mn this year

- Thursday, April 10, 2003

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Colombia's Carbones del Cerrejon coal mining company plans to invest US$130mn at its operations on the country's La Guajira peninsula this year to expand output to 28Mt compared to last year's 17.3Mt, a company spokesperson told BNamericas.

Of the figure, 60% will go on mining equipment but also favored will be infrastructure (bridges), telecommunications, impermeable pit barriers, feasibility studies, local exploration work, pumping and other light equipment and adjacent property acquisition. Investment last year totalled US$47mn, the official said.

Regarding the areas slated for feasibility studies and exploration, the spokesperson explained that the objective is firstly to incorporate whatever is necessary to reach 28Mt of output and secondly to determine feasibility to produce beyond that figure. The studies will take place over the three areas of Cerrejon: Norte, Centro and Sur.

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Cerrejon is also working another deposit on the peninsula, the Patilla mine that began operations late last year. The spokesperson said Patilla would complement expansion plans at the Cerrejon Central coal mine where production is set to rise to 10Mt/y from 3Mt to help reach the goal of 28Mt. This is the ideal volume to have on the market at this time considering global demand and prices, the official said.

Patilla plans to produce 2.7Mt in 2003 with an investment tag of US$3.7mn. To date the company has invested US$2mn on infrastructure at the mine.

Carbones del Cerrejon is owned equally by Anglo-Australian resource group BHP Billiton (NYSE: BHP), Switzerland's Glencore International and Anglo American (LSE: AAL) of South Africa.

The three multinationals acquired 50% of the principal Cerrejon mine, known as Cerrejon Zona Norte, in November 2001 by buying the government's stake in it. Then early last year the three bought the other 50%, which was held by a subsidiary of US oil giant Exxon Mobil. The three already had the other smaller Cerrejon Zona Centro mine and the Cerrejon Zona Sur project which is currently at the exploration stage.

Cerrejon Zona Norte is South America's largest coal mine.

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