CERREJON COAL COMPANY SETTLES LABOR DISPUTE

UNCLAS BOGOTA 000689 SIPDIS SIPDIS E.O. 12958: N/A TAGS: ENRG EMIN EINV ELAB CO SUBJECT: CERREJON COAL COMPANY SETTLES LABOR DISPUTE WITHOUT THE DRUMMOND DRAMA REF: 06 BOGOTA 5395 ¶1. (U) On January 29, Cerrejon Mines (owned by a consortium of UK and Canadian companies) settled biannual labor talks, averting a strike which would have affected delivery of nearly 500,000 tons per month of coal to the U.S. The workers' union at Cerrejon, SINTRAMINENEGETICA, was the same union that struck at the Drummond mine for six weeks in 2006 (reftel). According to a senior Cerrejon executive, the labor negotiations were "amiable" in spite of the union's vote in early January to authorize a strike. The executive added that Cerrejon viewed the strike vote as "posturing", and that the company was never concerned over a potential work stoppage. Labor union sources also reported that the negotiations were positive and without the animosity that they experienced with Drummond. ¶2. (U) Cerrejon negotiators were able to quickly resolve labor/management issues, allowing more space for negotiators to close on wage differences. Cerrejon workers will receive a 7.7 percent wage increase during the first year of the two year contract, and a 6.0 percent raise during the final year. In comparison, Drummond workers received an 8 percent raise the first year and 1.5 percent above inflation (inflation was 4.48 percent in 2006) the second year. Cerrejon is the second largest Colombian coal exporter, delivering approximately 5.5 million tons of steam coal a year to the southeastern U.S.. Drummond is the leading exporter of steam coal to the U.S. at 14.1 million tons. ¶4. (SBU) Comment- Unlike Drummond, Cerrejon was able to avoid a strike with SINTRAIENERGETICA by adequately dealing with labor management issues such as termination without cause and increased social benefit packages. It should be remembered, however the Drummond strike occurred in the midst of Colombia's national election campaign which seemed to influence both labor and management's hard line. Drummond's hard line in negotiations with the union, in spite of a six week strike, likely set a baseline for wage concessions that was more easily met by Cerrejon. End Comment. WOOD