New World Resources magazine No. 1 2012 interview 6–9 Kowalczyk: people want to be successful technology 12 –13 A gallery of a rare length and profile will connect Darkov and Karviná Mines responsibility 23 OKD Foundation non-profit project awards Editorial Dear reader, It is something I feel sure you are familiar with from your own experience: friends who have spent years abroad return home and, as we show them around, they cannot hide their surprise at the transformation that their home town and their country have undergone during their absence. This is natural, as only those who have kept the necessary distance are able to discern changes down to the fine detail. I myself had a similar experience when I returned to OKD after a five-year interval. This is where I started my professional career, before serving a full 15 years at various levels of the group. The OKD I have come back to is completely different from the one I left. The new extraction technologies, introduced as part of the Productivity Optimisation Programme (POP), make our miners’ work easier and allow the mining of coal in less accessible places. The new coking battery at our sister company OKK was designed on the basis of the latest scientific research and according to the most stringent demands for environmentally friendly operations. The new mining control system ensures that our clients enjoy security of supply and enables a higher measure of flexibility in the production of coke. Work safety standards at the mining and coking operations have experienced an appreciable improvement. And on top of all this, the company is managed in a modern fashion, providing for openness, transparency and social responsibility. For half a year I have been in charge of coal and coke sales. My objective is to achieve absolute customer satisfaction in the products we provide and the service we deliver – I believe we will succeed. Zdeněk Durčák, Chief Commercial Officer at OKD Open Mine No. 1 I 2012 Published by: New World Resources Plc c / o Hackwood Secretaries Limited | One Silk Street | London EC2Y 8HQ | United Kingdom Headquarters: Jachthavenweg 109h | 1081 KM | Amsterdam | Netherlands Tel.: +31 20 570 2200 | Fax: +31 20 570 2222 E-mail: [email protected] Web: newworldresources.eu Editor-in-Chief: Tomáš Píša | Editor: Marek Síbrt | Cooperation: Roman Grametbauer Production and distribution: BISON & ROSE Design and typeset: BISON & ROSE Registration: MK ČR E 18829 Submission deadline: 9 March 2012 With a QR code reader on All rights reserved. The reproduction and use of all images contained within this publication your mobile phone, you do without the written approval of NWR is forbidden. The logos of companies, products and services not have to retype a web introduced in this publication are the business trademarks of the respective firms. Questions, address. Just scan the code remarks and article ideas can be sent to: [email protected]. An electronic version of the magazine on the left into your phone. including active links is accessible on the Company website. 6–9 How do things work at the ČSM Mine? Its director knows best 10 –11 12 –13 Which coal is A three-kilometre best for coking tunnel is being and which coal dug from both is used in the ends to connect energy sector? two mines 18 –19 14 –17 China is the world's There is not solely biggest producer one type of coke – of coal, yet it still different types needs to import are produced for additional volumes different purposes Content 4–5 economy 14–17 technology NWR in 2011: great performance in We refine black gold: we produce coke a challenging environment 18–19 economy 6–9 interview The Chinese coal industry Kowalczyk: people want to be successful 20 economy Does Europe need its own mineral 10–11 technology resources policy? Coal is coking coal if… …Or a story about OKD’s laboratories 21 responsibility Water: indispensable for life, 11 technology and for hard coal mining NWR Karbonia: a modern and safe company 22 responsibility Who is a stakeholder? 12–13 technology A gallery of a rare length and 23 responsibility profile will connect Darkov OKD Foundation non-profit and Karviná Mines project awards economy interview technology NWR in 2011: great performance in a challenging environment In February NWR published its preliminary results for the financial year 2011, which were broadly in line with market expectations. With revenues of EUR 1.6 billion and EBITDA of EUR 454 million, NWR delivered one of its best financial performances ever in a period characterised by severe challenges in the global economy. We achieved solid operational Earnings per share of performance with both coal production and coal sales EUR 0.47 for the targets being exceeded, year, and a dividend of mainly due to higher volumes of thermal