The US Energy Information Administration believes Colombia could potentially double its coal production between 2010 and 2020, after nearly doubling its output between 2000 and 2010.
Columbia and the US compete in the seaborne thermal coal market, with both in the top six exporters globally, according to World Coal Association data.
Colombian coal exports in July rose 45.5% from the year-ago period to 8.884 million mt, the second highest monthly volume in 2014 after May's record 12.456 million mt, according to the country's statistics agency.
Coal production in Central and South America is expected to increase by an average of 3% annually in the coming decades, rising from 91 million st in 2010 to 224 million st in 2040, EIA said in its International Energy Outlook for 2014, released Tuesday.
Colombia is the largest producer in the region, accounting for 82 million st, or 90%, of Central and South America's total production in 2010, EIA said.
More than 90% of Colombia's production has been exported in the past decade, primarily to Europe, the Americas, and, increasingly, Asia.
"Inspired to capture more opportunities in the Asian market in the decades to come, the [Colombian] government continues to put a high priority on the resolution of labor issues, improvement of mine safety, and expansion of road, rail, and port infrastructure," the report said.
"[Colombia's] energy and mining minister announced in June 2012 that the government expects coal production to reach 127 million [st] by 2014 and plans to invest more than $350 billion in inland transportation infrastructure to support 165 million [st] of coal production by 2020," the report said, citing a Platts story from June 2012.
PANAMA CANAL EXPANSION MAY LOWER SHIPPING COSTS
The ongoing Panama Canal expansion could result in lower international shipping costs that would lead to additional shipments of Colombian coal to Asian markets, said EIA.
Expected to be completed in early 2016 at an estimated cost of $5.25 billion, the Panama Canal expansion will double the size of the 48-mile system of locks connecting the Atlantic and Pacific oceans. It will allow passage for ships with cargo capacities of up to 13,000 20-foot container units, twice the size of the largest ships that pass through the waterway today.
So far, most of the coal produced in the region has been steam coal, although metallurgical coal production in Colombia has the potential to grow significantly if infrastructure investment and railway modernization materialize as currently planned," said EIA, citing a separate Platts report in November 2012.
In a separate EIA presentation, sourcing Fairplay Shipping prices, it said the Panama Canal expansion would shorten the travel time to Asian markets by as much as 15 days.
The distance between US East and Gulf coasts and Asia is estimated at 20 days at a speed of 20 knots.
In comparison, the same trip via the Suez Canal would take 29.5 days, Cape Horn 35.6 days, and Cape of Good Hope, 31.6 days.
