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Prairie Mining #PDZ – EU Confirms Coking Coal as a Critical Raw Material while Market Fundamentals Continue to Improve
EU Confirms Coking Coal as a Critical Raw Material while Market Fundamentals Continue to Improve
- European Commission continues to designate coking coal as a Critical Raw Material in its 2017 review
- Coking coal continues to enjoy a strong market and spot price environment with hard coking coal prices above US$200/t FOB Australia
- Market analysts forecast underinvestment in new coking coal mine development has potential to result in sustained high coking coal prices
- European coking coal supply and demand fundamentals continue to improve with recovery of the steel making sector and increased reliance on imported coking coal as European production declines
- Polish Government strongly supports development of new, modernised coal mines in order to meet future demand
- Increasing demand for electric vehicles is expected to drive growth in steel supply to the European automobile industry
- Large infrastructure development programs across Europe including High Speed 2 Rail in the UK, Poland’s transportation redevelopment plan, and China’s Belt and Road Initiative to contribute to European steel consumption
Prairie Mining Limited notes market fundamentals continue to improve for Prairie’s two large-scale Tier One coking coal projects as the European Commission reaffirms coking coal as a “Critical Raw Material” for Europe.
Prairie remains ideally positioned to supply coking coal to meet Europe’s steel demand in the future.
Prairie’s Chief Executive Officer Ben Stoikovich commented “The outlook for increased coking coal demand from Europe’s steel producers coupled with reducing European supply is creating a ‘perfect storm’ for Prairie to become the go-to supplier of the critical raw material. Europe’s steel producers which supply the vast automobile industry are now noting the potential increase in demand for steel due to the move towards vehicle electrification over the coming decades. We are well positioned to supply the required coking coal to produce the steel from the heart of Europe’s steel making industry.”
COKING COAL REMAINS A CRITICAL RAW MATERIAL FOR EUROPE
The European Commission has confirmed coking coal’s status as a Critical Raw Material in its 2017 list, which features 27 raw materials and updates the 2014 list. The primary purpose of the list is to identify the raw materials with a high supply-risk and a high economic importance to which reliable and unhindered access is a concern for European industry and value chains.
Following an objective methodology, the list provides a factual tool for trade, innovation and industrial policy measures to strengthen the competitiveness of European industry in line with the renewed industrial strategy for Europe, for instance by:
- identifying investment needs which can help alleviate Europe’s reliance on imports of raw materials;
- guiding support to innovation on raw materials supply under the EU’s Horizon 2020 research and innovation programme; and
- drawing attention to the importance of critical raw materials for the transition to a low-carbon, resource-efficient and more circular economy.
Importantly for both of Prairie’s projects, it is expected that the list will incentivise the European production of critical raw materials through facilitating the launching of new mining activities.
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Table 1: 2017 Critical Raw Materials |
|||
|
Antimony |
Baryte |
Beryllium |
Bismuth |
|
Borate |
Cobalt |
Coking Coal |
Fluorspar |
|
Gallium |
Germanium |
Hafnium |
Helium |
|
HREEs |
Iridium |
LREEs |
Magnesium |
|
Natural graphite |
Natural rubber |
Niobium |
PGMs |
|
Phosphate rock |
Phosphorus |
Scandium |
Silicon metal |
|
Tantalum |
Tungsten |
Vanadium |
|
European steel makers – including the newly-formed ThyssenKrupp Tata Steel Joint Venture – are now looking ahead to supply a changing automobile industry with the introduction of electric vehicles and concurrently supply numerous major European infrastructure programs.
- Increasing demand for ultra-low emission vehicles is expected to drive growth in steel supply to the European automobile industry. Almost 0.5 tonnes of coking coal are required to produce the structural, electrical and plated steel for each electric car. Specifically, steel is an important component of the electric vehicle structure and will be in the powertrain, enhancing the electric motor’s efficiency, range and power. Further, lithium-ion batteries commonly used in electric vehicles will require steel while infrastructure including the production of machinery, charging units and “refuelling hubs” for electric vehicles will also require steel.
- According to BHP Billiton, China’s Belt and Road Initiative to advance globalisation and trading – which includes several European countries including Poland – could result in up to 150 million tonnes of incremental steel demand.
