Coal in the Time of Climate Change

Should a coal mine be concerned about climate change? The answer seems obvious; climate change seems bad for business. But in the case of Cerrejón, South America’s largest open-pit coal mine, to get to the full extent of their problems you must dig deeper.

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 [1].

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 [2]. 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 [3].

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 [4].

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 [5]. 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 [6].

 

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 [7]. 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 [8].

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 [9]. 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 [10].

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 [11].

Cartoon by Colombian cartoonist Xtian, November 3rd 2016
Cartoon by Colombian cartoonist Xtian, November 3rd 2016

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 [12]. 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 [13][14]. 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 [15].

 

Word count: 796 words

 

[1] “Cerrejon’s Colombia coal output down 1.48 percent in 2015”, Reuters, http://uk.reuters.com/article/coal-cerrejon-colombia-idUKL2N14Z01E20160115, Accessed November 2016.

[2] Eva Krukowska, “Global Coal Consumption Heads for Biggest Decline in History”, Bloomberg, http://www.bloomberg.com/news/articles/2015-11-08/global-coal-consumption-headed-for-biggest-decline-in-history, Accessed November 2016.

[3] “Coal 2009 – 2016”, Trading Economics, http://www.tradingeconomics.com/commodity/coal, Accessed November 2016.

[4] “Coal in no longer King”, Economist Intelligence Unit, April 6th 2016, http://www.eiu.com/article1194107503.html?pubtypeId=49039189, Accessed November 2016.

[5] Glencore, “Glencore Sustainable Development Presentation”, June 13th 2016,  http://www.glencore.com/assets/sustainability/doc/GLEN-Sustainable-Development-Presentation-20160613.pdf, Accessed November 2016.

[6] “Glencore estaría interesado en comprarle a Anglo parte del Cerrejón”, El Tiempo, March 2nd 2016, http://www.eltiempo.com/economia/empresas/glencore-interesado-en-comprarle-a-anglo-parte-del-cerrejon/16526273,  Accessed November 2016.

[7] Cerrejón, “Indicadores”, http://www.cerrejon.com/site/operacion-integrada/indicadores.aspx, Accessed November 2016.

[8] Cerrejón, “Resumen del Proyecto de Expansión Iiwo’uyaa para Grupos de Interés”, 2011, http://www.askonline.ch/fileadmin/user_upload/documents/Thema_Wirtschaft_und_Menschenrechte/Bergbau_Rohstoff/Cerrejon_Xstrata/Resumen_del_Proyecto_de_Expansion_Iiwo_uyaa_para_grupos_de_interes.pdf, Accessed November 2016.

[9] Cerrejón, “Cambio climático”, http://www.cerrejon.com/site/desarrollo-sostenible-%E2%80%A2-responsabilidad-social-rse/medio-ambiente/cambio-climatico.aspx , Accessed November 2016.

[10] Cerrejón, “Cerrejón, aliado de La Guajira, Informe de sustentabilidad 2014”, 2015, http://www.cerrejon.com/site/Portals/0/Documents/pdf/informes_sostenibilidad/IS%202014.pdf, Accessed November 2016.

[11] Ibid.

[12] “El arroyo que se le atravesó al Cerrejón”, El Espectador, March 7th 2015, http://www.elespectador.com/noticias/medio-ambiente/el-arroyo-se-le-atraveso-al-cerrejon-articulo-548145, Accessed November 2016.

[13] “Air of discontent around Cerrejón mine deepens as Colombians cry foul”, The Guardian, October 26th 2016, https://www.theguardian.com/global-development/2016/oct/26/discontent-cerrejon-coal-mine-colombians-cry-foul, Accessed November 2016.

[14] Daniel Voskoboynik, “Climate Change Is Threatening to Exterminate the Wayúu People”, Pacific Standard, October 5th 2016, https://psmag.com/climate-change-is-threatening-to-exterminate-the-way%C3%BAu-people-e79a1c7d33c4#.vx7dtmk8j, Accessed November 2016.

[15] “Una solución de agua para La Guajira”, El Espectador, August 25th 2016, http://www.elespectador.com/noticias/economia/una-solucion-de-agua-guajira-articulo-651103, Accessed November 2016.

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4 thoughts on “Coal in the Time of Climate Change

  1. Yes, indeed coal mining industry is a contributor to the climate change problem, but at the same time, coal is likely to remain as a source of fuel over many years to come. The U.S. Energy Information Administration estimated global coal reserves at 980 billion short tons in 2011. At current consumption rates, these reserves are expected to last 113 years. [1]

    For Cerrejón, there are a few solutions that they can implement to reduce their impact, especially to the water quality. I like your idea of desalination. At the same time, they can install liners and covers on waste rock and ore piles. This will reduce the potential for contamination of groundwater, and may go a long way to appease the Wayuu community.

    In terms of reducing the amount of water used, they should recycle the water used in the processing of the ore, and can invest in R&D to treat the water that has been used to control dust emissions such that it can be used back in the ore processing phase.

    [1] “Center for Climate and Energy Solutions” [http://www.c2es.org/energy/source/coal].

  2. Thanks for the insights ARC. I have been to Cerrejón many times and the scale of it is impactful everytime.
    I wonder why desalination has not been a solution made more public. Many studies today find that Desalination financially feasible (see https://www.nap.edu/read/12184/chapter/8#172). For all the environmental richness in La Guajira, its poverty is rampage and depressing, gaining significant notoriety this year with statistics showing 65% of the population living in extreme poverty and reports of over 40 death of infants attributed to undernourishment (see: http://www.eltiempo.com/multimedia/especiales/la-rancheria-de-la-guajira-que-vive-la-pobreza-y-la-desnutricion/16187739/1).

    I am sure the national government would be incredibly happy to subsidize a new desalination plant with mixed uses for mie and the rural community of La Guajira. Why hasn’t Cerrejon begun this?

  3. This is a very interesting article! I wrote about the extent of coal industry in Poland and it seems to resemble the situation in Columbia. Aside from negative climate implications of coal production, do you foresee negative economic implications for the country if the industry were to shrunk? For example, in Poland the government fears high unemployment if coal mining were to be shut and as a result, just released a new legislation aiming at protecting the local coal industry. Do you think Columbia might take a similar (short sighted) path to preserve the industry?

  4. Thanks for sharing this article arc. I too come from a country (South Africa) where we are grappling with the tension between managing the inherent negative environmental impact of mining operations while also recognising that mines play a significant role with respect to employment. Any interventions in this space therefore necessarily need to consider the potential knock-on effects on the people living in towns that are economically reliant on the mining operations. With that said, the threat to the water supply posed by Cerrejón’s operations is definitely concerning and in such a situation, I believe regulation definitely has an important role to play in setting terms of engagement that support environmental sustainability. Rather than view this as a constraint, I wonder if there may be a potential opportunity for Cerrejón to embrace this diversification more aggressively through a public-private partnership focused on continuing to deliver water to the area.

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