China and Colombia Exploring Panama Canal Alternative

The Colombia Canal? It could become a reality, as China and Colombia are engaged in advanced discussions about creating an alternative to the Panama Canal.

"This one is quite advanced, " Colombian President Juan Manuel Santos told the Financial Times.

"To create a whole city south of Cartagena in the Caribbean as a hub for production and assembly to export to the rest of South America and Central America and even to the United States," he said.

Such plans have traditionally gone nowhere because of the massive engineering costs and environmental hazards involved.

But the China's growing appetite for resources may make this plan different.

Colombia, which over a century ago owned Panama, is the world's fifth biggest producer of coal.

According to the Financial Times, Colombia has high-quality coal in easily-worked surface mines close to the Caribbean end of the proposed route. Coal can be carried in bulk in automated trains – a lot cheaper than loading and unloading containers (it can also be carried long distances on conveyor belts).

China and India both need vast quantities of thermal coal for power stations, and cooking coal for their steel industries. Colombia has both -- and would offer a chance to reduce dependence on traditional suppliers such as Mozambique.

For Colombia -- building in a poor area plagued by guerillas and drug-related violence would lead to security through capital investment in the area, officials say.

As of now, Chinese delegations have presented various different proposals to Colombia which include rail systems that would connect the Atlantic with the Pacific.

And Santos is clearly enamored with the possibilities that China and the region can offer his country.

Commerce between China and Colombia totaled $4.8 million in the first 8 months of 2010 -- a 73 percent jump over the same period in 2009, according to Colombian Daily, El Tiempo.

"Asia is the new engine of growth for the world economy," Santos said.