Figure 1: Tugs positioning the STX Sun Rise to unload gates.
In a major milestone for the Panama Canal Expansion Program, the first four gates for the new locks arrived from the Port of Trieste, Italy, to the waterway’s Atlantic side on board the semi-submersible vessel STX Sun Rise in late August. It was a journey of more than 11,500 miles requiring a month of sailing time. Built by Italian subcontractor Cimolai SpA, the first four gates are 57.6-m long, 10-m wide and 30.19-m high, and weigh an average of 3,100 tons. They will be installed in the middle chamber of the new locks in the Atlantic side.
The new locks of the expanded Panama Canal have a total of 16 rolling gates (eight for each new lock complex). The steel gates will be transported to their final position using the same self-propelled motorized wheel transporters that are used to load and unload from the ship. The gates are being shipped four at a time from Italy. They will be unloaded onto a temporary dock until ready for installation. Unlike the current canal, which uses miter gates, the expanded canal will have steel rolling gates.
The exact completion date of the project will depend on the safe delivery of the remaining 12 gates, which will in turn depend on safe sailing conditions in the southern part of the north Atlantic. Sailing routes for the heavy-lift vessel will cross the birthplace of Atlantic hurricanes, so it is apparent the next three shiploads of gates will have to be carefully coordinated with open ocean weather forecasts. Historically, the worst part of the Atlantic hurricane season stretches from the last part of August through September and October.
Colombian Coal Port Expansion
Colombia’s superintendent of ports and transport, Juan Miguel Duran Prieto, spoke in June at the Ibero-American Technical Conference on Port Infrastructure in Madrid, Spain. He and Ricardo Schwartzman Larco, the chairman of the National Port Authority of Peru, presented a paper entitled, Port Investments in Peru and Colombia. While that paper did not focus on coal terminals per se, it did state quite clearly that the government of President Juan Manuel Santos aims to increase its port capacity with the enlargement and modernization of four regional port companies, the construction of six ports and the projection of at least seven new ports. It was apparent that Santos, a Kansas University-educated economist, understands the importance of ports in developing a country’s economy. Investors need this kind of assurance.
Colombian coal shippers have another reason for expanding ports. In addition to expanding port capacity, the coal industry is also preparing for a new environmental bill set for January 1, 2014, which states that coal being shipped as cargo must be directly loaded on to a vessel.
According to figures from the Superintendence of Ports and Transpor-tation (Superintendencia de Puertos y Transporte), of the 83 million metric tons (mt) of raw materials and goods that moved through Colombian ports between January and June 2012, 46% was coal (38 million mt). The number of minerals transported becomes more important when it is considered that 168 million mt of cargo moves through Colombian ports annually, including about 77 million mt of coal. Experts predict that figure will double.
In July 2012, Manuel Campos, manager of ports in the National Infrastructure Agency, named four of the more prominent projects: Puerto Bolivar (expansion), Cerrejon; Puerto Brisa, Dibulla (La Guajira); Puerto Nuevo, Ciénaga (Magdalena); and Drummond, who is making two direct load ports, one in Ciénaga and the other in Mamonal. Campos did not mention Puerto CCX, the projected expansion of Prodeco’s Carbosan, or the development of the Magdalena River.
Puerto Bolivar (Expansion)
Puerto Bolivar is already direct loading, but port operator and miner Carbones del Cerrejon has taken steps to increase annual production tonnage, and to increase port capacity to handle the additional tonnage. In May 2012, Cerrejon contracted with Ferrovial of Spain and Sainc of Colombia to build a second terminal. Costing about $39.2 million, the second terminal will enable Cerrejon to increase annual tonnage from 32 million tons to 40 million tons. The entire project, including mine expansion, is expected to cost $1.31 billion.
The coal port is located on the western shore near the entrance to Bahia Portete (Portete Bay). It can receive ships of up to 984-ft long and 147-ft beam, and can load to a maximum draft of 55 ft and maximum air draft of 69 ft. It can handle Capesize vessels.
