Last September coal producer New World Resources announced it was closing the Paskov coal mine in Frýdek-Místek. It said the only remaining active mine in the Ostrava region, which is run by its daughter company OKD, was making a loss and likely to remain uncompetitive in the medium term.
OKD said last year that if it received no financial assistance from the Czech government it would shut Paskov by the end of 2014.
The mine produced 950,000 tonnes of hard coking coal just two years ago. However, the industry is going through a rough spell globally as demand is weak and prices are down.
OKD is the biggest employer in the region and the closure of Paskov will bring around 2,500 layoffs in a traditionally industrial part of the Czech Republic already hard hit by unemployment. In February the jobless rate was 10.9 percent, the Czech News Agency said.
On Tuesday the Czech minister of industry and trade, Jan Mládek, visited the mine to hold talks with with representatives of the mine company and the Moravia-Silesia regional authority.
Afterwards, Mr. Mládek said three options had been under consideration ahead of the meeting: the closure of Paskov by the end of this year; the state taking it over for a nominal sum; or NWR keeping the loss-making mine in operation until 2017 and the state contributing to redundancy payments, re-qualification courses and the clearance of the site.
The Social Democrat minister said he had personally been in favour of the second option. However, he had in the end gone for the third approach, partly because it was less likely to lead to complications from Brussels.
Government approval for this course of action is by no means a shoe-in, Mr. Mládek said at a news conference. The cabinet is not united on the issue, he explained, with different ministries likely to push their own agendas in relation to the matter.
The minister told reporters that if his plan goes through it will cost the exchequer some CZK 1.1 billion. But, he went on, if Paskov was to cease operations completely by the end of this year, it would in any case cost an estimated CZK 1 billion in additional welfare costs.
NWR spokesperson Petr Jonák said the slower wind-down provided a “three-year cushion” that would benefit the mine’s employees as it allowed more time for possible fresh investment and job creation in the region.
Mr. Jonák also said that if there was a turnaround in coal prices and Paskov started making a profit it again it could remain open. This would not appear likely.
The Ministry of Industry and Trade hopes its plan for Paskov will help shore up the rest of OKD, which has a total of around 12,000 workers.
NRW is based in Amsterdam and is quoted on the London, Prague and Warsaw stock exchanges. It is two-thirds owned by the company BXR, which is roughly half-owned by Czech billionaire Zdeněk Bakala.