New World Resources Plc, the largest Czech producer of coal for steelmakers, agreed to keep the unprofitable Paskov mine open for three years longer than planned after the finance minister pledged aid for its miners.
The government will provide 600 million koruna ($30 million) to help miners who will lose their jobs, Finance Minister Andrej Babis said today during a televised press conference after meeting NWR Chairman Gareth Penny. The money won’t go to NWR shareholders, Penny said.
NWR, which has posted losses for five quarters, originally pledged to shut Paskov down at the end of 2014 because the mine loses as much as $80 million a year. The company is undergoing a capital review and expects a significant decrease in its “economically mineable” reserves, it said in January.
“The conditions that I am proposing for talks at the government are that the Paskov mine won’t be closed for three more years, and the state would support only social programs for miners,” Babis said during the conference.
After Babis announced the agreement, NWR shares reversed an earlier decline of as much as 7.5 percent and closed up 3.2 percent in Prague at 13.05 koruna, valuing the company at 3.5 billion koruna. The stock is down 45 percent this year, after falling 76 percent in 2013.
The plan is subject to European Commission approval, the finance minister said. Prime Minister Bohuslav Sobotka said he welcomed Babis’s proposal and will discuss it with him tomorrow.
“At the end of the day, none of this money would be for shareholders,” NWR’s Penny said. “This would go to those who are no longer working there. I think it is a fair solution.”
NWR’s main shareholder, billionaire Zdenek Bakala, will need to inject about 3 billion koruna into the company, Industry and Trade Minister Jan Mladek told public Czech Television in an interview today.