An interview with Jerzy Wacław Klinowski, Vice‑Chairman of the Board of Directors and Chief Operating Officer of NWR Karbonia.
Could you describe the workflow for opening the Dębieńsko. At what phase is the project now in?
Currently, everything is in the hands of the authorities and the public administration. We are now trying to make some changes to the 50-year licence we received in July 2008. When designing the mine we decided to construct two shafts which would be connected underground, and to extract coal under the ceiling of seam 401/1. Yet there are several coalfaces that lie above that seam which we cannot extract within the current licence conditions. So we have drawn up an application for a licence amendment that would include permission to mine these coalfaces.
Such a process must require a lot of documents and be extremely demanding in organisational terms…
When drawing up the documents for the licence amendment application, we prepared the reserves documentation, which has already been approved by the Ministry of the Environment. And more than a year ago we also compiled a project aimed at utilising the deposit which describes the ways in which we will extract the coal. We want to build new foothill galleries within four years so as to make the seams accessible. We have prepared all the documents necessary for the approval of the licence changes, the only thing we are now lacking is an environmental impact assessment report, i.e. the plan of what impact our investment will have on the environment. The area in which we are planning to mine is spread over 31 square kilometres. We have already completed this report, however due to a jurisdiction dispute between the public administration bodies the whole process ground to a halt in the summer of 2010 and it was only re-launched a few months ago.
So, to understand it correctly, the opening of the mine has been complicated by administrative procedures?
When it comes to obtaining the permissions concerning environmental impacts, I am not too concerned as I believe that sooner or later we will get the document. However we won’t be able to start the operation in the mine without acquiring the land from the owners of the complex of the former Dębieńsko Mine – the mining company Kompania Węglowa (KW) and the Mine Restructuring Company (SRK). This is by far the most significant issue for us today. Kompania Węglowa owns approximately 50 hectares, while another five hectares, on which the head frames stand, are the property of the Mine Restructuring Company. The rest, about 120 hectares, is owned by the municipality of Czerwionka-Leszczyny. We do not foresee any problems connected with the acquisition of this land, it is just a matter of time for us to settle the matter.
How long have the negotiations with KW and SRK lasted? What can be done to conclude them successfully?
We launched the negotiations with Kompania Węglova a year and a half ago but only managed to purchase part of the area and several mine buildings in the middle of March 2011. Nevertheless, after paying the security we found out that the contract can only be completed in September or October 2011. We need the consent of two ministries – the Ministry of National Property and the Ministry of Economy. The case of the negotiations conducted with the Mine Restructuring Company is somewhat similar. We need the consent of the two ministries in order to sign a purchase contract for the two existing head frames and infrastructure.
And this in turn will delay the mine’s opening...
It appears that we will begin digging in the late autumn. And it goes without saying that this isn’t the best time of year to launch these works since the ground is frozen and there is snow. We could actually start constructing the mine tomorrow. We are ready to do so in both financial and material terms. The sooner we obtain the required permits, the sooner we can put the mine into operation and start employing people who in many cases are jobless today. The only thing that is holding us back is the lengthy procedure for arranging the required permits and certificates. We can’t move until the authorities accelerate the procedure of completing these formalities. These are the main obstacles to commencing construction activities.
What will be the main benefits of opening the mine to the local community and the region?
I have stressed it on every occasion I have had the opportunity: opening the mine will mean a huge financial injection for the local community and the region as a whole. It will provide jobs for about 2,500 people. And don’t forget that in the municipality of Czerwionka-Leszczyny, which formerly was almost exclusively dependant on black-coal mining, the unemployment rate in the 18-25 age group is 25 per cent, and the overall average unemployment is definitely more than 30 per cent. We’re talking about mass unemployment. That’s why it doesn’t surprise me that we receive about 50, 60 job applications every single day. So far, we have received more than 3,000 job applications, as well as innumerable inquiries.
How much will it cost to open the mine?
The total investment will be approximately EUR 350 – 400 million. I estimate that half of that amount will be made up of costs for demolition, modernisation and construction works. We intend to give work to a number of local companies during the construction. These local demolition, construction, electrical, mining and plumbing firms will make a profit from the mine. I am convinced that we will need them in the process as well.
What benefits will the mine bring to the local population? And what additional benefits will it mean for the community?
Since the beginning of the school year NWR Karbonia has supported the introduction of two classes with mining specialisation at the training and industrial schools which form part of the Integrated School in Czerwionka-Leszczyny. We have provided the school with money for developing an electrotechnical workshop. And it has also been given the guarantee, which is one of the conditions for the introduction of the mining classes, that the students will gain work experience in the mine’s surface operations. We have made a commitment to it. And, in addition, we want to introduce a motivational system of rewards for mining class students’ dependent on their grades.
Are you planning to support the local community’s activities in other areas too?
NWR Karbonia already supports local scouts, neighbourhood and other initiatives such as, for example, the publication of commemorative volumes to mark the anniversary of the school’s foundation, coorganisation of sports events, chess tournaments for both young people and adults, sponsorship of raffles and support for the local church choir in which a number of talented people sing, as well as participate in various events and perform in public.
