Coal in the CR and Central Europe
PhDr. Tomáš Vlček, Ph.D.
International Relations and Energy Security
Department of International Relations
and European Studies
Commodity specifics
 Main use of coal: production of heat and electricity
by combustion; production of metallurgical coke by
carbonization of coal
 1 kWh of electricity = combustion of 0.00049 tons
of coal on average
 1 MWh of elelctricity = 0.49 tons of coal
 1,000 MW power plant´s 1 hour production =
combustion of 490 tons of coal
 24-hour-production = 11,760 tons
 1-month-production = 352,800 tons
Commodity specifics
 This greatly affects transport of coal, most of the
inland coal transports are carried out by:
- freight trains (60-70%)
- river transport (5-15%)
- trucks (10-15%)
- conveyor belts (8-10%)
- or pipe (1%).
Commodity specifics
 Coal is traded all over the world, with coal shipped huge
distances by sea to reach markets.
 Ships are commonly used for international transportation, in
sizes ranging from:
◦ Handysize - 40-45,000 DWT
◦ Panamax - about 60-80,000 DWT
◦ Capesize vessels - about 80,000 DWT
 Overall international trade in coal reached 1142Mt in 2011;
while this is a significant amount of coal it still only accounts for
about 16% of total coal consumed. Most coal is used in the
country in which it is produced.
Commodity specifics
 Transportation costs account for a large share of the total
delivered price of coal, therefore international trade in
steam coal is effectively divided into two regional markets
 the Atlantic market, made up of importing countries in
Western Europe, notably the UK, Germany and Spain.
 the Pacific market, which consists of developing and
OECD Asian importers, notably Japan, Korea and Chinese
Taipei. The Pacific market currently accounts for about
57% of world seaborne steam coal trade.
Commodity specifics
Source: Euracoal
Commodity specifics
Source: Euracoal
Commodity specifics
Source: Euracoal
Commodity specifics
 The coal business in CE is thus rather local or
regional (bituminous coal)
 High quality coal and metalurgical coal is
however a part of the cross-border trade
◦ Higher quality of the material
◦ Better use (cogeneration, metalurgy)
◦ More expensive products (heat and electricity,
metal)
◦ Transport expenditures are balanced with better
revenues for use
Hard Coal in the Czech Republic
Installed Capacity in the Czech Electricity Grid on 31 December 2017
Type of Power Station Installed Capacity
(MWe)
Production (brutto,
MWh)
Percentage (%)
Thermal Power Station 11,075.4 45,431.7 49.7 / 52.2
Gas Combined Cycle
Power Station
1,363.5 3,722.4 6.1 / 4.3
Gas Fired Power Station 895.9 3,719.6 4.0 / 4.3
Hydroelectricity 1,092.7 1,869.5 4.9 / 2.1
Pumped-storage
Hydroelectricity
1,171.5 1,170.5 5.3 / 1.3
Nuclear Power Station 4,290.0 28,339.6 19.3 / 32.6
Wind Power 308.2 591.0 1.4 / 0.7
Solar Power 2,069.5 2,193.4 9.3 / 2.5
Geothermal Power 0 0 0 / 0
Total 22,266.7 87,037.6 100 / 100
Source: Energeticky regulacni urad, 2018, s.5, 40
Coal Power Plants in the Czech Republic with more than 150 MWe of Installed Capacity
Power Plant Owner Installed Capacity Connected to the Grid Fired on Life
Expectancy*
Detmarovice CEZ, a. s. 800 MWe 1975 - 1976 Bituminous coal 2020-2030
Chvaletice Severni energeticka
a.s.
800 MWe 1977 - 1978 Brown coal 2020-2029
Kladno Alpiq Generation
(CZ), s. r. o.
299.1 MWe 1976, 1999 Bituminous coal,
brown coal
2045-2050
Komorany United Energy
pravni nastupce, a.
s.
239 MWe 1959, 1978, 1986, 1994,
1997, 1998
Brown coal** 2025
Ledvice II CEZ, a. s. 220 MWe 1966-1968 Brown coal 2015
Ledvice III CEZ, a. s. 110 MWe 1998 Brown coal 2040-2055
Ledvice IV CEZ, a. s. 660 MWe 2014 - 2015 Brown coal 2055
Melnik (II) CEZ, a. s. 220 MWe 1971 Brown coal 2015-2020
Melnik (III) CEZ, a. s. 500 MWe 1981 Brown coal 2015-2020
Melnik (I) Energotrans, a. s. 352 MWe 1961, 1994 - 1995 Brown coal ?
Opatovice Elektrarny
Opatovice, a. s.
378 MWe 1979, 1987, 1995 - 1997 Brown coal 2020-2030
Pocerady CEZ, a. s. 1,000 MWe 1970 - 1977 Brown coal 2029+
Porici CEZ, a. s. 165 MWe 1957 Brown coal,
bituminous coal**
?
