Annex 1.3 LONG TERM PROGRAM 1. The principles of the implementation program of the “Mining Industry Strategy during 2004-2010” 2. The development in the number of people employed in the Romanian mining industry during 2003-2007 3. The development in the budget subsidies during 2003-2010 4. The development in the number of people employed in the hard coal sector: CNH Petrosani SC Banat Anina 5. The development in the number of people employed in the lignite sector: CNLO Targu Jiu SNC Ploiesti 6. The development in the number of people employed in the ore mining sector: REMIN Baia Mare SC Bucovina Min MINVEST Deva SC Moldomin SC Cuprumin SC Baita CNU Bucharest 7. Cost estimate for the redundancy program in the mining companies during 2004-2006 8. The cost of the social program for the reconstruction of the affected mining regions during 2003-2006. 1. The principles of the implementation program of the “Mining Industry Strategy during 2004-2010” to be discussed with representatives of IMF A. Principles regarding the budget subsidies The mining companies within the Ministry of Economy and Commerce shall prepare balanced budgets that will ensure the necessary funds for paying all due contributions regarding retention at the source, local taxes salary taxes, as well as the utilities, based on the analysis made for each mine within the company, considering: A1. For the mining companies in the lignite and mineral sectors, during 2004-2006: a decrease by 25% of subsidies and capital allocations comparing to the previous year; granting of subsidies and capital allocations through 2006, with respect to the first bullet of this paragraph; offering the potentially viable mines/quarries for privatization until the end of 2005; maintaining in operation within the mining companies only the operators of the mines/quarries that will not be privatized and will not require any budget subsidies. A2. For the mining companies in the hard coal and uranium sectors, during 2004-2010: a decrease by 14.3% of subsidies and capital allocations, comparing to the previous year; granting of subsidies and capital allocations through 2010, with respect to the first bullet of this paragraph; offering the potentially viable mines/quarries for privatization until the end of 2009; maintaining in operation after 2010 the mines that will not be privatized and will not require any budget subsidies. A3. For all mining companies within the Ministry of Economy and Commerce and for the above- mentioned period: tax exemptions for the contributions to the state budget, with the same percentage and for the same period of time as for the granting of subsidies and capital allocations. B. Criteria for the selection of mines proposed for the cessation of activities: the ratio (losses from mining operations + subsidies for production + subsidies for energy costs + social allocations) / revenues; critical situations caused by geo-mining conditions and/or depletion of deposits; for the mines/quarries that remain within the mining companies to maintain the necessary funds for payment of local taxes, retention at source and salary taxes in the conditions stipulated at A1, A2 and A3 for the respective year. 2. Evolution of the Romanian mining sector staff a=existent staff at the beginning of the year b=no. of staff reduced during the year no. Staff as of 01.01.07 Year Remaining Programmed out of which: Redeployed to mining execution of Specification 2003 2004 2005 2006 2007 privatized units Total activity closure works a 18325 17342 15492 14492 13462 Hard Coal Sector b 983 1850 1000 1030 1020 0 13462 13462 0 a 23929 21506 19906 17873 15359 Lignite Sector b 2423 1600 1033 2524 0 14818 ** 541 0 541 a 23592 18093 14081 10642 7098 Mineral Sector b 3509 4002 3439 3544 1500 *** 4698 * 2400 *** 1500*** 900 a 2000 2000 1700 1520 1400 Uranium Sector b 0 300 180 120 0 0 1400 1400 0 a 67846 58941 51179 44527 37319 TOTAL b 6915 7752 5652 7218 2520 *** 19516 17803 *** 16362*** 1441 *employees of mines for which there will not be any interested investors will quit in January 2007. ** out of which 2946* mines and small open pits ***1,500 employees will quit in January 2007 3. The state support for the mining sector between 2003 – 2010 Sector Indicator Year Actual Budgeted Forecast 2003 2004 2005 2006 2007 2008 2009 2010 Hard Coal Total 3581559 4098328 3324339 2942564 2603656 2343983 2114293 1911589 Total I 1705783 2722392 2038256 1746787 1496996 1282926 1099467 942244 subsidies 1172443 2230960 1617099 1385854 1187677 1017840 872288 747551 capital allocations 323758 271432232617 199353 170845 146415 125477 107534 investment 209582 220000 188540 161579 138473 118671 101701 87158 Total II 1875776 1375936 1286083 1195777 1106660 1061057 1014826 969345 debts cancelled 1875776 1375936 1286083 1195777 1106660 1061057 1014826 969345 Lignite Total 3690206 23120131734009 1300508 0 0 0 0 Total I 754594 727354 545515 409137 subsidies 374548 344147 258110 193583 capital allocations 253046 210207 157655 118241 investment 127000 173000 129750 97313 Total II 2935612 1584659 