Mining Basin Kolubara company enters biggest modernization cycle, says Milorad Grcic Director RBK

, Uncategorized


Mining Basin Kolubara company, coal lignite production company which supplies serbian TPPs is directly influencing serbian energy balance and security. From Kolubara mines lignite more than 60% of Serbian electricity is being produced. RB Kolubara as most important production company in EPS is entering biggest modernization and investment cycle in its history.

In an interview RB Kolubara Director Milorad Grcic reveals the company strategy,current and future projects.

Now that has been seven months since you assumed the position of the leading figure of MB “Kolubara”, what have you managed to change during this period?

The first step I took, after I was appointed the head of the Mining Basin “Kolubara”, was to learn the real issues of this leading coal producer in Serbia, and to compose a professional and competent team capable to cope with the complex challenges of the company. What I also tried with the help of my co-workers and the union representatives of MB “Kolubara”, hopefully with a good success, was to make many calls and meetings with employees in direct production, as those are the people on the site who best know what is bothering them and can indicate best what is going on in terms of business operations in total, including the problems in the direct production as well as that related to liquidity and current and long-term business. In addition to analysing internal problems of MB “Kolubara”, I had also to meet with local communities in the area affected by mining operations and coal exploitation. Without socially responsible co-operation with municipalities of Lazarevac, Lajkovac, Ub and Obrenovac, there would be no way to create an environment for faster resolution of property issues, the expropriation process and the issues of common interest, especially when it comes to certain companies the fate of which is tied to the business of Mining Basin “Kolubara” . I already knew that the business stability of MB “Kolubara”, as a strategic company, the energy backbone and the largest system in the Republic of Serbia, influenced the prosperity of these municipalities, and thus the prosperity of Serbia.

The key problem that our financial experts were able to observe as a multilayer one refers to a chronic lack of liquidity and the consideration of ways to finance large investment projects.

What are the key issues? How can they be solved?

The most important thing is how to consolidate “Kolubara“ financially as soon as possible, since time is our worst enemy; how to avoid unnecessary financial allocations, such as paying for the use of the building land; how to use internal reserves and stimulate staff to harness their energy and creativity for making progress in our company. Also, it is very important that people working in the production sector could feel that their working conditions and earnings are being taken care of. We have introduced several rationalization and savings measures that were not accepted at first. We need to know at any time what our financial capacities are, and only then we could plan out our needs.

Over a month ago, MB “Kolubara” have fulfilled the legal obligation of adopting the Anti-Corruption Integrity Plan. The risks are identified in the field of company management, documentation management, human resources, public finances, procurements and safety issues, and the serious work on their realization is yet to begin. By adoption of this document, we have shown the willingness to change and work on preventive methods, since they are the ones that represent one of the pillars of anti-corruption struggle.

Are you satisfied with the communication and agreements made with PE EPS? What should be improved?

We are having daily communication with the management of EPS and we tend to solve identified issues in a common way. We agreed that the open pit mines development had been underestimated in recent years, because we did not make investments in them, and a layman can understand that without coal there is not enough electricity and thermal capacities. We found the mining equipment in a very bad shape, with the coal and overburden system not being improved for years, and some excavators are more than four decades old. This must change, because we cannot produce more than 30 million tons of coal per annum by means of the obsolete equipment. We need 120 to 150 million euros a year for the opening of the new mines, the Field “E”, Field “G” and “Radljevo”. For the new investments, funds must be provided from our own resources, by EPS and the loans. Without the development projects, there is no future of MB “Kolubara” and EPS, especially when taking into account the energy strategy of Serbia having the coal as the main resource.

Overhaul season is underway, what are the most important tasks?

The Company Assembly made a decision for “Kolubara Metal” to rejoin MB Kolubara; why was this decision made and do you have the support of the Managing Board of EPS; and how do you plan to implement it?

4. and 8.  Each year, in order to prepare for work in the winter period and to ensure reliable production of coal, regular overhauls are conducted as well as preventive maintenance of production facilities. So far everything is going smoothly as planned. Several excavators that are operating within coal systems of the Fields “D” and “B” underwent revitalization  of the vital parts of mining equipment, which practically extended the lifetime of the mining machines over four decades old having paid off their value long time ago. The overhauls in the OPMs “Tamnava West Field” and “Veliki Crljeni” are underway.

