Europe's Largest Coking Mine Seeks Partners

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - The owner of Europe's largest deposit of hard quality coking coal is looking for partners to develop the Polish mine.

New World Resources Plc (NWR) (Amsterdam, The Netherlands) has said it is in "very early talks" with potential financial partners for the development of the Debiensko mine in southern Poland. The mine, with a Joint Ore Reserves Committee (JORC) estimate of 190 million metric tons of coking coal reserves, is located 40 kilometers (km) from the Czech border.

"We are looking at potential partners," NWR Chairman, Gareth Penny, told media. "This is Europe's biggest deposit of hard quality coking coal."

The project has run into trouble ever since the discovery of underground water at the mine in 2011. As a result, NWR cut its planned investment in the project last year from €50 million ($65.1 million) to €5 million ($6.5 million). This has since been increased to €10 million ($13 million) for this year following a comprehensive site evaluation and technical review.

"We concluded the technical review of our premium quality coking coal deposit in Debiensko, southern Poland, and I am pleased to report that we remain committed to the project," Penny explained recently. "The previously outlined risks associated with the water management and potential excessive liabilities are now resolved. However, in light of the current market conditions, we will limit our progress on site in 2013 to the purchase of surface properties and project value engineering. We are budgeting a total capital expenditure of 10 million this year for Debiensko."

NWR holds a 50-year licence, granted in 2008, to mine for coking coal but has also applied to amend its licence to allow it to mine shallower coal seams.

NWR posted weak financial results for the full 2012 financial year last month, recording a 20% fall in revenues to €1.3 billion ($1.7 billion) and earnings before interest expense, income taxes, depreciation and amortization (EBITDA) of €223 million ($290 million), down 51% on the 20111 financial year.

Penny said: "2012 has been a tough year for NWR. The ongoing macroeconomic uncertainties in Europe as well as the slowdown in Asia have affected business sentiment, and this has had a knock-on impact on steel markets, and associated raw materials including coking coal. In the coking coal business, continued pricing pressure during the year led to a 30% decline in the price of coking coal year-on-year."

Looking ahead to 2017, the company is aiming to double the amount of coking coal its sells into Europe to 10 million tonnes per annum (MTPA), up from 5Mtpa today. To that end, NWR is exploring the possibility of buying coking mines outside of Europe, most likely in the U.S., in order to start importing coking coal into Europe.

"To achieve our 2017 target of reaching 10Mtpa of coking coal sales, we have taken a closer look at global coking coal trade flows into Europe, and we see an opportunity for NWR to capitalise on the growing supply gap in European coking coal markets," Penny noted. "Coking coal production in Europe has been on a downward trajectory for decades. To compensate for this decline and for the coking coal qualities that cannot be regionally sourced, there has been an increase of imports into Europe. The estimated supply gap of coking coal in Central Europe is around 4Mtpa, reaching more than 50Mtpa for the whole of Europe -- trends that continue to grow despite the economic downturn. "

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.