Brazil firm announces 1.74 bn tons of coal potential in Colombia

Rio de Janeiro, Mar 16 (EFE).- Brazilian miner MPX Energia SA, controlled by billionaire Eike Batista, announced Tuesday that it will start production in 2012 at four Colombian areas estimated to hold 1.74 billion tons of coal.

MPX said in a press release that exploratory drilling through February 2010 indicated potential resources of up to 1.74 billion tons of coal at concession areas held by MPX Colombia, its wholly owned subsidiary in the Andean nation.

"The positive results achieved so far and the acquisition of a strategic site for the construction of a private port set the basis for the development of an integrated coal mining system with an output capacity of 20 million tons per year," the company said.

MPX's concessions in Colombia cover a 66,225-hectare (163,520-acre) area along 25 kilometers (15.5 miles) of the coal-bearing Cerrejon Formation in the northern province of La Guajira.

MPX said it will begin production in 2012 and that output could reach 15 million tons annually in 2021.

The Brazilian firm's coal mining system in Colombia encompasses three open-cast mines - Cañaverales, Papayal and San Benito - and underground mining in San Juan.

The plan calls for MPX's Colombia's port to begin operating in 2013 at a location on the Caribbean coast some 150 kilometers (93 miles) from the mines. Until then, the company will use an existing port either in Santa Marta or Cienaga.

The Colombian coal will supply MPX's thermo-electric power plants in Brazil and Chile.

The company initially will transport up to 7 million tons of coal per year from the mines to MPX's port by truck, but starting in 2006 a private railroad will come online and allow maximum output capacity to reach 20 million tons of coal annually.

The timeline outlined in the business plan "already accounts for the expected time needed for environmental licensing, granting of concessions, rights of way and expropriations, if necessary," MPX said.

MPX is controlled by Brazilian Eike Batista, Latin America's second richest man with a total net worth of $27 billion, according to Forbes magazine.

Batista's EBX conglomerate also has interests in oil and gas, infrastructure and logistics and real estate.