MAC: Mines and Communities

Colombia: Vale threatens heart of mineworker's union

Published by MAC on 2011-07-04
Source: Reuters, New York Times, statements

As if it wasn't hard enough for unions to operate in Colombia, now Vale wants to make it harder.

Workers at the global giant's El Hatillo coal mine - most of whom are sub-contracted -  has linked with the SINTRAMIENERGETICA union in presenting modest bargaining demands.

Rather than negotiate, however, Vale is attempting to dictate the process by which the union formulates its demands. The company's supervisors have threatened every worker with dismissal unless they renounce the union.

Vale's superintendent locked one union supporter in his office, threatening him to the point that he showed symptoms of a heart attack and had to be hospitalised in a serious condition.

Act NOW! Colombia: Tell Vale no more union busting


Workers confronted with union busting at Vale

By Rainer Santi

IMF Metal

22 June 2011

Workers at Vale Coal Colombia, an affiliate of the Brazilian mining giant, met with persecution after organizing in the Sintramienergética union. IMF has sent a formal letter of protest to Vale Colombia.

COLOMBIA: The workers of the transnational company Vale Coal Colombia, which produces coal at the El Hatillo mine in Calenturitas in the El Paso municipality in the Department of Cesar, have organized with the Sintramienergética union and immediately, on June 3 of this year, presented modest bargaining demands to this Brazilian company. The response has been outright persecution of the workers. The company says it will not negotiate because supposedly the union did not hold an assembly of all its members at the national level to approve the petition - something that the law does not require.

Several supervisors have threatened every one of the workers with dismissal if they do not renounce the union; during discussions on safety they state that they should not join the union because "unions don't end well and joining a union hurts the workers' families." On June 12, superintendent Jairo Tamayo locked Mario Prado in his office and accused him for being responsible for the firing of the workers at the Vale contractor Másering.

"We have also learned that most workers at El Hatillo are not directly employed by the company, but rather through the so-called "bolsas de trabajo," which appears to be a strategy for depriving workers of a wide range of rights," Jyrki Raina writes in his letter to the Vale Coal Colombia President Zenaldo Olivera.

Colombia violating FTA labor agreements through union reprisals: US Union

Colombia Reports

20 June 2011

Vale Coal Colombia has been violating the Labor Action Plan between the United States and Colombia, a requisite of the pending free trade agreement, through threats and reprisals against unionists in the northern department of Cesar, according to U.S. trade union United Steelworkers (USW).

In a letter to Vale Coal Colombia President Zenaldo Olivera, as well as U.S. Secretary of State Hillary Clinton and several top U.S. officials, USW's International President Leo W. Gerard lambasted recent retaliations against trade unionists at Vale's El Hatillo coal mine in Cesar department.

Colombian trade union Sintramienergetica informed USW that workers at the mine organized a union in early June but that the company "unlawfully refused to recognize and bargain with that union" and "immediately proceeded to take reprisals against the workers in retaliation for their union support."

Gerard also pointed out that "the majority of the workers at El Hatillo are not employed directly by the company but rather through so-called 'bolsas de trabajo,'" allowing them to be deprived of "a wide range of rights." This would appear to violate the Labor Action Plan signed by U.S. President Barack Obama and Colombian President Juan Manuel Santos on April 7, 2011.

The Labor Action Plan signals part of the criteria to which Colombia must comply in order to advance the long-stalled FTA with the United States. The plan is primarily focused upon ensuring the rights and protection of workers and trade unionists. One of the provisions requires the Colombian government to prevent the misuse of cooperatives in ways such as those claimed by Sintramienergetica and USW.

Vale Coal Colombia, a branch of the Australia-based coal company Vale Coal, apparently sent supervisors to hold "daily 'security meetings,' as well as individual meetings in which they have threatened workers with dismissal if they do not renounce the union. These same supervisors have told employees quite ominously that nothing good will come of the union and that the union will bring ruin to themselves and their families," Gerard wrote.

On June 12, the superintendent of the mine allegedly locked union leader Mario Prado "in his office and made a series of threats against him," as well as blaming him for the firing of several fellow employees, which Gerard claimed was the cause for Prado being rushed to hospital with symptoms of a heart attack.

U.S. and Colombian labor unions remain firmly opposed to the FTA, primarily on the grounds of continuing human rights violations and a lack of protection for Colombian trade unionists and employees.

Back in May, Interior and Justice Minister German Vargas Lleras claimed that Colombia had "complied" with the preconditional criteria of the Labor Action Plan necessary for U.S. approval of the FTA.

Although the FTA remains stalled in the U.S., Trade Representative Ron Kirk stated Monday that the White House expects to send the agreement to Congress before the August recess. On June 14 Kirk commended the Colombian progress regarding long-standing concerns about workers' rights and anti-union violence.

"We are pleased that Colombia is meeting its commitments," he said.

Despite reports of ongoing human rights violations and anti-union violence, coupled with strong opposition from Colombian and U.S. labor unions, the FTA is likely to be passed this year due to the steps that Colombia is outwardly taking to address the problems, rather than for any immediate impact.

Domestic Republican pressure is also a key factor, given their control of Congress, with Senator Orrin Hatch responding to Colombia's reported progress by stating that "the Obama Administration has lost another excuse to delay the implementation of these vital trade pacts."

Itochu to invest $1.5 bln in Drummond Colombia coal ops

By Yuko Inoue


16 June 2011

TOKYO - Japan's Corp said on Thursday it would take 20 percent of Drummond Co's Colombia coal operations for $1.5 billion, seeking to meet growing demand for high-quality thermal coal in Asia.

