Low coal prices set to hit Colombia's wallet

Colombia, the world’s fourth-largest exporter of coal, faces a potential spending crunch in 2020 as royalties from the fuel decline amid a supply glut and slowing economic growth in China.

The fuel provides some 80% of the Andean country’s mining royalties, totaling hundreds of millions of dollars in income each year, and is the second-largest generator of foreign exchange behind oil.

Government data shows coal exports fell by 18% in the first half of the year, to a value of $3.6 billion. Prices for thermal coal have fallen about 37% since the start of the year and that will affect royalties, which are calculated six months in advance and therefore lag behind price changes.

A decline in royalties could hurt planned investment by President Ivan Duque’s government, which is already grappling with congressional resistance to economic proposals, expensive post-conflict social programs and low approval ratings.

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