U.S. coal miner Drummond has asked Colombia’s commerce regulator to force competitor Glencore to sell its stake in a shared railway to prevent what Drummond alleges is potential for Glencore to disadvantage other miners, according to a letter reviewed by Reuters.
The Anglo-Swiss commodity trader and miner Glencore Plc and Drummond each have stakes of around 40% in Colombia’s Fenoco railroad, which runs from Chiriguana in Cesar province all the way to the coastal city of Santa Marta.
Glencore also controls the Puerto Nuevo coal terminal in Magdalena province, which maintains an access canal Drummond uses for exports.
But Glencore this year said that the concessions for both mines run by its Colombian subsidiary Prodeco would be handed back to Colombia because a restart of operations would not be viable.
Without Prodeco, Glencore will no longer need to use the railroad and port.
However, Glencore expects to become the sole owner of the Cerrejon mine in La Guajira province when it completes a $230 million buy-out of partners BHP and Anglo American in the first half of 2022.
The two changes create an unfair advantage for Glencore because though its operations will now be in a different province, it will maintain veto power over decisions about Fenoco, Drummond alleged in a letter to Colombia’s Superintendency of Industry and Commerce (SIC) regulator, dated Sept. 2 and seen by Reuters.
In the letter, Drummond said the SIC should immediately order Glencore not to use its veto power over Fenoco and to sell its stake, which should be offered first to whoever takes over the Anglo-Swiss company’s mining titles in Cesar.
“We ask the SIC that…it impose structural and behavioural conditions to permanently guarantee that Glencore will not use its shareholder position in Fenoco and Puerto Nuevo to negatively affect the operations of Drummond and the other producers of coal in Cesar,” the letter said.
The regulator should “order Glencore to put its shareholder participation in Fenoco up for sale. This participation should be preferentially offered to the company that takes over the titles for mines in Cesar from Glencore,” the letter said.
Glencore declined to comment on the letter. Drummond did not immediately respond to a request for comment.
The two companies have had previous arbitrated disputes over the railroad, but up until now both have had an interest in Fenoco’s smooth operation, the letter said.
Glencore “should continue with the completion of its obligations in the access canal without affecting its competitors,” the letter added.
The SIC told Reuters it was aware of the issues described in the letter.
“Exactly for that reason the SIC is analyzing the operation, comprehensively reviewing both the antecedents and the state of the involved markets,” a SIC spokesperson said.
Source: Reuters.com