NWR - New World ResourcesNWR Annual Report and Accounts 2008
  • Company overview
  • Business review
  • Operating and financial review
  • Corporate governance
  • Remuneration report
  • Financial statements (PDF)
  • Shareholder information (PDF)
  • Downloads (PDF)
  • Chairman's statement
  • Management report
  • Strategy
  • Operational review
  • Health, safety and employees
  • financial review and outlook
  • Board aand senior management
  • Corporate social responsibility
Mike Salamon

Mike Salamon

Executive Chairman of the Board, NWR

Chairmans statement

Chairman's statement

Our core business is hard coal mining. Through our principal operating subsidiary, OKD, we supplied 11.4 million tonnes of quality coking and thermal coal to our customers in Central Europe during 2008. The quality of our coal, our proximity to many of our key clients and our reliability as a supplier have given us strong competitive advantages.

For the last few years, we have predominantly focused on upgrading and streamlining the Company to improve operational efficiency. This strategy has proved vital in periods of strong economic growth and is arguably even more critical in difficult economic times.

In early 2008, we set out the building blocks of our business strategy: to improve the efficiency and profitability of our mining operations by investing in better equipment and technology, by consolidating our procurement efforts and by enhancing operational efficiency through maintaining efficient cost structures; to strengthen the reserve base from existing mines; to actively pursue growth opportunities; to maintain a strong health and safety record; and to implement international best practices in our corporate governance. We achieved a very positive set of financial results for the year ended 31 December 2008, delivered our production targets, improved our efficiencies with our Productivity Optimisation Programme (“POP 2010”) and enhanced our reserve base. We also successfully listed on the London, Prague and Warsaw stock exchanges. NWR was the largest Initial Public Offering on the London Stock Exchange and the only Initial Public Offering on the Prague Stock Exchange in 2008.*

However, it is very sad to note that, despite an overall improving trend in our safety and health performance, seven of our colleagues died at work. This clearly continues to focus our attention on our safety objectives.

POP 2010 is now well under way. NWR is in the process of acquiring ten of the most efficient longwalls in the world, offering great performance thanks to our highly skilled technicians and engineers. By implementing our new, world-class longwall production equipment and gate road development machinery, we are boosting productivity and should also improve our safety performance. The new equipment will also enable us to extract coal from deeper and more geologically challenging seams.

We have 418 million tonnes of JORC reserves. We continue to pursue our regional growth strategy and major milestones were achieved in our Dębieńsko and Morcinek coking coal projects in Poland.

In June 2008 the Polish authorities granted NWR a 50-year mining licence for Dębieńsko, and drilling to determine conditions in the prospective new shafts commenced in December 2008. The project comprises approximately190 million tonnes of NWR’s total reserves.

On 20 August 2008, the Czech and Polish governments signed a treaty on cross-border mineral exploration, enabling companies from both countries to operate in the border area. The signing of this treaty, which has been ratified by the Czech parliament and is awaiting ratification by the Polish authorities, created the legal framework needed to enable the Morcinek project to move forward.

The outlook for the industry in 2009 is very tough, given significantly reduced demand from steel consuming sectors and the marked reductions in steel and core production globally and in the region. In this context we have been very pleased for the support we have recieved from our customers for 2009 coal sales contracts. However, recognising the limited visibility with respect to how 2009 will actually evolve, NWR’s Board has reviewed its decision to take up RPG’s offer of 24.99 per cent on the Ukranian iron ore and pellet producer, Ferrexpo plc.

The Board continues to firmly believe in the strategic rationale for the transaction, however, it has concluded that current timing is not ideal. This conclusion has been in large measure echoed by feedback from minority shareholders.

I believe NWR is on the road to becoming a world-class organisation. 2008 was a year of significant progress for NWR. We have a robust balance sheet and strong cash flows and hence, if we look beyond this period to the longer term, I am confident that we are well placed to fully exploit our existing reserve base as well as new opportunities.

Mike Salamon

Executive Chairman of the Board, NWR

* Source: Dealogic