UPDATE 1-Czech cabinet okays deal for NWR coal mine to stay open

Mon Apr 28, 2014 10:35am EDT

Related Topics

* Government approves 600 mln crown deal for fired workers

* European Commission has final say

* Deal conditioned on NWR avoiding bankruptcy (Adds official confirmation, Industry Minister comments, background)

By Robert Muller

PRAGUE, April 28 (Reuters) - The Czech government has approved a deal allowing New World Resources to continue operating its loss-making Paskov hard coal mine to end-2017, Industry Minister Jan Mladek said, which would preserve 1,800 jobs.

The struggling Czech mining firm has suffered losses due to a sharp fall in global coal prices and is in talks with bondholders on a capital restructuring.

It had planned to close Paskov, which has the worst performance of its four active mines in the Czech Republic, at the end of 2014 but has been under pressure from workers and the cabinet to keep it open.

The deal is conditioned on European Commission approval and assurances to other companies active in the area that further mining at Paskov will not jeopardize an industrial zone next to Paskov, Mladek told reporters on Monday.

"There is no certainty that the Commission will approve it," he said. "We have pledged, as the ministry, to put out our best effort to have it notified."

Under the agreement, struck by Mladek and the miner earlier in April, London-listed NWR would retain at least 1,800 workers at the mine and keep it operating until the end of 2017.

The deal calls for the government to contribute 600 million Czech crowns ($30.27 million) in social programmes for miners who lose their jobs after 2017. That money will be spent only if Paskov continues operations until the end of 2017.

Mladek said the deal would no longer apply if any of the companies involved - New World Resources Plc, New World Resources NV or OKD - declares bankruptcy. ($1 = 19.8215 Czech Crowns) (editing by William Hardy and Jane Baird)

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