New World Resources Plc, the largest Czech producer of coal for steelmakers, said it’s seeking a partner to help develop the Debiensko mine in Poland.
“This is Europe’s largest deposit of hard quality coking coal,” Chairman Gareth Penny said in an interview in Prague. “We are looking at potential partners.”
Developing Debiensko is part of a plan for NWR to become Europe’s leading coking coal supplier in the next decade, said Penny, the former chief executive officer of De Beers, the biggest diamond producer. The company is cutting output of thermal coal to focus on more profitable coking coal that’s supplied to steel producers such as ArcelorMittal and carmakers including Volkswagen AG.
Debiensko is a “really important part of NWR’s long-term future,” Penny said in yesterday’s interview. He dismissed reports that the company may try to sell the mine because of technical difficulties with underground water.
NWR has held “very early-stage” talks with some Polish coal companies as well as financial investors and even customers to cooperate on the project, according to Penny.
The company, which is listed in London, Prague and Warsaw, is in the process of buying up the land around the mine, a process that should be finished in April, Penny said.
NWR was little changed at 79.5 koruna in Prague today. The stock has lost 19 percent so far this year, adding to a 28 percent retreat in 2012.
Last year the miner cut planned spending at Debiensko to 5 million euros ($6.6 million) from 50 million euros following the discovery of large quantities of underground water. A technical and safety review proved the project is “viable” and the company doubled capital spending for the mine, which contains an estimated 190 million metric tons of coking coal, to 10 million euros this year, Penny said.
NWR plans to boost imports of coking coal into Europe from the U.S. and is considering buying mines in North America. It had 267 million euros in cash at the end of last year.
“Valuations in coal right now are very attractive,” Chief Financial Officer Marek Jelinek said in an interview. “We have a lot of cash on our balance sheet which in the current business environment isn’t earning us anything, so the most accretive way to finance an acquisition today would be to use that cash.”