OKD, a wholly-owned subsidiary of New World Resources, has signed a deal with certain members of the Czech government to continue operations at its Paskov hard coking coal mine in the Ostrava region.
Government proposal
The agreement is part of a proposal to be submitted to the government as regards financial support of the closure of the Paskov mine. The main elements of the proposal are:
- OKD extends the operation of the mine until 31 December 2017 for its own account.
- The state provides an amount of CZK 600 million covering the social costs of the closure.
- If coking coal prices drop below US$ 110/t for three consecutive quarters (according to the International hard coking coal benchmark) between 1 July 2014 and 31 December 2017, the agreement is invalid and both parties will renegotiate the agreement in good faith.
- OKD retains the flexibility to continue mining at Paskov after 2017 should it decide so; the agreement also becomes invalid if the net result of the Paskov mine is positive (in sum) for at least four consecutive quarters.
The proposal is expected to be discussed by the Czech government by the end of April. After approval by the Czech government the agreed support needs to be approved by the European Commission.
Edited from various sources by Katie Woodward