Czech hard coal miner New World Resources’ OKD unit wants to lay off half of its employees within the next two years. Although the move is not unexpected and the Czech government has been debating ways of softening its social impact, the lay-offs will present a serious problem in a region with a 19.2 percent unemployment rate.
After the Czech government refused OKD a four billion crown bailout package late last year, it was only a question of when the sole remaining hard coal miner in Moravia would start laying off employees. The company is deep in debt as a result of low coking coal prices and had previously announced hard-hitting restructuring plans.
According to Chief Executive Dale Ekmark OKD will lay off half of its employees in the next two years, leaving the company with only about 5,000 employees by 2018. Originally a strategic restructuring plan unveiled by NWR late last year envisioned the closure of just two mines – Paskov and Lazy – by 2018. Dale Ermark said on Tuesday that the planned closures would also effect the Darkov mine.
The biggest employer in the Moravia-Silesia region, OKD now has over 13,000 employees including a number of suppliers linked to its operations. The Paskov mine alone, which could close at the end of 2016, has 1,800 employees.
The Czech government and the Moravia-Silesia local administration have been pushing for a phased out closure of the mines which would allow the authorities to deal with its social impact. Tomas Hanzel, mayor of Karvina,which has a 17.3 unemployment rate,stressed that lay-offs this nd next year would have a devastating effect. The region needs more time to find investors and develop the Nad Barborou industrial zone which would make up for the job losses, he said. Around 500 jobs have been created by the Nove Pole industrial zone, but in view of the high unemployment in the region that is woefully inadequate.
The government and regional authorities would like to see mining continue in the region until 2020 and the Environment Ministry has given its approval for extended mining in the region until 2023. According to Ekmark this approval is crucial and will prevent the closure of other OKD mines prematurely. However the company still has to fulfil a number of conditions in order to expand mining to the approved new locations.
Meanwhile fresh talks between the Czech government and NWR on OKD’s future are expected to take place in the coming weeks.