"Czech Republic Mining Report 2016" Published

The Czech mining sector is set to consolidate further over the next few years due to the gradual winding down of the country's hard coal mining operations in the east of the country. The country's online functioning uranium mine is also scheduled for closure in 2017. We note potential expansion in the thermal coal sector, as the commodity remains an important source of domestic energy generation; however, increasing pressure on the government to comply with EU emissions regulations leaves us to question whether this is a viable long-term strategy.

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Our outlook for Czech coal mining output is increasingly bearish, following growing concerns surrounding the country's hard coal mining sector. We forecast overall coal production to fall by 2.3% in 2016 to 53.4mn tonnes (mnt) and to continue declining on an annual basis through to 2020 when it will total 52.3mnt.

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The outlook for the thermal coal sector looks more positive. In October 2015, the government approved a plan to develop the mining of lignite, which will reportedly allow miners to expand mining of the commodity beyond the previous environmental limits. The northwest of the Czech Republic is estimated to contain up to 120mnt of lignite deposits.

As such, Czech mining looks set to find itself solely reliant on thermal coal within the next decade. The country's sole uranium mine, Rozna, is due to close in mid-2017, though there have been reports of a potential uranium mining being launched at Brzkov from 2020.

We forecast the mining sector's contribution to GDP will remain below 1.0% per year to 2019. In fact, we expect the sector's total contribution to the Czech Republic's GDP to decline from an estimated 0.9% in 2013 to 0.6% in 2019. Stagnant coal output and only modest growth in thermal coal prices in the years ahead will lead to the sector's value expanding only 1.1% on average per annum over our forecast period. Public opposition to restarting the country's old uranium mines and potentially more stringent carbon emissions policy emanating from the EU will be the major stumbling blocks for future growth in the industry. In contrast, we forecast real GDP growth in the country will expand 2.8% on average per annum to 2019.

The Czech Republic Mining Report has been researched at source and features BMI Research's mining and commodity forecasts for metals, minerals and gems, covering all major indicators including reserves, production, exports and values. The report also analyses trends and prospects, national and multinational companies and changes in the regulatory environment.

BMI's Czech Republic Mining Report provides industry strategists, service companies, company analysts and consultants, government departments, trade associations and regulatory bodies with BMI's independent forecasts and competitive intelligence on the mining industry in Czech Republic.

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