Staric - The Industry and Trade Ministry has proposed to the government to approve state support to mining company OKD to cover costs related to dampening of mine Paskov under the condition that mining will continue till end-2016, minister Jan Mladek said at a press conference today.
The condition is that OKD will operate loss-making mining in Paskov till the end of 2016 and the subsequent costs of mining reduction and severance payments would be covered by the state to the amount of Kc1.1bn, provided that the EC approves the support, Mladek said.
The Finance Ministry, however, said it considers the proposal unacceptable and believes that OKD is obliged to secure the removal of impacts of mining on all land plots affected by mining as well as to create financial reserves to secure this activity.
The Finance Ministry said it will thereforeturn to the Czech Mining Authority, which is obliged to see to it that OKD maintains such reserved.
Prime Minister Bohuslav Sobotka said he agrees with the Industry and Trade Ministry. "The Moravskoslezsky region today resembles a social boiler before explosion in a number of aspects, and the government should therefore support all reasonable measures that will reduce the risks of a further steep growth of unemployment," Sobotka told CTK.
"The proposed support is tied to a two-year extension of mining and it will partly return to the state in the form of paid-up social and health insurance and in saved social allowances that would otherwise have to be paid to almost 2,000 dismissed miners," Sobotka said.
OKD, which is struggling with big economic problems, announced in September 2013 that it would close the Paskov mine. Its reps said at that time that if the costs of reduction of mining were to be covered by OKD alone, the company would close the mine as of December 31, 2014.
"The state´s costs of the gradual dampening of mining activities will reach Kc1.1bn. In comparison with the expected shortfall in taxes, insurance and mining revenues that would come in the case of closing the mine in 2014, the costs of the state are almost neutral," Mladek said.
The amount of money that the government would use for support to OKD would be for specific purposes, namely severance payments to miners and removal of environmental damage after the mine. The state would pledge up to the value of Kc1.2bn, Mladek elaborated.
The ministry was picking out of three variants and the one it will recommend to the government is less risky as regards the approval from Brussels than the possibility that the state would buy the mine for one crown and then solve reduction of its activities.
"Now it is up to the government. And I must say that it does not have to be simple," Mladek stated, adding that three ministries have raised objections, namely the Finance Ministry, the Environment Ministry and the Defence Ministry, all of them of ministers from movement ANO.
If mining ended on December 31, 2014, the shortfall in public budget revenues when taking into account the income tax, social and health insurance and compensations for raw materials would reach some Kc1bn.
The extension of job contracts in mine Paskov concerns on average 1,800 people in the coming years. The ministry´s proposal is linked with efforts to prevent a leap growth in the number of jobless in the Moravskoslezsky region, Mladek said.
Unemployment in the region stood at 10.9 percent in February and there were 93,619 jobless at the end of the month. In January alone, 3,738 unemployed were added to the labour office´s files.
Dozens of miners have already been moved from Paskov to other mines in the Karvina area. OKD´s trade unions and management earlier said they hoped that most of the miners would be moved from Paskov to other mines in the region.
Company New World Resources (NWR), which owns OKD, announced this year that due to high costs of mining and low coal prices, the estimate of coal reserves that it will pay off to mine has fallen from 184 million tonnes by 65 percent - to 64 million tonnes.
Mine Paskov has some 2,500 employees and the whole OKD employs over 12,000 people. NWR belongs to firm BXR, which holds nearly two thirds in it. Czech billionaire Zdenek Bakala owns some 50 percent in the BXR group.
The unions have been against the mine´s closing right from the start. They argue that there are at least 20 million tonnes of quality black coal in the mine.