The nation's fourth-biggest trading house will gain the exclusive right to export the coal used to burn electricity generation, demand for which is expected to rise in Japan after the Fukushima nuclear power disaster in March.

It plans to start shipments this year.

Privately-held Drummond, the second-largest coal exporter in Colombia, had run an auction process on the assets at least twice, involving Brazilian mining giant Vale SA, Glencore and Xstrata, sources told Reuters last year.

At $1.5 billion for the 20 percent stake, the whole operation would be worth $7.5 billion, which was at the top end of expectations when it was put up for sale.

Itochu sealed the deal as Drummond wanted a minority partner and to strengthen shipments to Asia, Yoichi Kobayashi, an Itochu director, told a news conference.

The companies aim to increase production by 10 million tonnes to 35 million tonnes by 2014, and ship 70 percent of that 10 million to Asia, especially to China, India and Japan. The rest will be shipped to Europe, Latin America and other places.

"The injection of capital from Itochu provides Drummond with the funds it needs to expand its Colombia operations to the next level," said a person involved in the transaction.

Last year, Japan imported only 60,355 tonnes of thermal coal from Colombia, accounting for 0.06 percent of total imports of 101.65 million tonnes, finance ministry data shows.

Itochu's stake in Colombia adds to a 15 percent stake it bought in the Maules Creek coal project in Australia for A$345 million last December and has been in talks to buy a further 10 percent stake.

It is unlikely to chase any other thermal coal assets in the near term, the person involved in the Drummond deal said.

"Between Maules Creek and this investment, they're pretty pleased with what they've achieved in the last 12 months," he said. The source did not want to be named because he was not authorised to speak publicly about the deal.

Nomura advised Itochu on the transaction, Bank of America-Merrill Lynch advised Drummond.

(Additional reporting by Osamu Tsukimori in TOKYO and Sonali Paul in MELBOURNE; Editing by Edwina Gibbs and Michael Flaherty)

Itochu to Buy Stake in Colombia Mine Project

By Chris V. Nicholson

Dealbook (New York Times)

16 June 2011

The Itochu Corporation, the Japanese conglomerate and trading firm, said Thursday that it would pay $1.5 billion for a 20 percent stake in a Colombian coal project run by the Drummond Company, the coal mining company based in Birmingham, Ala.

Itochu, which is also involved in textiles, chemicals, food and real estate, said it would spend 126.5 billion yen for the mine interest, as well as exclusive rights to market the coal in Japan. It will also seek to sell the coal to electric power utilities and other consumers in Asia.

Drummond said last July that it had hired Bank of America Merrill Lynch to help it find new financial backing for its Colombian project, and global mining companies like Xstrata, Rio Tinto, Vale, Vedanta and Essar were reported to have expressed interest.

The transaction, announced Thursday and which Itochu expects to complete within three months of receiving the necessary approvals, gives Drummond's total Colombian operations an implied value of $7.6 billion.

The Japanese firm is in talks with the government agency Nippon Export and Investment Insurance of Japan to insure the coal. Successful negotiations will effectively mean the deal has the backing of the Japanese government, which is searching to fill a gap in energy supply since the March tsunami devastated the country's nuclear energy production.

Drummond has been mining coal in Colombia since 1995, and is sitting on reserves there estimated at 2 billion metric tons, with current production at 25 million metric tons per year. Founded in 1935, Drummond is embarking on a process to become a "major international diversified mining company."

The company has five coal concessions in the country, all of them open pit mines located in northern Colombia near the Venezuelan border. They produce thermal coal, and have an estimated life span of more than 50 years.

Thermal coal, also known as steam coal, is generally ground to a powder and used to drive turbines that generate electricity, in contrast to coking coal, which is used to turn iron into steel.

Demand for thermal coal has grown alongside demand for more power generation in emerging markets.

Itochu, which is already involved in mining and minerals, said Thursday that it hoped to raise its equity share in coal mining operations worldwide. The Japanese firm has stakes in mines producing eight million metric tons a year, and is aiming to hit 20 million metric tons a year within four years. On this deal, it hired Nomura as its financial adviser.

Drummond said in a separate statement that it would use the cash from Itochu to expand its Colombian exports. The investment will feed a five-year capital program worth $1.3 billion that will purchase more efficient mining equipment, as well as build a direct-loading port facility at the behest of the Colombian government.

"Drummond believes that this partnership will facilitate the further opening of the Asian coal markets to exports from Colombia," the company said.

Drummond and Itochu first collaborated in the 1960s, exporting American metallurgical coal to Japan. The Alabama company is the largest merchant coke producer in the United States.

Xstrata near to buying Colombian coal miner: report


9 January 2011

LONDON - London-listed miner Xstrata is close to winning the $8 billion auction for Colombia's second-biggest coal miner, British newspaper The Sunday Times said, without citing sources.

The newspaper said Xstrata was the only suitor to table a fully-financed offer for the business, which is being sold by family-owned U.S. group Drummond, by last month's deadline.

Bank of America-Merrill Lynch, which is running the auction, extended the timeframe to allow other bidders including London-listed Vedanta Resources and India's Essar Global more time to arrange financing, the paper said.

However, they have struggled to do so, putting Xstrata in pole position to secure a deal, it added.

Xstrata declined to comment.

Brazil's Vale, Glencore International  and mining investment vehicle Vallar also previously showed interest in Drummond's Colombian operations, sources familiar with the matter have said.

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