Colombia's Fenoco coal railway workers demand higher pay
* Workers in talks with company for 15 percent pay raise
* Railway is key artery for Colombia's coal exports
* Law stipulates talks should last 20 to 40 days
BOGOTA, Sept 10 (Reuters) - Workers at Colombia's main coal railway Fenoco, which transports about half of the country's coal exports, are negotiating with the company for better pay and improved benefits, their main union said on Tuesday.
The two sides have been holding talks since Aug. 29, said Felix Herrera, president of the Sintraime union, which he said represents 300 workers or about half of those directly employed by the company.
Herrera said the workers were seeking a 15 percent increase in pay while the company was offering a raise equal to the inflation rate, which he said had been the standard increase for Fenoco employees for several years.
Annual inflation through August was 2.27 percent.
"It's premature to talk about a strike," he said.
Though discussions are still at an early stage, the possibility of a strike comes in a year of repeated disruptions in the coal sector, including two strikes. The railway is crucial to keep the industry competitive in a country with a poor network of roads.
Fenoco workers went on strike last year for 23 days, slashing exports by about half. Colombia is the world's fourth-biggest coal exporter and an important supplier to Europe.
The company's main shareholders are Goldman Sachs, Glencore Xstrata Plc and U.S.-based Drummond International, with each managing its own rolling stock.
The rail line runs through the coal mining province of Cesar to the Caribbean coast, collecting the bulky mineral from mines along its route.
According to Colombian law, negotiations must run for 20 days, renewable if both sides wish for 20 more. Only after talks can a strike or arbitration be considered.
Colombia has cut its coal production goal for 2013 to 94 million tonnes from 98 million due to the constant turmoil afflicting the sector this year. In 2012 the sector produced 89.2 million tonnes.
Workers at Drummond's two mines and port have been on strike for 49 days over pay and potential job losses for some of the 400 port workers whose roles will be made redundant by a switch to direct machine loading of coal from January 2014.
The labor ministry is studying whether to force an end to the strike after a majority of the company's employees voted last week in favor of accepting Drummond's offer for improved terms and conditions. The union which called the strike has said that vote was conducted illegally.
The shutting down of Drummond's operations has cut Colombia's coal output by about a third.
In February, a strike at the country's largest miner, Cerrejon, a joint venture of Anglo American Plc, BHP Billiton Ltd and Glencore Xstrata, lasted a month before workers accepted the company's offer.