UPDATE: Drummond Mulls Selling Stake In Colombia Coal Business

29th Jul 2010 20:19

(Adds executive comments and background.) By Darcy Crowe Of DOW JONES NEWSWIRES BOGOTA (Dow Jones)--Drummond Co., one of the largest coal miners in Colombia, is mulling the sale of a stake in its operations and doesn't rule out giving up majority control of its mines in Colombia. The privately held company, based in Alabama, is currently "exploring all possibilities," Mike Tracy, Drummond's mining president, said Thursday. Drummond is looking for a partner as it engages in an ambitious expansion project for El Descanso mine, where it wants to raise production from an annual three million tons of coal to 25 million tons of coal over the next three years. Last week, Drummond announced it had hired Bank of America Merrill Lynch to find a partner for its coal business in Colombia. Tracy declined to say how much money the partner would bring to the company. "We're looking for a partner right now," Tracy said. "We haven't made any commitments," he told reporters during a mining conference in Bogota. Tracy, who oversees all of Drummond's mining operations, didn't rule out selling a majority stake in the operations in Colombia. While the company's financing needs focus on El Descanso, he said that "more than likely we will take a partner for the entirety of the operation because the operations are so integrated." Regarding the sale of a majority stake in Colombia, he said it's "totally open at this point." Tracy refused to give a timeline for when a decision could be reached on a potential sale and added that authorization from Colombia's government may be needed "depending on the terms and conditions of the sale." Drummond is one of the top coal producers in Colombia, which ranks as the largest coal exporter in Latin America and one of most important in the world. The company's Colombian affiliate had sales last year of 3.25 trillion pesos ($1.76 billion). Drummond expects to mine and export about 23 million tons of coal this year. -By Darcy Crowe, Dow Jones Newswires; 57-314-298-32-77; [email protected] (Inti Landauro contributed to this report.) (END) Dow Jones Newswires July 29, 2010 15:19 ET (19:19 GMT)