New World Resources magazine No. 1 2011 interview 4–8 Petr Otava, Chief Commercial Officer theme 9–11 Safety levels improve at NWR corporate responsibility 20 OKD Foundation to distribute CZK 60 million this year Editorial Dear readers, 2010 saw a strong economic revival in We are making significant progress with our Central Europe with a consequent increase Debiensko project in Poland. The exploratory in demand for coking coal and coke. It was works have been completed and we plan to a good year for NWR, and for most of our break ground before the end of the year. The customers and partners, and the economic mine should be fully operational within five downturn now appears to be behind us. Our years. revenues grew by 40%, EBITDA increased by one and a half times and operating cash flow Importantly, we will reincorporate NWR was 80% higher than in 2009. We were able in the UK this year, making us eligible for to pay a dividend of EUR 0.43 per share for inclusion in the FTSE indices. While this will the year as a whole, marking a return to our mean absolutely no disruption to our daily long-term dividend policy of distributing business, the positive impact on our equity 50% of our net profit. story should be significant. There has been a pick-up in the automotive You can find more information about our industry and related sectors and 2011 looks plans and developments within NWR in the promising for coal and coke sales. Both following pages. And I am delighted that from globally and in Central Europe, demand for this issue, Open Mine magazine is available in coking coal has undoubtedly been influenced three languages – English, Czech and Polish. by the dramatic events in Australia. You can read about the factors influencing the Enjoy your reading. global coal and coke business, as well as the practical aspects of negotiating coal prices, Marek Jelínek in an interview with Petr Otava, who is Chief Financial Officer responsible for our coal and coke sales. New World Resources N.V. Open Mine No. 1 I 2011 Published by: New World Resources N. V. Jachthavenweg 109h 1081 KM Amsterdam, the Netherlands Tel.: +31 20 570 2200 Fax: +31 20 570 2222 E-mail: [email protected] Web: www.newworldresources.eu Editor-in-Chief: Tomáš Píša Editor: Marek Síbrt Authors: Vladimír Bystrov [email protected], Stephen Hough [email protected], Marek Síbrt [email protected], Vladislav Sobol [email protected], Investor Relations NWR [email protected] Production and distribution: BISON & ROSE Design and typeset: BISON & ROSE Registration: MK ČR E 18829 Submission deadline: 10. 3. 2011 All rights reserved. The reproduction and use of all images contained within this publication without the written approval of NWR is forbidden. The logos of companies, products and services introduced in this publication are the business trademarks of the respective firms. Questions, remarks and article ideas can be sent to: [email protected]. An electronic version of the magazine including active links is accessible on the Company website at: http://www.newworldresources.eu/openmine 2–3 “Demand for coking coal along with prices strongly rebounded in 2010.” 4–8 9–11 “A quality “The number of service increases reportable injuries the certainty that at NWR mines we will hold on to decreased by half a customer.” during the last five years.” 13 14–17 “The decision “There is a long about how the journey between areas would look the initial intention after reclamation is to mine for coal taken by the local and the arrival of councils.” the first tonne at the surface.” Content 2–3 economy 14–17 technology 2010 Highlights Mining for coal 4–8 interview 18–19 economy Coal trading is a special Coal and coke on world markets specialisation 20 responsibility 9–11 safety OKD Foundation to distribute Safety levels improve CZK 60 million this year at NWR mines 21 responsibility 12 economy Miners donate CZK 350,000 Continuous Improvement to St. Barbora, the highest sum ever 13 reclamations Returning the landscape to nature economy interview technology 2010 Highlights On 24 February 2011, NWR announced a strong set of results for the financial year 2010 on the back of improved operational efficiencies as well as improved market conditions. Demand and prices improved throughout the year, picking up significantly at the end of last year. A major achievement of the year was to deliver our production targets while at the same time keeping costs under control. Notably, POP 2010 – the huge investment to renew NWR’s mining equipment – delivered its first full year of improved efficiencies. We also Demand for coking coal along with prices strongly rebounded in 2010 completed COP 2010, our capital investment programme Globally, coking coal is in capital investment programme focussed on improving our short supply as China and improving our cost and safety coking