Puerto Brisa (New)
Puerto Brisa is located near the scenic fishing village of Dibulla. Earthwork for the port began in July 2010. However, at that time, contractors had not yet been chosen for construction of the water works (viaduct, piers and access channel). Puerto Brisa would be able to directly load vessels of up to 180,000 DWT in 66 ft of water. It would not be limited to handling coal cargo only, however, anticipating export mineral cargo of copper, barite, bauxite, titanium and feldspar, as well as citrus fruit, beans, cotton, palm oil and vegetables.
A new coal producer anticipating the use of Puerto Brisa is Pacific Coal Resources of Canada. Pacific Coal has two active mines within 250 km of the port, La Caypa and Cerro Largo. The two mines are on track to produce a combined 1.6 million tons in 2013. Pacific Coal fully intends to use Puerto Brisa when it is complete and ready for use, because it would save the company transportation costs. However, it recently extended a costly throughput agreement with Carbosan for a period of two years, signaling its concern about the readiness of Puerto Brisa.
Puerto Brisa officials have not responded to email inquiries about their status, but Pacific Coal has taken steps to protect their sales obligations during the next two years. The company’s two surface mines have been sending their coal to Carbosan via commercial truck, and the Carbosan port services deal has been extended to July 2015, perhaps reflecting some doubt that Puerto Brisa would not be ready for commercial service until then.
Puerto Nuevo (New)
Prodeco, the Colombian coal unit of Glencore International PLC, opened a new coal loading port (Puerto Nuevo) in May, with an initial throughput capacity of 21 million mt per year to boost exports. Equally important is the fact that it will comply with Colombia’s more stringent environmental regulations requiring direct coal loading.
Figure 2: Coal ports of Colombia. Proposed ports Puerto Brisa and Puerto CCX would be located near Rio Cañas.
The $550 million Puerto Nuevo port in the Caribbean province of Magdalena will load coal directly onto ships rather than using intermediary barges, a system that sometimes causes environmental damage because coal can be spilled into the ocean. It is the first coal port in Ciénaga to implement direct loading.
Puerto Nuevo also offers an unloading station for trains at 8,000 mt per hour (mtph), a storage yard with 1.1-million mt capacity, 7 km of covered conveyor belts that can transport 8,000 mtph, supported by a buffer silo with 2,500-mt capacity, and a 1.7-km access pier open to Capesize vessels.
The port construction was tailored to protect 200 hectares of native forest along with construction berms to isolate coal stockpiles and to help control dust emissions, as well as the planting of 18,000 trees and the relocation of almost 800 animals. Puerto Nuevo also prioritized hiring local employees. Since the opening of its community service office in Ciénaga in 2010, Puerto Nuevo assisted in helping more than 1,000 people find employment.
Following this year’s $70 billion megamerger, Swiss-based Glencore Xstrata has become one of the world’s leading integrated producers and marketers of commodities, with production, sourcing, processing, refining, transporting, and supply of metals, minerals and energy products. Prodeco is Colombia’s third-largest coal exporter; last year it produced 14.7 million mt. It plans to ramp up production to around 21 million mt by 2015.
Puerto Drummond (Expansion)
Colombia, the world’s No. 4 coal exporter, has seen a boom in investment, especially in the oil and mining sectors. Its high-quality thermal coal production is dominated by Cerrejon — equally owned by Anglo American, BHP Billiton and Xstrata; Drummond International; and Prodeco. The three companies are increasing output and expanding infrastructure.
Drummond is currently investing $350 million to build a direct ship-loading facility at its Santa Marta port. Drummond is the second largest coal shipper in Colombia, and has been using a system that requires intermediary barge loading prior to final ship loading in deep waters. This is a very big issue with environmental activists, but the Colombian government can now point to Drummond’s investment plans as a success.
Drummond is building a port next to Prodeco’s harbor to expand export capacity as they increase production and to comply with the change in port rules.
