Mining to Czech Republic

Trends and opportunities

The Market

Economic growth in the Czech Republic continues to remain strong with the forecasts for 2015 of 2.7 per cent growth expected to be above average European Union (EU) growth rates (Source: OECD, Country profile of Czech Republic, Dec 2014).

The value of the Czech Republic's mining sector is approximately A$2.3 billion (Source: Business Monitor International Czech Republic Mining Report 2014, pg 7), employs 26 479 people with 13 360 working in underground mining (Source: The State Mining Authority of Czech Republic, Mining Yearly 2013 (PDF) – Tables: 5.2/4 pg 159). The major commodities mined are hard coal, lignite and uranium and the sector is supported by a relatively small but traditional mining equipment, technology and services (METS) sector. The country has expertise in resources education, research and development with a special focus on deep underground mining and related issues.

The Czech Republic is the fourth largest coal producer in the EU and will remain one of Europe's largest coal producers as the country continues to rely on domestic coal output for heat and electricity generation. (Source: Euracoal, Coal in Europe (PDF), 2013) Large-scale coal reserves are domestically important as coal-fired power generation accounts for around 60 per cent of the country's total electricity output. It is forecast that Czech coal output will reach 53.4 million tons in 2018. (Source: Business Monitor International Czech Republic Mining Report 2014, Table: Czech Republic – Mining Industry Forecasts, pg 20).

Coal Overview

Energy production (coal and uranium) is considered important to the country as the electricity output is dominated by coal-fired (59 per cent) and nuclear power plants (33 per cent) (Source: Eurostat, ‘Energy, transport and environment indicators’ (PDF) 2013, Table 2.5.2 pg 66).

Black coal is mined in Upper Silesian Basin which adjoins the Lower Silesian coal basin in Poland and brown coal and lignite deposits are more dispersed with large deposits in Western Bohemia near the border with Germany. The total coal reserves in the Czech Republic were estimated in 2013 at 25 billion tonnes.

(Source: Mineral Commodity Summaries of the Czech Republic 2013, pg 150 and 154, Oct 2013)

Characteristics of hard coal and lignite mined are:

(Source: EURACOAL, ‘Country profiles Czech Republic’, Dec 2014)

Hard coal

Black coal (coking coal) is primarily mined by OKD in the north-eastern part of the Czech Republic near the border with Poland. Its annual output in 2013 of approximately 11 million tonnes is primarily used in the steel industry and for Czech consumption and is extracted using continuous mining technology with only 10 per cent being mined using plough technologies.

In 2012 the company increased the depth of its mine to 1270 metres accessing an additional 20 million tonnes of coking coal and introduced new technologies including an electronic personnel monitoring system. (Source: New World Resources, Open Mine No.2/2012 (PDF) pg 10, 14 and 15).

Recently, OKD has experienced significant losses in its operations caused by high investments in technology, a rise in costs, following higher maintenance and underground development costs. It has obtained approval from the government and investors to restructure its operations and the closure of the least profitable Paskov mine has been postponed. (Source: Mining Technology, NWR to delay Paskov coal mine closure in Czech Republic, 9 Apr 2014)

To assist the mining region through this restructuring period the Czech Government has been evaluating measures to maintain employment, which include investments in environmental protection and reducing the ecological damage of mining activities. This could represent new opportunities for Australian companies that can provide technologies to solve ecological damage caused by historical mining operations, mine closures and water treatment.

Location of hard coal reserves in Czech Republic

(Source: Technical University of Ostrava, 2014)

Brown coal and Lignite

Brown coal and lignite is mined by three companies in the Czech Republic - Severoceske doly, Czech Coal and Sokolovska uhelna and is primarily used in power plants with only 3.5 per cent of production exported to Slovakia, Germany and Austria.

The Czech mining companies are undertaking exploration for new deposits, particularly along the Czech-Polish border where an agreement has been made between the countries, in anticipation of the lifting of the current mining restrictions in this area. The companies are also evaluating the possibility of re-opening closed mines through application of modern efficient mining methods.

The existing mines have in recent years been modernising operations through investing in conveyor belts systems and slurry management. Two new automatic filtration slurry presses for dewatering conveyor belt systems were installed with capacity of 25 and 30 tonnes in 24 hours.

Location of Brown Coal and Lignite reserves in Czech Republic

(Source: Technical University of Ostrava, 2014)

Opportunities

The resource sector in the Czech Republic is facing significant challenges which will need to be addressed in the next five years. Through partnering with local companies Australian companies can offer products, services and solutions to assist the Czech industry address these challenges.

Opportunities for Australian resource and METS companies are predominantly in the coal mining sector. Specific areas are:

Mine optimisation and profitability.

• Mine safety and rescue – in 2013 there were 605 injuries and four fatalities in the Czech Republic mining sector
• Environmental, social and economic impact assessment studies and strategies.
• CO and CO² detection and monitoring (both for central and personal applications)
• Recommissioning of closed mines through application of new technologies that would allow previously uneconomic operations to be reopened.
• Personnel training using modern methods of training, including efficient and safe mining practices.
• Tailing processing and remediation
• Coal quality improvement, alternative use of coal, clean coal technologies.

For further information download 'Czech Republic - Coal sector challenges and opportunities' (PDF).

Competitive environment

The coal sector is facing some significant challenges in the near term due to relatively high costs of production, particularly in the hard coal sector. Currently the cost of production is high and unsustainable at current world prices, though there is a significant restructuring program underway to better align production costs to global prices.

Coal mining development has been restricted by the Czech Government, which has established environmental mining limits that currently prevent access to over one billion tonnes of coal, extension of existing mineable areas and the establishment of new mines. They are under review as part of its new Resources and Energy Policy.

Tariffs, regulations and customs

For companies interested in mining opportunities in the Czech Republic it is important to be aware of the three constituent acts (mining law) that form the foundation of the country’s mining and mineral-related legislation:

• The Mining Act (on protection and use of mineral resources)
• The Czech National Council Act on Mining Activity, the Explosives and State Mining Administration
• The Czech National Council Act on Geological Works.

Czech companies have strong connections with adjacent markets in the EU and the broader region and can offer an opportunity for Australian organisations to access these larger markets in the region.

Links and industry contacts

Major Resource companies

OKD (New World Resources)
Czech Coal Group
Severoceske doly, a.s.
Sokolovska uhelna, a.s.

Major R&D institutes and universities focused on mining activities

VSB – Technical University of Ostrava
Czech Technical University, Prague
The University of Pardubice

Specialised university geology education and research

Charles University in Prague – Department of Geology at the Faculty of Science Palacky
University in Olomouc – Department of Geology at the Faculty of Science
Masaryk University in Brno – Institute of Geological Sciences

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