operations. In line other emerging economies position. with our stated strategy at continue to drive world listing in 2008, we continued demand. Our move to bring We have also made good to streamline our business the pricing of most of our progress during 2010 in with the disposal in 2010 of coking coal in line with the developing our investment our energy assets, the last of Japanese Fiscal Year has projects in Poland, particularly our non-core operations. given us greater exposure Debiensko, where a world-class to the positive changes project team and group of Going forward we remain in global prices. Currently advisors are now in place committed to stringent cost there is a notable trend and undertaking a detailed control, which should help towards quarterly pricing feasibility study. to mitigate against the cost internationally and it is likely implications of mining deeper that the majority of our We continue to see the as well as the inflationary customers will look to price logic and benefits of being pressures on our inputs, such their coking coal contracts a regional consolidator. This as steel and energy. with us on this basis going would increase our scale forward. and resources and deliver Mike Salamon, Executive many synergies. As the first Chairman of NWR, We delivered on our total privatised, restructured and commented: “After a tough coal production targets and modernised coal business 2009, demand for coal and made significant progress in the region and the first coke in our markets rebounded on improving efficiency and to access multiple capital strongly in 2010 and we maximising returns from markets, we are in a strong successfully increased our our existing assets. In 2010 position to bring these volumes in response to this we continued to reap the credentials, combining both demand. benefits of our POP 2010 operational and financial Open Mine 1 I 2011 2 safety reclamations responsibility Efficiency gains & Polish development Subject to internal approval investment programmes projects: Debiensko and final licenses, NWR expects to break ground in The Productivity Optimisation NWR continues to execute Debiensko during the course Programme (“POP 2010”), a detailed development of 2011. which was completed at schedule for its Debiensko the end of 2009, continues project in Poland. The Detailed Dividend to deliver on its objectives. Feasibility Study (“DFS”) that The new equipment shows will map out the project Consistent with NWR’s improved performance scope, execution plan, budget dividend policy, the NWR has compared to existing and schedule as well as declared a final dividend of equipment and OKD is able a significant proportion of the EUR 0.22 per share, which to maintain coal production engineering for the project will be paid to shareholders output with 17 operating commenced in September in the form of an interim longwalls as opposed to 20 in 2010, and completion of dividend on 15 April 2011. 2009 and 32 in 2008. The the first stage is expected in Together with the dividend new equipment delivered an March 2011. This comprises of EUR 0.21 per share paid average daily production per the surface infrastructure in October 2010, this takes longwall of approximately and processing plant, as the full year dividend to 2,800t, an improvement of well as the access and coal EUR 0.43 per share for the 72% in comparison to the conveying declines. The full year 2010. previous technology, with engineering contracts for some longwalls delivering daily average production as high as 6,000t. 2010 Highlights Combining the performance of the new and existing equipment, overall longwall productivity in OKD rose by approximately Coal and coke production of 11.4 Mt and expertise, to bear on any 15% in 2010 to 1,743t/LW a day opportunities identified. compared to 2009. 1Mt, respectively Total external sales of 10.7 Mt of coal and Whilst the broader European NWR’s Coking Optimisation economic outlook remains Programme 2010 (“COP 2010”), 1.1 Mt of coke uncertain, we expect an investment programme Revenues of EUR 1,590 million demand for coking coal in designed to improve the EBITDA of EUR million the CEE region to remain efficiency and productivity of 464 robust, driven by a continuing the Company’s coke operations Earnings per share of EUR 0.86 recovery in the automotive and was successfully concluded Full year dividend of EUR 0.43 per share construction sectors. Recovery on target by the end of 2010 in Central Europe’s industrial and the newly constructed Safety metric improved by 24% sectors will also underpin coke battery No.10 at OKK’s demand for thermal coal, where Svoboda plant is now running we have already seen prices rise. at full capacity. Its maximum capacity, together with that these elements of the DFS Outlook for 2011 Last but not least, our plan of the renovated battery No.