8 April, 2016

Ad Hoc Group requests Czech Gov to save ODK coal mine

AHG the owner of the OKD coal mine is requesting financial aid from government to save it from the closure.

A total bill for 33 billion crowns, that’s the estimate put on the costs of a crash of the hard coal mining company OKD.

It should be pointed out that this is not an independent estimate, but the figure arrived at by the local office of consultants Deloitte after being hired to carry out a study by the biggest shareholders in the struggling coal company.

The estimate is made up of not just the direct loss of around 13,000 jobs in the mines of Moravia-Silesia but to the knock on impact of around 8,000 jobs that would disappear in connected firms providing services to the mines or in other ways depending on them.

The 33 billion figure should, the biggest shareholder in OKD hopes, the group of creditors known as the Ad Hoc Group (AHG), figure in government deliberations as they try to work an approach to OKD. AHG’s main argument is that government funding to pave the way for a gradual closure of the mines could cost around half the 33 billion crown total. AHG though does not say at the moment how much cash it is seeking from the government.

Relations between OKD and the Czech government over the pits have been strained to say the least. They have not been helped by surprise off the cuff comments about new closures by managers and what ministers described as totally unrealistic demands for state help. At one stage recently, ministers suggested OKD’s owners could forget about all but the most basic state help.

On the other hand, a phased closed down of the mines is what the government desires most of all as it would give the region more time to adapt to a future where coal mining is, at best, a marginal economic factor. And, Czech mine companies would point out, the neighbouring Polish government has few scruples when it comes to giving out aid that keeps the mines open or subsidizes coal sales.

Critics of the Deloitte study and OKD, say that its owners are just trying to keep the mines going for as long as possible so that they can pay off some of their debts.

One scenario not covered by the study, according to a report by business daily, Hospodářské Noviny, since it is clearly not a favoured option for AHG, is insolvency and the forced sale of the remaining OKD assets. Under such a scenario, some of the mines could be conceivably kept going with the slate wiped clean of some of the past debts.

That is, however, the way that coal trader and former mine owner Petr Paukner would like to see things go. He has made no secret that he would like to bid for some of the mines if they are sold as part of an insolvency procedure and says he could conceive that some could continue operating for around another five years.

Source: RadioCZ