- UK infrastructure projects including the High Speed 2 Rail Line and the construction of the Hinkley Point C Nuclear Power Station are expected to use over 3 million tonnes of steel – equivalent to 375 London Olympic Stadiums.
STRONG COKING COAL ENVIRONMENT CONTINUES
Hard coking coal prices have returned to levels above US$200/t FOB Australia mainly attributable to proactive buying in the seaborne market by steel producers concerned about future potential supply disruptions from Australia due to weather.
Longer term, market analysts have suggested recent and sustained underinvestment in new mine development has the potential to result in a lack of new supply in coming years which may sustain higher coking coal prices even in a lower demand scenario. According to industry analysts there is an expected decrease in supply of 0.5% per annum until 2020.
POLISH ECONOMISTS AND INDUSTRY EXPERTS ACKNOWLEDGE PRAIRIE AS CLEAR FUTURE SUPPLIER
A key independent adviser to the Polish Government, the Polish Academy of Sciences1, recently published a report confirming Prairie’s Jan Karski and Debiensko Mines as obvious sources of future coking coal supply for the European steel industry. The Polish Academy of Sciences is a statutory institution which provides expert advice to the Polish Government and is one the most prestigious and reputable academic institutes in Poland. The report suggested:
“Both domestic and European demand for coking coal is also expected to increase. However, the supply of this raw material is low – 85% of coking coal used in the EU in 2016 was imported. Therefore, Polish authorities are interested in promoting both the material and domestic steel industry, in order to secure a bigger share of European market to Poland – especially in Central Europe.
It is necessary to open new seams at existing mines, or building new mines, to guarantee the energy security of the country and to ensure sufficient supply of material for the steel industry (in Poland and in European Union).”
Importantly, the report concluded that private mining businesses such as Prairie would indeed complement, rather than compete, with state-controlled mining companies.
“The Polish mining sector faces a great opportunity, as foreign private companies shall bring in the best innovative technologies and international practices in undertaking and implementing modern mining projects, thus leading to the natural transfer of innovative technologies to Polish industry.”
The findings of the report are in line with the Polish Commercial and Industrial Chamber of the Metallurgical Sector which in a recent paper acknowledged:
“One of the most important cost components, decisive for the economic standing of the steel sector, is the price of coking coal, and resulting prices of coke. It is worth remembering that undisturbed and attractively priced supplies of such materials from Polish mining and coking plants shall continue to be the base for development and competitive advantage of Polish steel industry and operation of directly and indirectly connected sectors.
Polish coking coal is attractive to the steel sector due to its price, resulting from high quality and geographic rent. In the event of insufficient supply of domestic coal, necessary imports (from countries like Australia and the USA) could have significant impact on both prices and flexibility of production in the sector2“.
POLISH GOVERNMENT HIGHLIGHTS THE NEED FOR NEW COAL MINES SUCH AS PRAIRIE’S PROJECTS
In December 2017, Vice Minister of Energy Mr. Grzegorz Tobiszowski publicly discussed the requirement of investment into the Polish coal mining industry which included the construction of new coal mines:
“To be effective we should invest in new technologies, using modern equipment, but also consider building new shafts and new mines – and then we will be able to mine coal effectively”
During a speech in the same month, Minister of Energy, Mr. Krzystof Tchorzewski discussed the need for at least two new coal mines in Poland. The Minister stated:
“…today we face this challenge. There is a requirement for investment…into new longwalls, but also the necessity to build new mines is looming”
Prairie will pioneer the introduction of international best practice in mine design, production organisation and technology to deliver substantial operational and product quality improvements in the development of its Jan Karski Semi-Soft Coking Coal Mine in the Lublin Basin and its Debiensko Hard Coking Coal Mine in Upper Silesia.
