Czech coal miner New World Resources (NWR) output is to fall and level off at around 7 million t annually in coming years as it stabilises after a major debt and equity restructuring, company officials said.
The group has forecast production of thermal and coking coal to drop to 7.5-8.0 million t this year from 8.6 million in 2014 while it slims down and continues cost cutting.
"(For) the primary OKD-based mining for the next three to four years we want to be around 7 million t," OKD Managing Director Dale Ekmark told reporters visiting one of its four mines in the industrial northeast.
The company, which operates in the Czech Republic through its OKD unit, completed a capital overhaul last year to reduce debt and avoid insolvency.
Coal prices have more than halved since 2011 and demand has been tepid.
Revenue dropped by a fifth to €676 million in 2014 but NWR swung to positive earnings before interest, tax, depreciation and amortisation (EBITDA) of €11 million and wants to improve on that this year.
It reported a €10 million loss in 2013.
It sees a group workforce reduction of about 10% this year. It also reduced capital expenditure by 45% last year to €60 million and forecasts a drop to €30-40 million this year.
Chief Financial Officer Marek Jelinek said investment would remain limited. The company ended 2014 with €128 million in cash and wants to preserve that this year.
Pasov costs fall
NWR has 54 million t of proven reserves in the Czech Republic. However, its uncompetitive Paskov mine has been slated for closure after 2017, although a final decision has not been taken and the company is looking to keep it open.
Ekmark said mining costs per t dropped to €100 last year at Paskov from €160 and that the challenge now was to make it cash neutral. Under a deal with the Czech state, NWR will keep the mine open until the end of 2017 and cover costs, and then the state will help in its closure.
"We are in the planning stages of going beyond 2017 (at Paskov)," Ekmark said.
"The target is to keep (costs) the same."
NWR has already fixed sales of about three-quarters of its expected 2015 coking coal output at €93 a t, a 9% rise over 2014.
It is also looking to take advantage of what it said is a 4 million t annual shortage of coking coal, used by the steel industry, in central Europe.
The company has two Polish mines not yet in operation.
Its Debiensko mine has 186 million t of coking coal reserves, but NWR lacks cash to open it and is seeking a strategic or financial investor for funding of €30 million over three years for a feasibility study before deciding to go ahead with the expected €800 million investment.
Its Polish Morcinek mine is less certain, although Ekmark said NWR was exploring what it calls a "Morcinek Light" plan which involves going after around 10 million t of coal using sublevel mining from an existing Czech mine just across the border, rather than driving shafts in Poland.
"That would give us a start into it. We don't have a number on it but it is substantially less capital (investment)," he said.
Edited from source by Joseph GreenSource: Thomson Reuters
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