Abstract
The Aluminium market has attracted a modest amount of foreign investment into
Slovakia in 2008 and
2009; however, falling market prices for aluminium
and the global economic downturn have hampered
the growth of this sector,
which, along with steel, is one of Slovakia’s foremost metal products.
The
decline in the global construction market will affect production
levels – the announcement by Slovalco
(Slovakia’s largest
aluminium producer) that it would to cut in production by 10% in Q109 is
illustrative
of this.
Drilling prospects at EMED Mining’s Biely
Vrch project demonstrated strong results and increased
potential value in
the area. Drilling between 2007 and 2009 has highlighted a rich area measuring
300m
by 350m with a depth of more than 250m. The project’s 34
completed drill holes have uncovered a
vertical structure over 400m in
depth. Grades of up to 1.34g/t have been discovered. Based on such strong
results, EMED announced in February 2009 their first JORC (Joint Ore Reserves
Committee)-compliant
resource of 41.7mn tonnes, with an average grade of
0.79g/t over a contained amount of 1.1mn ounces of
gold, 65% of which
occurs near the surface.
A significant acquisition for a foreign investor
was that of Slovmag – the second-largest producer of
magnesite
refractory materials in the country – by Russian Holding Magnezite
Group. This was seen as
a strategic move on the part of the Magnezite
Group to access trade markets of the EU through Slovakia,
and to exploit
Slovmag’s notable capacity for producing magnesite construction
materials. This was
encouraging to the local economy as Slovmag is one of
the area’s largest employers; however, in
December 2008, the company
announced that they had to make 300 redundancies.
Exploration for uranium
development is expanding as Slovakia looks to reduce dependency on Russia
for
imports of oil and gas. A significant amount of electricity production
comes from nuclear energy at 24%,
with the majority of production stemming
from natural gas at 31%. The government is committed to
expanding nuclear
energy and Slovakia currently has five nuclear reactors with two more in
construction.
The country has previously had a poor reputation for safety,
though this is expected to continue to make
improvements on the back of
its EU membership. Commitment to nuclear energy is rarely without
opposition, however, and in 2008 and 2009 several protests were made against
uranium mining and
exploration in Slovakia. Objections were raised in
February 2008 against the uranium exploration by
Crown Energy in the
Torkay region; objections were raised by the City of Kosice in May 2009
against
exploration work by Ludovika Energy; a subsidiary of Tournigan, in
the Jahodna-Kuriskova region;
and in April 2009, 92,000 people petitioned
against mining for uranium in the Tencin region. Despite this
opposition,
it is likely that commitment to the sourcing of indigenous fuel sources such
as uranium will be
sustained, especially as Slovakia is a country that
relies heavily on imported fossil fuels.
One of the main developments in
2008 was the approval from the Slovakian government in October for
the
largest brown coal mining company, Hornonitrianske bane Prievidza, to open
coal deposits and begin
construction on the 11th mining field in the
Novaky mining area. In addition to approving the project,
which is
expected to realise extractable coal stocks of 7.2mn metric tonnes, the
government also approved
the issuance of state aid for the initial
investment in the project. Capital expenditure for the project is
estimated at EUR36.5mn (SKK1.1bn). The opening of the mine is expected to add
increased capacity of
400,000-600,000 metric tonnes of extractable coal
and generate employment prospects for 500 people
over 15 years. With work
beginning in May 2008, completion of construction is anticipated for July
2009,
while the first extraction is expected to be mined in October
2009.
Industry Forecast
Slovak mining prospects are not particularly
upbeat in the medium term. BMI forecasts that the industry
will reach a
value of US$0.6bn by 2013, representing growth of just 8% from 2008.
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