Coal mining technology in Poland has not kept pace with international best practices, thereby negatively impacting efficiency of existing mines. Prairie will start with a “clean slate”, drawing on modern international experience in all areas of development including:
- Modern exploration techniques – provide more accurate and reliable estimation of resources and improved mine planning
- Optimized targeting of coal seams – focuses on maximizing net present value by targeting highest quality coal seams first
- Modern mine design – reduces operating costs, improves coal yields and optimizes logistics
- New technologies – focuses on increased automation, improved productivity and safety
- Improved Labour Organisation – flexible shift structures, bonuses based on production targets aimed at increasing productivity, reducing costs and aligning staff interests with corporate goals
To view this announcement in full including all illustrations and figures, please refer to www.pdz.com.au
For further information, please contact:
|
Prairie Mining Limited |
Tel: +44 207 478 3900 |
|
Ben Stoikovich, Chief Executive Officer |
Email: info@pdz.com.au |
|
Sapan Ghai, Head of Corporate Development |
________________
Fancy Doing the Okey-Cokey with a Miner Called Prairie?
by Malcolm Stacey – ShareProphets
Hello, Share Sweetners. I rarely bring a developing miner to your further scrutiny. I prefer to leave all that to my mining expert colleague Gary. Also, I’ve been burned quite a lot by disappointing mineral and metal finds in the past. But any road up, let’s have a look at this one.
Coal miner Prairie Mining (PDZ) seems to have a good chance of success in the next few years. Based in Perth, it focuses on Poland. The firm claims it could eventually have one of the most advanced coking operations ‘in the Northern Hemisphere.’
Coke is used heavily by the steel industry. And we all know, from plant closures in the UK, that steel-making is currently not the most profitable undertaking in the world. There’s too much competition, including interest from our friends in China.
But manufacturing, construction and heavy engineering all need steel, as does the car industry. So coke, which heats up the raw material, is always going to be in demand. Can you imagine, for example, how much steel will be needed for that new HS2 rail link?
Prairie has a coal project called Debiensko, which in January will start producing a slightly lower grade coking coal than that of its other site, Jan Karski. The Karski mine is set to start producing next year also.
Both locations are at the centre of industrial Europe and have excellent access to infrastructure. The reserves at both mines have been estimated at $3.3 billion. Which is big compared to the company’s present valuation. Though one should be aware that such estimates, especially in the mining game, can go wrong.
Prairie shares are now just over 30p. In March they were over 40p. This is not one of those mining shares which aims to serve a market which may not be all that big. Coke is vital for manufacturing. There are signs that the developing world, especially, is going to be making and building many more machines, buildings and heavy plant.
But, as with all miners, there just may be hidden snags along the way. And you should be aware of those risks.
As we all are in the Punter’s Return.
Link here to the article on the ShareProphets website
Brand CEO Alan Green discusses Tertiary Minerals #TYM, Prairie Mining #PDZ and Cerillion #CER on Vox Markets podcast
Brand CEO Alan Green discusses Tertiary Minerals #TYM, Prairie Mining #PDZ and Cerillion #CER with Justin Waite on the Vox Markets podcast. The interview is 16 minutes in.
Prairie Mining #PDZ CEO Ben Stoikovich interviewed at Mines and Money 2017
Prairie Mining #PDZ CEO Ben Stoikovich talks to Andrew Scott of Proactive Investors at Mines and Money 2017. He explains how Prairie is perfectly positioned to help meet Europe’s coking coal demands.
Prairie Mining #PDZ – Strong Community Support as Jan Karski Environmental Permitting Advances
Prairie Mining Limited #PDZ is pleased to announce the formal submission of the Environmental and Social Impact Assessment (“ESIA”) and initiation of the public consultation process for its 100% owned high value ultra-low ash semi-soft coking coal (“SSCC”) Jan Karski Mine in the Lublin Province, south east Poland (“Jan Karski” or “Project”).
- Environmental permitting for Jan Karski advances following successful submission of the Environmental and Social Impact Assessment to the Lublin Regional Environment Directorate for Environmental Consent
- Community Consultation Program initiated in the Cyców municipality within Lublin Province, showing strong community support for development of Jan Karski
- 74% of residents of Lublin Province support the building of a new mine in the region per the results of a recent independent poll
- Overwhelming public support for the development of Jan Karski demonstrated across the region with residents agreeing a new mine would bring significant employment opportunities and economic development to the region
- China Coal Technical and Economic Studies for Jan Karski near completion with Prairie hosting China Coal and the Jinan Mine Design Institute in Poland to finalise capital cost estimates with Polish sub-contractors
- Jan Karski continues to be one of the most advanced new large scale coking coal projects in the Northern Hemisphere, advancing towards development alongside partners China Coal and CD Capital.
