TIDMPDZ
RNS Number : 1566Z
Prairie Mining Limited
13 December 2017
PRAIRIE MINING LIMITED
NEWS RELEASE | 13 December 2017
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 ("Prairie" or "Company") 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.
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 Sciences(1) , 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
sector(2) ".
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 Email: info@pdz.com.au
Executive Officer
Sapan Ghai, Head of
Corporate Development
________________ (1) The Mineral and Energy Economy Research
Institute of the Polish Academy of Sciences: "Raw material security
in the context of limited domestic capacity of hard coal production
- key issues", 2017.
(2) Commercial and Industrial Chamber of Metallurgic Sector:
"Polish steel sector
"; 2017.
This information is provided by RNS
The company news service from the London Stock Exchange
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