coal. And due EUR 0.23 per share to further improvements in for the year. safety, NWR has accomplished its lowest ever injury frequency rate. In 2011 NWR reincorporated in the United Kingdom and is now Capitalising on previous included in FTSE 250 and FTSE 350 Mining indices, which provides even investments greater exposure to an international investor community Throughout 2011 we Growth of the first of the two planned continued to benefit from slopes. The project is advancing our considerable investments The most significant milestone and we will invest up to EUR in our underground mining for NWR during 2011 was 50 million in 2012 as we work equipment, thus enabling us to the decision to commit to towards bringing the mine into partially mitigate the negative our organic growth strategy production in 2017. Looking effects of cash cost inflation, by starting work on opening further to new opportunities, as well as the geological the Debiensko Mine. This is we announced our intention to challenges of mining ever a 190 million tonnes hard coal explore the hard coal resource deeper underground. Mining deposit (mostly coking coal) at the Frenstat Mine in the at around 1,000 metres below in southern Poland over which Czech Republic. the surface poses significant we have a 50-year mining challenges in terms of both license. Our decision was Reincorporation safety and production. Hence based on a detailed feasibility being able to exceed our study of the proposed mine A key milestone for overall production targets for together with our assessment the Company was the the year and further reducing of the long-term market. reincorporation of NWR in our Lost Time Injury Frequency During 2011 we assembled the United Kingdom and our Rate underlines the benefits of an experienced international subsequent inclusion in the those investments as well as project team and, in FTSE 250 and FTSE 350 Mining the commitment and discipline December, we broke ground indices. We continue to believe of our dedicated workforce. and commenced excavation in the long-term rationale of Open Mine 1 I 2012 4 safety reclamations responsibility demand from Poland and renewed investments in coal- fired power plants in countries 2011 Highlights such as Germany, thermal coal seems positioned to play Revenues of EUR 1.6 billion an ever-increasing role in the regional energy mix. EBITDA of EUR 454 million Net profit of EUR 130 million Dividend Less than 8 lost-time injuries per million hours Given our strong performance in 2011 and in line with NWR's worked stated dividend policy of Coal production of 11.2Mt, and external sales distributing 50 per cent of annual net income over the of 10.6Mt course of the business cycle, Broke ground at Debiensko Mine in the board has proposed a final dividend of EUR 0.07 per share. southern Poland If approved by the Annual General Meeting in April, this Intention to explore the hard coal resource will bring our total dividend at Frenstat Mine in the Czech Republic for 2011 to EUR 0.23 per share. Reincorporation in the United Kingdom and Summary inclusion in FTSE index series The market reacted positively to our results. On the day of the announcement our stock 2012 Outlook this decision; one that allows outperformed the FTSE 350 NWR to increase its visibility Mining index on the London Q1 2012 coking coal and coke prices agreed amongst the international Stock Exchange. Our cash cost at EUR 142/t and EUR 311/t, respectively investment community. containment, in particular, was well received, with one Thermal coal average prices for 2012 agreed Long-term fundamentals of the analysts covering NWR at EUR 74/t , up 11% compared to 2011 of our business noting: “NWR’s guidance of flat mining cash costs in Coal production and sales targets of 10.8–11Mt We strongly believe that the 2012 looks a tough task… and 10.25–10.5Mt, respectively fundamentals for coking coal having said that, the fact that remain attractive, globally costs came in in-line with Expected external coal sales split of 48% coking and in our region. Despite expectations in 2011 lends the difficult macroeconomic credibility to this target.” The coal and 52% thermal coal environment in 2011, car market also likes the fact that Coke production and coke sales targets of 700kt production in the region, one our coking coal pricing is fully of the key drivers of local steel aligned with the global pricing and 600kt respectively production, grew rapidly: up cycle, and that our stock 12% in the Czech Republic offers unique exposure to the Mining unit costs expected to stay broadly flat, and 13% in Slovakia. This appealing CEE growth story. in CZK terms reinforces our belief in the long-term prospects of the Radek Nemecek Expected CAPEX of EUR 250 million of which steel sector in CEE.