Prairie’s Chief Executive Officer Ben Stoikovich commented: “With the submission of the ESIA and initiation of the public consultation process, Prairie continues towards applying for a Mining Concession to commence construction of the Jan Karski Mine together with our strategic partner China Coal. We now look forward to submitting our Mining Concession application in the upcoming months.
A recent independent poll of residents demonstrates strong support from local communities for major investment and job creation in the Lublin region with construction of the Jan Karski Mine. It is extremely positive to see that 74% of the residents of Cyców support the construction of a new coal mine. Jan Karski is one of the most advanced coking coal projects of significant scale in the Northern Hemisphere and its development will provide substantial economic and social benefits for Eastern Poland. During November, we had the pleasure of hosting China Coal and the Jinan Mine Design Institute in Poland to finalise capital cost estimates for the Project and meet with Polish subcontractors. China Coal’s Technical and Economic Studies are now nearly complete and will underpin a Chinese bank debt financing package for the construction of Jan Karski.”
SUBMISSION OF ESIA & INITIATION OF PUBLIC CONSULTATION
An application for issuing the environmental decision together with the ESIA was submitted to the Regional Director for Environmental Protection (“RDOS”) in Lublin on 6 October 2017. Taking into account the RDOS’s additional comments the motion and ESIA were supplemented on 22 November 2017. The ESIA documentation meets all the formal requirements and is being reviewed by the RDOS.
Prairie is now waiting for approval of the ESIA in the form of Environmental Consent decision, which is the last component to meet all formal requirements to apply for the Mining Concession for construction of Jan Karski. Independent environmental consultants have confirmed Prairie has met all pre-requisite requirements and can expect an environmental permit in due course.
As part of the environmental permitting process, the first public consultation was held in the Cyców Municipality (“Cyców”) within Lublin Province (“Lublin”) on 18 November 2017. The public consultation was organised in accordance with international standards, specifically, International Finance Corporation (“IFC”) Standards. The meeting was attended by local residents of the Cyców, including the mayor of Cyców, Wiesław Pikula, and current employees of the neighbouring Bogdanka mine. A presentation on Jan Karski’s development plans was given by Mr Miroslaw Taras (Prairie’s Group Executive), Witold Wołoszyn (Prairie’s Environmental and Planning Manager) and specialists from the international environmental consulting group, Multiconsult Polska Sp. z o.o. which had prepared the ESIA. Key advantages for the local community related to employment opportunities and social benefits associated with the development, construction and operation of Jan Karski including:
- creation of 2,000 direct employment positions and 10,000 indirect jobs for the region once operational;
- increasing skills of the workforce and through the implementation of International Standard training programmes;
- stimulating the development of education, health services and communications within the region; and
- building a mine that creates new employment for generations to come and career paths for families to remain in the region.
Prairie remains on track to have its full application for a Mining Concession submitted for Jan Karski in the coming months. In Poland, a Mining Concession application comprises the approval of a Deposit Development Plan (“DDP”), a Spatial Development Plan (rezoning of land for mining use), and an ESIA in the form of an Environmental Consent decision. Jan Karski’s DDP and Spatial Development Plan have already been officially approved.
Granting of the Environmental Consent will fulfil all the regulatory prerequisites for the Company to submit a formal Mining Concession application.
INDEPENDENT POLL DEMONSTRATES STRONG COMMUNITY SUPPORT FOR MINE DEVELOPMENT
Centrum Badań Marketingowych INDICATOR Sp. z o.o. (“CBM Indicator”) – an independent polling company with over 25 years expertise in the Polish market – carried out extensive research on public support for mine development in Lublin. The poll indicated overwhelming support exists amongst residents and there is acute awareness of the importance of coal supply for the Polish economy. Results of the poll indicated 74% of those living in Lublin supported the construction of a new mine in the region.
Key results are summarised below:
Do you support the construction of a new mine in Lublin?
Yes – 74%
No – 26%
Do you believe domestic coal mining is essential to Poland’s economy?