Prunerov II CEZ, a. s. 1,050 MWe 1981 - 1982 Brown coal 2015-2023
(2040***)
Prunerov I CEZ, a. s. 440 MWe 1967 - 1968 Brown coal 2015-2023
(2040***)
Tisova I CEZ, a. s. 183.8 MWe 1959 - 1961 Brown coal 2020+
Tisova II CEZ, a. s. 112 MWe 1959 - 1961 Brown coal ** 2020+
Trebovice Dalkia Ceska
Republika, a. s.
174 MWe 1961, 1998 Bituminous coal,
light fuel oil
2015-2020
Tusimice II CEZ, a. s. 800 MWe 1974 - 1975 Brown coal 2035
Coal in the Czech Republic
Year Exploitable
economic
reserves
Explored
economic
reserves
Prospected
economic
reserves
Potentially
economic
reserves
Crude extractionI Saleable
extractionI
2008 192,182 1,523,979 5,928,406 8,741,585 16,628 12,662
2009 205,630 1,543,177 6,011,672 8,900,448 15,130 11,001
2010 168,917 1,536,411 6,009,407 8,875,686 15,786 11,584
2011 180,729 1,518,929 5,998,902 8,821,173 15,681 11,455
2012 168,538 1,496,792 5,995,983 8,831,488 15,889 11,439
2013 66,301 1,487,287 5,993,801 8,834,579 13,368 10,045
2014 56,569 1,475,446 5,993,812 8,835,351 13,166 11,471
2015 41,844 1,475,464 5,746,510 8,839,345 8,483 7,640
2016 25,199 1,465,793 5,991,317 8,828,495 6,725VI 6,074
Source: Geofond, 2017
1 – česká část hornoslezské pánve 2 - česká část vnitrosudetské pánve 3 - podkrkonošská pánev
4 - středočeské pánev 5 - mšensko-roudnická pánev 6 - plzeňská a radnická pánev
7 - boskovická brázda 8 - mšensko-roudnická pánev 9 - mnichovohradišťská pánev
13
Brown Coal in the Czech Republic
Year Exploitable
economic
reserves
Explored
economic
reserves
Prospected
economic
reserves
Potentially
economic
reserves
Crude
extractionI
2012 862,202 2,347,268 2,063,445 4,525,445 43,710
2013 825,322 2,308,649 2,062,445 4,488,796 40,585
2014 796,277 2,273,951 2,062,445 4,489,937 38,348
2015 749,075 2,239,329 2,062,445 4,473,282 38,351
2016 714,356 2,203,911 2,059,859 4,465,466 38,646
Source: Geofond, 2017
1 – chebská pánev 2 – sokolovská pánev 3 – severočeská pánev 4 – česká část žitavské pánve
15
Czech coal market structure (2009, source: Kavina 2010)
◦ Two separate markets
◦ Coking and Heating
◦ Hard coal only 7% of electricity production
16
2009 - těžba
černého uhlí
11 001 kt
ČU
koksovatelné
5 900 kt
ČU
energetické
5 101 kt
Tuzemské dodávky
2 318 kt
Export
3 582 kt
Tuzemské dodávky
2 657 kt
Export
2 444 kt
Dovozy
777 kt
Dovozy
987 kt
K tuzemskému užití
3 095 kt
K tuzemskému užití
3 644 kt
Výroba koksu
2 270 kt
17
18
 Coal is an essential source in the Czech energy and electricity mix
 Coal is the only energy source, in which we are self-sufficient in terms of
energy security
 Domestic production of lignite fully cover domestic consumption
 Hard coal is also a major export commodity of the Czech Republic
 Current problems of the coal sector will most likely not and will not have
a significant negative impact on the electricity sector of the Czech
Republic, but may be at risk of inaction respective companies and
industries significantly negative impact on the sector CHP
Coal in the Czech Republic
19
Coal in the Czech Republic
 Two problems:
 Financial crisis and general drop in economic production (hard
coal)
 Territorial Ecological Limits on Brown Coal Mining (brown coal)
Limits on coal mining
 Territorial Ecological Limits on Brown Coal Mining
guided by the Government’s Resolution No. 444/1991
on territorial ecological limits on brown coal mining in
the North Bohemian Basin of October 30, 1991.
 This resolution specified the final lines of mining and
landfill in the mines Merkur, Brezno, Libous, Sverma,
Vrsany, CSA, Lezaky, Bilina and Chabarovice and in
Ruzodolska and Radovesicka landfills as well as the limit
values of air pollution in basins in the regions
Chomutov, Most, Teplice, Usti nad Labem and Louny.
Limits after SEP 2015
 Decision transferred to RMP which states (p. 49):
 On 19. 10. 2015 the Government discussed the material "Further
procedures and solutions for the territorial environmental limits of
the brown coal mining in northern Bohemia" and issued Resolution
no. 827 to tackle the issue of territorial environmental limits.
 At Bílina mine the government approved changes in the territorial
environmental limits with the new mining limits set 500 m from
the urban area of the nearby municipality.
 At the ČSA mine the government left the territorial environmental
limits in force. But the coal will be conserved and protected and
new assessment of the situation will take place in 2020, taking
account the process of construction of new nuclear units.