Will NWR Karbonia also support residents who could be affected by mining activities?
Of course! We are already doing so and have received a lot of questions in this respect. We don’t leave the local citizens in the lurch. Pursuant to the Polish Mining Act, an entrepreneur who wants to carry out this type of activity is obliged to bear the consequences. That is precisely why we have created a system of assistance for the residents in the areas in question. Everyone who wants to build a house in this territory and is aware of the fact that they may be affected by the consequences of mining activity can turn to us and ask for a financial contribution to reinforce their house foundations in connection with the expected movement of sub-soil. These people bring maps of their land and we compare them with the plans we have.
Is it possible to avoid a conflict between the applicants and the company in such a situation?
It’s a very sensitive topic, after all. We issue a certificate that the house in question will be exposed to mining impacts of the first, second or third category or, conversely, that it will remain beyond the area affected by coal extraction. We reach a certain consensus as a result of agreement between the experts representing the applicants and our specialists. This manner of solution has worked well. Accordingly, people can receive a voucher in the value of PLN 15-35,000. In this connection, we have received between one and two hundred applications. For logical reasons, we only pay the contribution when the house has been built to the level of the roof.
Do you already have plans to employ a specific number of people? How many will NWR Karbonia employ and when will they start working?
We have to be prepared for the possibility of employing several hundred people at once. For the time being, excluding contractors, NWR Karbonia has a relatively small number of permanent and external staff. But we must be ready to employ a large number of people fulltime almost immediately. As I’ve already said, we can start working on placing the mine into operation almost immediately; we have only been held back by administrative procedures.
How many employees are you able to take on immediately once you’ve received all the required permits?
Once we finally obtain the buildings and all the permits we will almost immediately employ about 200 people. We should eventually employ some 2,500 people. At the present time we are preparing a detailed feasibility study and at the end of March we completed its first phase. Also under preparation is a financial model of the mine’s functioning which will subsequently impact our employment policy.
Do you know at this juncture the level of salaries that miners working at the new Dębieńsko Mine can expect?
We have already prepared the wage tariffs and we strive to provide our employees with wages that are competitive and at least at the level of the national average in the mining sector, but more likely higher. We want the remuneration system to link with labour productivity in such a manner that better financial results of the company would also mean higher earnings for our employees.
Do you intend to apply the Canadian-American models you are familiar with from the years you spent in North America?
I designed, built and managed several mines there, and I managed to maintain very good relations with the local trade unions. The trade union members there pay contributions from which they also pay the head of their union. Every year the employer enters into wage negotiations with the trade union that represents all the workers. As I have said, we would like to link the employees’ remuneration system with their productivity.
What are the characteristics of the wage system across the ocean?
The wage system in the USA or Canada comprises four or five salary brackets, whereas the remuneration system in Poland is extremely complicated. In Poland, there are far more salary brackets, as well as additional payments for work experience, performance bonuses, etc. And there are also anniversary premiums, miner’s cards, thirteenth and fourteenth salaries, free coal, stationary allowances, and other perks. That is why the wage slip of a Polish miner has an A4 format, whereas in the US and Canada the slip merely contains a few specific, essential items of information.
What about land reclamation at the locations that will be damaged as a result of mining activities? Is NWR Karbonia ready for this?
The Mining Act very precisely stipulates that a company is obliged to anticipate mining impacts and rectify and compensate for the damage caused by mining activities. We are obliged to prepare the operating plan which describes the mine’s planned activities. One of its parts is the presumed damage to the surface in the location where the mining impacts will manifest themselves, the manner of preventing it and mitigation of the condition incurred.
Who reviews and approves this plan?
The operating plan is assessed and approved by the District Mining Office, which continuously supervises the compensation for the damage incurred. When, for example, we lower the level of a watercourse we have to restore it or fence off the river. Moreover, it concerns the impact of mining on residential houses and other parts of the infrastructure, for example, roads, rails, etc. Costs for these works can constitute up to 3% of coal production costs. Although these are very high costs, we are well aware that they are necessary and cannot be omitted, and we fully understand it.
Can you say today with a clear conscience that NWR Karbonia is an open company conducting a dialogue with the local inhabitants?
Yes, of course! I invite people to discuss things. If anyone has any problems relating to a lack of information or wants to raise any questions pertaining to the mine’s future, I invite him or her to our headquarters. Moreover, we hold regular meetings with the citizens of individual locations during which they can ask us about anything relating to the planned activities in connection with the mine.
Are people interested in these meetings? How many turn up?
The meetings are usually attended by 200 or 300 people. It is important that we have established contacts and cooperation with the local media also. Journalists have been kept up to date with our intentions and they understand that the mine has to be opened as soon as possible. I think that it is always worthwhile to inform all the parties concerned and we value transparency in all we do. I’m convinced that the fewer facts and intentions are concealed from people the better.
Tomasz Rozek,
tomasz.rozek@cook-comm.com