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Serbian Mine Sees Chinese, Vattenfall Agreements for Upgrades

Thermal Power Plants and Mines Kostolac, a unit of Serbian power monopoly Elektroprivreda Srbije JP, expects the Export-Import Bank of China to approve a $344 million loan soon to finance upgrades next year.

The company, which operates a coal mine and electricity generating units about 50 kilometers (31 miles) southeast of Belgrade, also wants to win a two-year accord with Germany’s Vattenfall Europe AG to provide consultancy services and help Kostolac improve open-pit operations, Kostolac General Manager Dragan Jovanovic said in an Oct. 31 interview in Belgrade.

“We expect the Chinese EXIM Bank to approve the lending in a few days,” Jovanovic said. The agreement needs Finance Ministry and parliamentary consent. The sovereign-backed loan will be repaid by Elektroprivreda Srbije.

Presidents Hu Jintao and Boris Tadic signed a 15-year agreement in 2009 for China to invest $1.25 billion in Serbia’s infrastructure and energy. Beijing-based CRBC International Co. is building a 170 million-euro ($231 million) bridge in the capital Belgrade.

Kostolac plans to revitalize two 350-megawatt power blocs and build a desulphurization unit, rail tracks and a new port on the Danube river, the first phase of a billion-dollar project that would also lead to the construction of a new power bloc and expansion of its coal-mining capacity.

The new power bloc will produce 2.5 billion kilowatt-hours of electricity a year based on 7,000 operating hours, compared with the total national output of 35 billion kilowatt-hours.

Extending Lifespan

The first phase will take 30 months to complete. The second phase, to start in 2014, will be worth around $700 million, he said, and involve a new 350-megawatt bloc with a lifespan through 2060 and the expansion of the Drmno coal deposit field.

Two existing blocs at Kostolac, A1 and A2, with respective installed capacity of 100 megawatts and 200 megawatts, will be decommissioned in 2017 and 2024 and replaced with the new one, Jovanovic said. The new bloc should start generating power between 2014 and 2020.

Kostolac currently relies on the Drmno coal field, which has around 350 million tons of remaining coal reserves. It also is considering acquiring the nearby Dubravica field, which contains around 400 million tons of exploitable coal out of an estimated deposit of 1 billion tons.

Expanding coal mines and coal-fired plants is a good investment because 70 percent of Serbia’s power output comes from coal and 30 percent from hydro plants, in a country which bans nuclear power, he said.

“This deposit is our offer for the future,” Jovanovic said. “There is no development model yet for that coal field and maybe we could start developing it with a strategic partner, with an offer that may be defined in a year or two.”

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