Czech coal miner New World Resources (NWR) is targeting production of 7.5-8 million tonnes in 2015. Sales are forecast at 8mt, 60% of which will be coking coal, Kallanish learns from the company. Capital expenditure this year is projected at €30-40m ($34-45m), while cash mining unit costs are seen at €65/t.

In 2014 NWR sold -14% less coal versus 2013 at 8.3mt, of which 57% was coking coal. Capex was down -45% to €60m, while coal inventory surged 76% to 668,000t. Last year’s restructuring of NWR’s balance sheet put the firm on a “much firmer and more sustainable financial footing to better withstand prevailing market coal prices that remain depressed, a period of market weakness that is unprecedented in terms of both its length and severity”, NWR executive chairman Gareth Penny says.

Coking coal average realised prices in 2014 were down -13% to €85/t. Last month NWR agreed and fixed with customers prices for 74% of its coking coal output in 2015 at €93/t (see Kallanish 9 January). Prices for the remainder of expected production will be negotiated later in the year.

“The low pricing environment was clearly reflected in our [2014] revenues... A further challenge has been that as we mine deeper the geological conditions become more challenging in terms of seismic risks, and this will naturally impact our future coal production,” Penny continues.

To mitigate this the firm reduced cash mining unit costs to €67/t in 2014 and cut back on capex. The focus on driving down costs will continue, “…which will be more critical as production volumes start to decline steadily”.

“We are now much better positioned to withstand the current pricing conditions than we were a year ago, and are well placed to benefit from any price recovery,” Penny observes; however, there is “no imminently visible upturn in global coal prices,” he adds.

Revenue in the fourth quarter was down -20% year-on-year to €172.3m, but net profit was at €105.9m versus a loss of -€480m due mainly to impairment loss incurred in Q4 2013 from the discontinuation of a loss-making operation. Full-year 2014 revenue also fell -20% to €676m, while net loss eased to -€23.1m versus -€1.04 billion.

NWR has in that past imported small tonnages of coking coal, blending them with its own production. However, from 2015 the firm intends to increase its trading and blending capability and import far larger volumes of coking coal.