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April 7, 2025 - US-based company Drummond has begun scaling back production at its Pribbenow and El Descanso open-pit coal mines in Colombia's Cesar department. The move is aimed at aligning output from the operations with current conditions in the international market, the firm said in a statement.
The company cited increased coal inventories at loading and stockpile points, along with a significant portion of expected output for the rest of the year remaining unsold.
"This plan, which will remain in place until market conditions improve, allows us to navigate global fluctuations while ensuring long-term sustainability," Drummond stated.
"If market conditions persist at current levels, we will need to take additional measures later this year to optimize operations, including adjustments to operating schedules, as we have done in the past."
Drummond's announcement comes just days after Cerrejón – Glencore's Colombian coal unit – said it would cut its annual thermal coal output by 5-10Mt due to unsustainable maritime transport prices.
In a March 24 post on X, President Gustavo Petro said, "Glencore is right to shift its capital toward profitable activities. Coal is no longer profitable, and the world is embracing the challenge of building decarbonized economies – a challenge Colombia must also take on."
Since last year, the Petro administration has signaled its intent to prohibit new contracts for thermal coal exploration and production, in line with the country's commitment to a just energy transition and national decarbonization goals.
The government argues that reducing emissions linked to coal, along with falling prices for the fossil fuel due to the growth of renewable energy, makes continued coal development less viable.
Operating costs and regulatory pressures
In addition to weaker international coal demand – particularly in Europe – and uncompetitive freight costs, Drummond pointed to rising operational expenses driven by regulatory and economic conditions in Colombia.
The company highlighted higher taxes, tariffs and labor regulations, as well as inflation affecting equipment and materials, as persistent challenges in the country.
Since February 21, Colombia has imposed a 1% tax on the extraction of coal and hydrocarbons, calculated on the sale or FOB value.
The measure is part of efforts to fund emergency expenditures due to unrest in the Catatumbo region, the Cúcuta metropolitan area and the municipalities of Río de Oro and González in Cesar department.
Coal consumption
A World Bank report released in December projected that global coal consumption will decline in 2025 and contract further in 2026 as the shift toward renewable energy and natural gas for power generation accelerates, displacing coal.
Demand in China is expected to fall both this year and next, while growth in India is also forecast to slow.
According to the Colombian mining association (ACM), the coal industry has contributed nearly 40tn pesos (US$10bn) in taxes and royalties over the past five years, generating more than 50,000 direct and 250,000 indirect jobs. Coal mining also drives more than 8tn pesos annually in local goods and services procurement.
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