Bloomberg News

Colombia Coal Group to Meet Lawmakers to Avert Higher Tax

June 22, 2012

Coal producers in Colombia, South America’s largest supplier of the mineral, will meet with lawmakers in a bid to avert a proposed tax increase that they claim would discourage investment.

Officials from the National Federation of Coal Producers will meet with congressional leaders next week to lobby against the proposal, Federation President Jaime Olivella said today in an interview in central Colombia. The tax on coal mining is currently about 10 percent.

Governments from Australia to Chile have sought to raise mining taxes as Chinese-led demand boosts the consumption of metals and minerals. Higher levies threaten to erode profit at mining companies hit by a slump in coal prices, Olivella said.

Global coal supply will expand about 8 percent annually this year and next as demand slows, Standard Chartered Plc said in a report June 14.

Production in Colombia will rise to between 97 million and 100 million metric tons this year from almost 86 million tons last year, Olivella said. Companies developing expansion plans include Drummond Co. and Cerrejon, a mine owned by Xstrata Plc (XTA), Anglo American Plc (AAL) and BHP Billiton Plc

Investment in roads, ports and trains to transport coal are needed to help meet a government target to produce 115 million tons in 2014, Olivella said. Coal producers will have to meet stricter environmental rules after a government regulator limited some production increases because of air pollution, Olivella said.

To contact the reporter on this story: Heather Walsh at hlwalsh@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net


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