Yes – 92%
No – 8%
Do you believe a new mine in Lublin will decrease unemployment?
Yes – 80%
No – 20%
Do you believe a new mine in Lublin will result in new infrastructure?
Yes – 72%
No – 28%
According to CBM Indicator’s poll, support for construction of a new mine in the area is extremely high in Cyców, where 82% of residents are aware of the vital role of coal for the Polish industry and 74% agree to a mine being built in their commune or in a neighbouring commune. Cyców already enjoys a lower unemployment rate and significantly better local infrastructure when compared to other municipalities in Lublin thanks to direct benefits of having Bogdanka operating adjacent to Cyców and consequently, residents of Cyców are familiar with the economic and social benefits mining can bring.
CHINA COAL STUDY FOR THE JAN KARSKI MINE NEARS COMPLETION
In November 2017, the Company hosted a delegation in Poland including China Coal No.5 Construction Company Ltd (“China Coal”) and the Chinese Government’s officially authorised coal mine design institute Jinan Mine Design Institute, during which capital cost estimates for the construction and operation of Jan Karski were finalised alongside domestic Polish specialists, subcontractors and partners who will provide relevant Polish content.
Following the Chinese delegations visit to Poland, China Coal is set to complete all Technical and Economic Studies (“Studies”) required and considered “bankable” by Chinese financing institutions. In accordance with the Strategic Co-operation Agreement between Prairie and China Coal, the Studies will form the basis for provision of debt financing for the construction and development of Jan Karski.
Upon completion of the Studies, Prairie and China Coal will advance Chinese bank credit approval to fund construction of the Project and enter into a complete Engineering, Procurement, and Construction (“EPC”) contract under which China Coal will construct the Jan Karski Mine.
For further information, please contact:
|
Prairie Mining Limited |
Tel: +44 207 478 3900 |
|
Ben Stoikovich, Chief Executive Officer |
Email: info@pdz.com.au |
|
Sapan Ghai, Head of Corporate Development |
To view all images and illustrations in this announcement, please refer to www.pdz.com.au.
Meet Prairie Mining #PDZ Management at Mines & Money London from 28 – 30 November 2017
Prairie Mining Limited will be attending the Mines and Money conference in London, which takes place at the Business Design Centre Ltd, 52 Upper St, London N1 0QH, from 28 November – 30 November.
Management will be available for the duration of the conference at stand C9 to discuss the Company’s latest developments at its two projects.
https://london.minesandmoney.com/glexhibitors/prairie-mining/
Strong outlook for Poland’s new coking coal mines – Inside Coal by IHS Energy
Article by Darren Malone – +44 208 260 2088
Investor confidence in Poland’s coal mining industry is on the up again due to strong international prices for coking coal and strong steel demand.
There are three high quality coking coal projects under development in Poland, which will diversify supply portfolios for European steel producers and reduce imports from Australia and the United States.
Two met coal juniors Prairie Mining (PDZ) and Balamara Resources are at the forefront of developing new coking coal mines to supply regional steel markets.
Prairie Mining is developing two mines – the Debiensko and Jan Karski. Debiensko is being lined-up as a premium hard coking coal project and is development ready. A drilling program has already been initiated and selected seams from the Debiensko mine indicate that two hard coking coal specifications are viable, both lie within the range of international accepted benchmark coals. The mid-vol specs have an FSI of 8.5 and CSR of about 63% (comparable with Goonyella from Queensland) and has the potential to produce up to 4.02.6 mt/yr (run-of-mine) saleable hard coking coal) from 2022. It is located in the upper Silesian coal basin.
The Jan Karski prospect is listed by Prairie as a high value semisoft coking coal asset, with the latest drilling and washability results indicating a product ash content of about 3.00% and a CSR of 51.50%. The ultra-low ash content makes it ideal for blending with hard coking coal and gives it a high value-in-use price premium of 10% above other premium Hunter Valley, Australian semi-soft coals. The low ash is more environmentally friendly, especially attractive in a tough EU regulatory environment for coal producers.
Prairie also has a huge logistic advantage compared to imported coking coal from the US and Australia. Delivered costs to the nearest steel plant and coke ovens are estimated at $4.6/t, compared to a cost of $37.70/t for imported coal. The two mines are next to existing seams mines that are being worked by listed Polish coal producers JSW and Bogdanka, so power, water and rail infrastructure is already in place.