1188494 891371 debts cancelled 2935612 1584659 1188494 891371 Minerals Total 5203028 43363843250038 2437529 0 0 0 0 Total I 4245297 3573222 2679917 2009937 subsidies 3843567 3231203 2423402 1817552 capital allocations 192330 169019 126764 95073 investment 209400 173000 129750 97313 Total II 957731 763162 570122 427591 debts cancelled 957731 763162 570122 427591 Uranium Total 340435 291753 250032 214278 183636 157376 134871 115585 Total I 323369 252316 216235 185313 158813 136103 116640 99961 subsidies 248616 186775 160066 137177 117560 100749 86342 73995 capital allocations 21153 1754115033 12883 11041 9462 8109 6949 investment 53600 48000 41136 35254 30212 25892 22189 19016 Total II 17066 39437 33798 28964 24823 21273 18231 15624 debts cancelled 17066 39437 33798 28964 24823 21273 18231 15624 Total mining sector Total 12815228 110384788558418 6894878 2787292 2501359 2249164 2027173 Total I 7029043 7275284 5479922 4351175 1655809 1419029 1216107 1042204 subsidies 5639174 5993085 4458678 3534166 1305238 1118589 958631 821547 capital allocations 790287 668199532069 425551 181886 155876 133586 114483 investment 599582 614000 489176 391457 168685 144563 123891 106174 Total II 5786185 3763194 3078496 2543703 1131483 1082330 1033057 984969 debts cancelled 5786185 3763194 3078496 2543703 1131483 1082330 1033057 984969 4. Dynamics of the hard coal sector staff a=existent staff at the beginning of the year b=no. of staff reduced during the year no. Year Programmed Specification 2003 2004 2005 2006 2007 2008 2009 2010 a 17035 16144 14444 13444 12444 11444 10944 10444* CNH Petrosani b 891 1700 1000 1000 1000 500 500 500 a 1290 1198 1048 1048 1018 998 998 968* S.C. Banat Anina b 92 150 0 30 20 0 30 30 a 18325 17342 15492 14492 13462 12442 11942 11412 TOTAL b 983 1850 1030 1020 500 530 530 *employees of mines that will not be privatized or that will not be able to continue their activity without benefiting form subsidies or without incurring loss and arrears ting from 01.01.2011 will be laid off in January 2011. The Required State Budget Support for the HARDCOAL SECTOR Year Forecast No Indicator unit Actual 2003 Budgeted 2004 2005 2006 2007 2008 2009 2010 A B C 1 2 3 4 5 6 7 8 a FINANCIAL PERFORMANCE a1 TOTAL REVENUES lei million 7647367 8555165 7846055 7485996 7185102 7026467 6818760 6630125 a11 Sales Revenues lei million 3300760 4323505 4392010 4387691 4403373 4485374 4491055 4491055 a2 TOTAL EXPENSES lei million 9683591 8555165 7846055 7485996 7185102 7026467 6818760 6630125 a3 TOTAL LOSS lei million 2036224 0 0 0 0 0 0 0 b THE STATE SUPPORT lei million 3581559 4098328 3324339 2942564 2603656 2343983 2114293 1911589 b1 TOTAL I lei million 1705783 2722392 2038256 1746787 1496996 1282926 1099467 942244 b11 Subsidies lei million 1172443 2230960 1617099 1385854 1187677 1017840 872288 747551 b12 Capital Allocations lei million 323758 271432 232617 199353 170845 146415 125477 107534 b13 Investment lei million 209582 220000 188540 161579 138473 118671 101701 87158 b2 TOTAL II lei million 1875776 1375936 1286083 1195777 1106660 1061057 1014826 969345 b21 Debts cancelled lei million 1875776 1375936 1286083 1195777 1106660 1061057 1014826 969345 c STAFF AS OF: 01.01 no. 18325 17342 15492 14492 13462 12442 11942 11412 The Required State Budget Support for CNH Petrosani Year Forecast No. Indicator Unit Actual 2003 Budgeted 2004 2005 2006 2007 2008 2009 2010 A B C 1 2 3 4 5 6 7 8 a FINANCIAL PERFORMANCE a1 TOTAL REVENUES lei million 7086687 8013691 7339168 7004578 6706111 6556094 6356106 6178856 a11 Sales Revenues lei million 3010647 4023000 4067404 4067404 4067404 4142404 4142404 4142404 a2 TOTAL EXPENSES lei million 9036753 8013691 7339168 7004578 6706111 6556094 6356106 6178856 a3 TOTAL LOSS lei million 1950066 0000000 b THE STATE SUPPORT lei million 3368281 3913284 3165757 2806657 2487184 2244167 2028751 1838279 b1 TOTAL I lei million 1571705 2605222 1937842 1660730 1423245 1219722 1045301 895823 b11 Subsidies lei million 1080413 2152073 1549493 1327915 1138023 975286 835820 716298 b12 Capital Allocations lei million 301710 253149 216949 185925 159338 136552 117025 100291 b13 Investment lei million 189582 200000 171400 146890 125885 107883 92456 79235 b2 TOTAL II lei million 1796576 1308062 1227915 1145927 1063939 1024445 983450 942456 b21 Debts cancelled lei million 1796576 1308062 1227915 1145927 1063939 1024445 983450 942456 c STAFF AS OF: 01.01 no. 17035 16144 14444 13444 12444 11444 10944 10444 THE NATIONAL HARD COAL COMPANY (CNH) PETROSANI SCHEDULE OF MINING ACTIVITY CEASE AT NON-VIABLE MINES for 2004 – 2006 Action Year 2004 2005 2006 Mine promotion for privatization - - - Cease of investment and Vulcan mine – partially preparation works Uricani mine – partially - - Lupeni mine – partially Petrila mine – partially Cease of mining activity and Valea de Brazi mine Vulcan mine – partially promotion of the GD for the Aninoasa mine Uricani mine – partially - approval of closure decision Lupeni processing plant Lupeni mine – partially Petrila mine – partially The Required State Budget Support for S.C.