Cerrejón, a coal mining complex located in the arid northern tip of Colombia, is the largest open-pit coal operation in South America and one of the largest in the World. In operation since 1983, it is owned by a consortium formed by the mining giants Anglo American, BHP Billiton and Glencore. Each year, Cerrejón extracts more than 33 M tons of thermal coal, which is transported by rail to a port ~100 miles away and shipped to the international markets .
Almost 60% of the production is destined to coal-powered electricity plants in Europe. Current developments aimed to stop global climate change such as the COP21 Paris Agreement and the expansion of cleaner and cheaper energy sources have reduced the attractiveness of coal energy generation. Therefore, coal consumption has fallen in the last years . However, the operation itself has significant challenges with the potential of being more harmful to the company than the falling price of coal.
Coal is a dirty business, but it’s still business
Coal burning is one of the main contributors to the rising levels of CO2 in the atmosphere. Most of the coal produced worldwide is used by industrial companies and to produce electricity. In the last years, after years of historical high prices, coal price fell 65% between January 2011 and January 2016, putting pressure on most coal mining companies .
Several factors have influenced this situation. Market analysts have attributed part of the price reduction to decreasing expectations about the role coal in the energy market. Public pressure and the application of stricter greenhouse emission schemes, as required by the Paris Agreement and other initiatives, will push electricity generation towards cleaner fossil fuel alternatives, such as natural gas, and renewable energies .
Nevertheless, coal powered plants will be part of the electric grid for years to come. According to the IEA, it’s impossible to fulfill future energy demand without using all current energy sources . For companies as Cerrejón this means a long-term guaranteed demand, although lower prices will require developing cost efficiencies to offset diminishing revenues. In particular, the amount of reserves and long-term potential of Cerrejón’s operation is such that Glencore has publicly admitted its desire to buy AngloAmerican’s participation in the consortium .
New problems, enough solutions?
Getting coal out of the ground in the amounts Cerrejón requires a gigantic operation; more than 12’000 employees and over 240 trucks and shovels work non-stop . The sheer size of the operation puts significant pressure on the resources at La Guajira, the region where the mine is located. La Guajira is one of the driest and least developed areas in Colombia. The area is also inhabited by the Wayuu, a native indigenous group .
Since 2012, La Guajira has suffered a severe drought, likely caused by climate change. The drought has been a challenge for Cerrejón and the Wayuu communities. The company has recognized the region is particularly vulnerable to climate change . Therefore, it has addressed this issue with a comprehensive environmental plan involving both the operation and the communities. In the operation, the company has developed a reforestation program to recover the mined areas to their original state. It has also committed CO2 emissions reductions of ~20’000 tons per year by optimizing waste management and machinery operation. The company has also reduced drinkable water consumption by 50% since 2009. However, non-drinkable water consumption has increased threefold over the same period. Most of the water is used to control dust emissions, which were also controlled by rain in the time without drought .
To help the Wayuu, Cerrejón has created the Foundation for Water in La Guajira. The Foundation has built wells and rain water collection systems in the communities closer to the mine. In moments of extreme drought, the company has also used the railway to bring water from the coast .
However, critics argue the company is not doing enough to reduce water consumption and it’s limiting the water supply for the communities. Moreover, future mine expansions require digging over water creeks that are almost the only water source for the Wayuu and wildlife in the area . The communities, concerned about the impact of the expansions on their water supply, have requested the regional authorities to block any expansion attempt and the conflict has leaked to the mainstream media . If the public sentiment turns against the company, the continuity of the operation could be at risk.
To overcome these challenges, Cerrejón must deepen its commitment to an environmentally friendly operation. Reducing water consumption in every process should be a permanent goal. In the long-term, it should adopt advanced technologies such as water desalination to minimize the mine’s impact on environment that will be drier. These technologies are being tested in the region and could help solving the water shortage for the company and the communities .
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