Financial Crisis
 The general specification of coal industry usually begins with
a very true statement that coal supply adds up 50-66 % of
overall operational costs of the coal fired power plant.
 It is thus very sensitive to the fluctuations in price.
Financial Crisis
 At this moment the bituminous coal
sector in the CR and CE is very negatively
affected by the world market
 CR: drop in prices, production and closure
of Paskov (31.3.2017)
 PL: drop in prices, production and
significant closures, miners striking,
threat of bankruptc, energy security
Comparison of key indicators of JSW SA and OKD, a.s. (recalculated to EUR)
JSW 2015 OKD 2015 JSW 2017 OKD 2017
No. of employeesI 18,947 9,135 20,887 6,120
Capital expenditures EUR 190.5 m EUR 34.3 m EUR 200.6 m EUR 15.3 m
Sales revenues EUR 1,657.5 m EUR 885.2 m EUR 2,084.8 m EUR 630.1 m
EBIT EUR 931.2 m EUR -251.9 m EUR 731.9 m EUR 124.5 m
EBITDA EUR 605.4 m EUR -210.3 m EUR 925.6 m EUR 132.1 m
EBITDA netII EUR 122.8 m - EUR 824.0 m Net
result EUR 785.2 m EUR -250.4 m EUR 597.3 m EUR 128.8 m
Coking coal production 11,151.2 kt 3,760.7 kt 10,675.7 kt 2,829.2 kt
Thermal coal production 5,161.7 kt 3,674.4 kt 4,092.7 kt 2,046.5 kt
Coke production 4,221.5 kt - 3,458.0 kt External
sales of coking
coalIII 5,800.3 kt 3,658 kt 5,937.2 kt 2,757.0 kt
External sales of thermal
coalIII 5,381.3 kt 3,701 kt 4,167.9 kt 1,936.8 kt
External sales of cokeIII 4,014.9 kt - 3,460.8 kt Unit
cash mining costs 73.4 EUR/t 66 EUR/t 73.4 EUR/t n/a
I At mining posts
II Net of non-recurring events
III External means outside the JSW Group/NWR, not necessarily outside Poland/Czech
Republic
Sources: JSW SA 2018a, p. 7, 35, 36; JSW SA 2016a, p. 6, 13, 29, 30; JSW SA 2016b, p. 36,
114; JSW n.d.b; OKD, a.s. 2016, p. 6, 7, 8, 11-13, 22, 32-33, 54; New World Resources Plc
2016, p. 23; Správa pohledávek OKD, a.s. 2018, p. 6, 13, 15, 17, 23, 30, 64
Case Study: Poland
 Coal supplies about 87% of Poland's electricity, it is
the world´s most coal-dependent country
 It is mined in State-owned Kompania Weglowa,
Europe's largest hard coal miner with 50,000 workers
 Mines are deep and expensive, rendering them
uncompetitive at a time of falling global coal prices
 Strong evidence of a problem:
 Polish buyers are increasingly turning to cheaper
imported coal, some of it from Russia
Case Study: Poland
1,000 MWe+ Power Plants in Poland
Power Plant Installed Capacity Fuel Operator Construction Year
Bełchatów TPP 5,354 MWe Lignite PGE GiEK S.A. 1981
Kozienice TPP 2,913 MWe Hard Coal ENEA S.A. 1972
Połaniec TPP 1,800 MWe Hard Coal Electrabel Połaniec SA
(GDF Suez)
1973-1979
Rybnik TPP 1,775 MWe Hard Coal EDF Polska Oddział w
Rybniku
1972
Turów CHP 1,694.8 MWe Lignite PGE GiEK S.A. 1962-1971
Pątnów I, II CHP 1,669 MWe Lignite Zespół Elektrowni
Pątnów-Adamów-Konin
SA*
1958-1974
Opole TPP 1,532 MWe** Hard Coal PGE GiEK S.A. Jaworzno
II, III
CHP
1,485 MWe Hard Coal Tauron Polska Energia
S.A.
1972-1979
Dolna Odra CHP 1,362 MWe Hard Coal PGE GiEK S.A. 1974
Łaziska CHP 1,155 MWe Hard Coal Tauron Polska Energia
S.A.
1967-1972
* Ownership structure: 52.67% Zygmunt Solorz-Żak; 10.76% ING Open-end Pension Fund; 36.57% Others
** A 1800 MW expansion of the station began construction in 2014
Note: CHP = Combined Heat Power Plant, TPP = Thermal Power Plant
Source: Polska Grupa Energetyczna SA and other open sources
Case Study: Poland
Source of the problem?
 Primary: financial crisis and world markets of course,
high production costs (1 km depths)
 Secondary: Complete lack of diversification
Future effect:
 CO2 emmissions policy
 Unemployment
 Possible bankruptcy; the government plans to create a
new enterprise that will take over the profitable assets
of KW (CZK1 billion debt, 2015 losses CZK 190/1 tonne)
 Positive: diversification (?)