Despite the early stages of the two projects, Prairie is already in discussions with local steel makers and coke producers for offtake agreements. Prairie estimates that Europe’s steel industry consumes 47 75 mt/yr of hard coking coal (PCI, hard and semisoft), of which 85% is imported mainly from Australia and the US.
Central European countries consume about 25mt -30 mt/yr of coking coal. Poland’s production has been declining in recent years and qualities have not met specifications. This has forced some steel producers to import coking coal from Canada for blending with domestic material. Yesterday, ArcelorMittal reported a supply disruption at two of its Polish coking plants in Krakow and Zdzieszowice. JSW’s Zofiówka coking coal mine supplies the two plants, but deliveries have been have been reduced, due to a shortage of rail wagons.
ArcelorMittal said it has been forced to change its coal mix. Zdzieszowice is one of the biggest coke plants in Europe, with a production capacity of about 4.40 mt/yr. The Krakow-based plant has a coke-making capacity of 0.70 mt/yr, according to a trading source. ArcelorMittal’s contract with JSW expires at the end of the year. Other regional steel makers in Germany, the Czech Republic and Austria also need security of supply of high spec coking coal, which the existing mines are having problems producing.
Meanwhile, ASX-listed Balamara Resources is also developing a major coking coal asset – Nowa Ruda in the lower Silesian coal basin. Early indications are showing that the mine can produce material with a CSR of about 69%, which is comparable to premium Australian coking coal. Annual production is expected to be about 1.50 mt/y and is slated for production in 2019. There are five steel plants within 150 km of the coking coal mine, and talks have already taken place with regional steel-makers to take the coal. There are also plans to upgrade Gdansk port to load Baby Capes. At the moment it is limited to Panamax vessels. Fundamentals for steel and coking coal in Europe are strong going forward. Coking coal is on the list of critical raw materials listed by the European Commission. Poland is also coal friendly, and has a well-trained mining workforce.
Elsewhere in Europe, Prairie also notes that growing demand for ultra-low emission vehicles is expected to drive growth in steel supply to the regional car industry. Almost 0.5 tonnes of coking coal are required to produce the structural, electrical and plated steel for each electric car. In the UK, infrastructure projects including the High Speed 2 Rail Line and the construction of the Hinkley Point C Nuclear Power Station are expected to use over 3 million tonnes of steel.
Prairie Mining and Balamara Resources are still in the early stages of development, but they are ideally positioned to supply coking coal to meet Europe’s steel demand going forward.
Link to full IHS Inside Coal 9.11.17 note
Brand CEO Alan Green presents Small Cap Spotlight, looking at Prairie Mining #PDZ, Midwich #MIDW and Advanced Oncotherapy #AVO
Brand CEO Alan Green presents Small Cap Spotlight, looking at Prairie Mining #PDZ, Midwich #MIDW and Advanced Oncotherapy #AVO.
Prairie Mining (PDZ) – Result of AGM
The 2017 Prairie Mining Limited AGM was held today, 16 November 2017, at 11.00am (WST).
The resolutions voted on were in accordance with the Notice of Annual General Meeting previously advised to shareholders.
In accordance with Section 251AA of the Corporations Act 2001, the following information is provided:
|
Resolution |
Result |
Number of Proxy Votes |
|||
For |
Against |
Abstain |
Proxy’s Discretion |
||
|
1. Adoption of Remuneration Report |
Passed unanimously on a show of hands |
5,585,346 |
6,500 |
14,235,078 |
101 |
|
2. Re-election of Director – Mr Benjamin Stoikovich |
Passed unanimously on a show of hands |
19,351,846 |
475,000 |
78 |
101 |
|
3. Re-election of Director – Mr Thomas Todd |
Passed unanimously on a show of hands |
19,826,846 |
– |
78 |
101 |
|
For further information, please contact: |
|
|
Prairie Mining Limited |
Tel: +44 207 478 3900 |
|
Ben Stoikovich, Chief Executive Officer |
Email: info@pdz.com.au |
|
Sapan Ghai, Head of Corporate Development |