Puerto CCX (Planned)
The most ambitious of all of the Colombian projects, Puerto MPX, was one of the pet projects of Brazilian billionaire Eike Batista. It was intended to have a throughput capacity of 30 million tons. The final harbor depth of 69 ft would accommodate vessels of up to 180,000 DWT. The port (Puerto MPX) would be located a few miles east of Santa Marta on the Caribbean Sea at Dibulla. It was intended to serve three CCX mines (Cañaverales, Papayal and San Juan) near the towns of San Juan de Cesar, Fonseca and Barrancas. During Phase I (first two years), coal would be hauled by 35- to 50-ton trucks (tractomulas) on Highway 88 to Cuestecita, then straight west through La Florida to Puerto MPX at Dibulla. In Phase II, a new CCX railroad would begin hauling the coal produced in the new longwall mine, San Juan. In May 2012, Batista had his Colombian coal company relisted on the Brazilian exchange (BM&FBOVESPA Small Cap Index (SMLL)) as CCX Carvão da Colombia, a sign of dark clouds to follow.
Figure 3: CCX mines intended to feed proposed Puerto CCX with 150 km of proposed CCX rail. Source: MPX Power Point: Desarrollo de Carbon Termico en Colombia, FENALCARBON
Puerto CCX was not one of the new ports mentioned by Campos, even though its parent company has received all its permits. Puerto CCX meant the municipality of Dibulla would have two ports in its territory. The first would be Puerto Brisa, which was already under construction. While it is true there was controversy about building two deepwater ports so close together, it is more likely that the financial problems of owner Batista had cast such uncertainty on all of his Colombian coal projects that Campos simply did not mention them.
Batista lost practically all of his $34.5 billion fortune in 2012 on his oil plays. He had to sell off many of his assets and companies, including his two Colombian surface mining reserves, Cañaverales and Papayal. This left CCX with only one mineable reserve, an underground property known as San Juan slated for longwall operation. Originally expecting to invest $3 billion on the three mines, private railroad and port, it soon became obvious Batista did not have even that “small” amount. (Bloomberg estimated that Batista’s fortune has been reduced to somewhere between $100 million and $400 million.)
Bloomberg reported on September 19 that Batista sold the Papayal and Cañaverales surface mining reserves to Transwell Enterprises Inc. Total asset value of CCX CARVAO on August 30 was $429.2 million, far short of the $5.5 billion required to develop the remaining coal reserve, San Juan underground. At that same time, Natalia Gutierrez, energy and mining vice minister, said the project is now “on standby.”
Batista learned that his oil reserves not only cost a fortune, but were not as easily recoverable as he was led to believe. He will not make the same mistake again; the only question is how long it will take him to fund the remaining CCX project.
Carbosan (Expansion)
The Prodeco Group is owned by Glencore International (Glencore). The group comprises Glencore’s Colombian operations for the export of thermal and metallurgical coal and its associated infrastructure. Prodeco undertakes exploration, production, transportation, and shipping for high-grade thermal and metallurgical coal destined for markets in Europe, the Americas and Asia.
The group has a marketable reserve base of 341 million mt, with resources (measured, indicated and inferred) of 560 million mt. It also has large operational advantages as it owns its entire essential operational infrastructure, including rail infrastructure, rolling stock, as well as all mining equipment and mine facilities. Furthermore, it owns Sociedad Portuaria Puerto Nuevo SA, the entity currently building a new direct loading public port in the municipality of Ciénaga.
The country will increase coal production, up from 100 million mt annually. Colombia has large coal reserves of energy and minerals, which involve at least 150 years of production. According to estimates by the Ministry of Mines and Energy, based on the 2008-2019 study, it is anticipated that from 2014, there will be extraction of 124 million mt of coal and 152 million mt by 2020.
Dave Gambrel was the director of transportation for Peabody Coal when the Interstate Commerce Commission gave its first approval to build the Tongue River Railroad. He currently writes for mining magazines and does consulting work in coal transportation. Contact: bunkgambrel@earthlink.net.
