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10 Questions

with Klaus-Dieter Beck
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March 19th, 2008 issue

COURTESY PHOTO
According to Beck's estimates, OKD spends 300 million Kč on lessening the negative effects of mining.
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The Beck file



Job title: CEO, OKD
Age: 53
Nationality: German
Previous position: Senior vice president, Foundation Coal Corporation
Education: Ph.D. in mining engineering, Rheinisch-Westfälische Technische Hochschule Aachen

OKD is the largest miner of hard coal in the Czech Republic, with most of its operations located in north Moravia, near the Polish border. Recently, OKD’s parent company, New World Resources (NWR), announced that it was seeking a permit to mine in southern Poland, close to OKD’s current operations. The expansion comes as NWR is pouring money into OKD. The mining company’s chief executive, Klaus-Dieter Beck, talks to The Prague Post about the viability of coal liquefaction and how he goes about protecting his miners.
? This winter OKD announced capital investments totaling 300 million euros ($465 million/7.5 billion Kč). What is this money going toward?
We want to provide our mines with the most modern equipment currently available on the global market. The investment will significantly improve the safety of our work underground, while the new technology concurrently will improve our productivity, enabling us to extract reserves that we haven’t had access to yet.
We call it POP 2010, which means “production optimization program.” Within two years, we will acquire 10 modern sets of equipment for our coal faces — the places where coal is mined — and what we call longwall faces. The individual technologies we’re buying include telescopic powered supports, conveyors and shearers to cut the coal and electrical devices to partially automate the operation of the equipment. We’re also acquiring 12 sets of equipment to develop so-called gate roads, which provide future access to longwall faces. The investment will be distributed equally among all the OKD mines.
? Coal mining, particularly underground excavation, has acquired a reputation as dangerous work that exposes workers to potentially lethal accidents. How do you protect your employees?
Occupational safety is a paramount priority for OKD’s management. The technologies we’re introducing through the POP 2010 project will considerably contribute to improved safety. For example, the load capacity of the roof supports — what we call shields — will almost double.
Beyond this, we are preparing many other safety improvements regarding employee health, like introducing new boots, new individual lights and self-rescuers, which are much lighter than what every miner has to carry currently. We’re also trying to involve our employees in this process, so they can come up with new ideas and initiatives.
? Hard coal mining went through a period of dwindling profitability in the past two decades, but has seen a return to viability in recent years. Why is that?
At the end of 20th-century, hard coal mining in Europe seemed to be completely uncompetitive. Mines continued to close in Germany, England, Spain, France and Belgium. Even the Ostrava branch of OKD closed. Then a significant revival occurred after 2000. Mainly, it stemmed from the start of rapid economic growth in India and China, the need to increase the production of steel and then the energies that manifested throughout the global economy. This trend, with small fluctuations, still persists.
? Who are the largest customers for your coal?
More than half of OKD’s production consists of coking coal [used for smelting iron], one-quarter is thermal coal and approximately 17 percent is coke. The main customers for the produced coking coal and coke are Arcelor Mittal, Moravia Steel, U.S. Steel and Voestalpine. The thermal coal is supplied mainly to Dalkia Česká republika and ČEZ.
? How long can excavation continue at your current mines?
A year ago, we had planned production at OKD for approximately 11 years. However, we know now that thanks to the new state-of-the-art equipment we’re buying, we’ll be mining for at least 20 years.
How long we can continue will depend on the future creativity of engineers to design and develop new ways of mining coal under difficult conditions. Apart from this, it is also the market that dominates the decision. What seems to be uneconomical now might be economical in years to come.
? If passed, what effect will the European Union’s energy package have on your operations?
This will not have any considerable influence on our business. The only danger would be a significant increase in the price of carbon credits, which would result in an outflow of customers shifting to other energy sources.
? Do you find the EU’s goals for renewable power sources and cutting of emissions feasible?
The use of renewable resources will surely gain in importance after a more significant exhaustion of fossil fuels occurs. There will be many issues resolved in their use, especially the lower dynamics of the energy they supply.
? The EU package stresses the importance of carbon capture and storage (CCS), a largely unproven technology that would be used to corral CO2 emissions and pump them underground for containment. Is it a bit of a pipe dream to expect to see this widely implemented?
We’re currently examining the possibility of our capacity to store CO2 through activities of our subsidiary company, HBZS. CCS technologies really are not proven in practice, and the possible proposed solutions are technically and economically demanding. Currently, they can hardly be used in reality.
? With the price of oil recently surpassing $100 a barrel, do you think there’s a role for synthetic gasoline made from coal?
This is an interesting question, but there is no clear answer to it. I know that, in the United States, there are serious plans [for coal-derived gasoline] being investigated or even developed — especially for the military, so they can provide an independent fuel resource for their different forces.
Even commercially in the United States. it already makes sense to convert coal into a liquid fuel, with the extremely low production costs of coal in the western United States. The only question is if you can justify the huge initial investment in these plants if you don’t know how long the price of oil will stay so high.
? The negative impact of coal mining on natural environments is undeniable. What do you do to clean up after your excavation work?
We spend about 300 million Kč on compensating the effects of our mining activities annually. And new technologies now allow not only for more efficient approaches in mining but also for more efficient elimination of mining’s impact on the surface. Our goal is not only to provide money to compensate for the damage: We want to use it for reclamation and creation of new landscapes, which will allow for further development and use. We plan to build a golf course on reclaimed area, for example. Other projects, which will transform some of our areas into recreational zones, are equally important.
 
Want your manager to answer our 10 Questions? Contact Paul Voosen at pvoosen@praguepost.com


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