This work, in spite of reduced funds for overhauls, is successfully performed by the employees of “Kolubara Metal” together with the technical service of “Open Pit Mines”.  If not for “Kolubara Metal”, it is clear that “Kolubara” could not have such operational readiness to continuously achieve energy balance of Serbia.

It is in the interest of EPS and MB “Kolubara” to have “Kolubara Metal” back. This Company was separated from MB “Kolubara” in 2005, but it turned out a wrong business move. Therefore, the initiative to have “Metal” rejoin its founder, which has been recently launched by the Assembly of MB “Kolubara”, is justified. The proposal should provide a more reliable production of OPMs, as well as secure future for the employees of “Kolubara Metal” which should not bear the consequences of wrong decisions made.

Unlike other separated companies, the founder’s rights of “Metal” remained with the MB “Kolubara” and we, as a good host should propose and provide guidelines for the most suitable solutions. There is no doubt that regarding the technical part and human resources, “Kolubara Metal” is the best Company in Serbian machine-building, particularly in the field of overhauls, maintenance, and development of mining equipment. In cooperation with the competent authorities and the ministers we will try to implement our idea, which aims to have “Metal” as a branch within our Company.

Workers should not be frightened by dismissal because the problem of redundancy should be solved in cooperation with the trade union organization, whether it is about some social program or other measures. We also believe that we should apply here the model that we use in MB “Kolubara” and that is – all employees who meet at least one of the two legal requirements for retirement should retire. We should openly say that with this initiative we prevented the bankruptcy of company, strategically important for “Kolubara”.

How does the expropriation and Project Vreoci go?

The expropriation works are extremely complex and require the compliance with the law and cooperation with the villagers who migrate, that is whose property assets are expropriated. Still, unlike other European countries, there is no adequate social support, so that this issue could be solved quicker and more efficiently. Experience shows that, for example, the expropriation process, at the opening of the mine in Germany, begins 15 years before the coal expropriation.   The expropriation is one of the most significant procedures that are implemented in our economic society and the expansion of the open pit mines cannot be halted, so that expropriation continues to follow the territorial priority principles.

When it comes to the expropriation implementation in the local community Vreoci, so far the competent services of expropriation have obtained the instructions for more efficient, rational and economical implementation of this very important procedure, in strict compliance with the Law on Expropriation. At the moment, the revision of the previous assessments and contracts by official state institutions is in progress. We will strive to implement the expropriation urgently and in higher quality, without repeating the mistakes that have been made in the past.

At what phase is the implementation of the project “Improvement of the environment” in MB “Kolubara”?

In the previous period, three contracts have been signed for purchase of the new equipment for open pit Field C between “Electric Power Industry of Serbia”, MB “Kolubara” and foreign companies, under the project “Contribution to the environmental  protection and improvement in Kolubara coal basin”. Two contracts, for purchase of the new equipment have been signed at the end of March. The contract for purchase of the new bucket wheel excavator have been signed with the German company “Thyssen Krupp“, worth 31 million euros, while Polish consortium  “Kopex“ is responsible for making the conveyor belt system worth 29 million euros. The contract was signed last week with the Swedish company „Sandvik“, based in Austria. Contract worth 14,38 million euros was signed for purchase of the spreader for this system. In the following period, it is expected to sign the contract  for the procurement of the power supply in the amount of two million euros.  This project is extremely important, it is one of the largest green projects in EPS, which is funded by European Bank for Reconstruction and Development with 80 million euros loan, loans of 65 million euros of German Development Bank and 9 million euros grant from the Government of Germany and 27 million euros of the company’s funds. Total value of the entire project is 181 million euros, and it is envisaged that the implementation of the project lasts for three and a half years.

Occupational health and safety are the priority at the corporate level, in what way is this field improved in MB “Kolubara”?

It should be taken into account that the production in “Kolubara” carries out on the area of about 100 square kilometers and that objectively every employee is exposed to risk of injuries, due to the nature of the work. Therefore, we insist on strict following the OSH measures, because, for us, the safety of the employees comes first. There is no price that can be paid when lives of the employees are at stake. In addition to the legal OSH measures, constant caution is necessary, which is especially indicated by the supervisory technical staff. The age of the employees in “Kolubara” is about 42 years and this fact also has influence on the safety and health of the employees who more and more often suffer from severe illnesses. We have been trying to provide an adequate health protection for the employees, together with the Union Organization of “Kolubara”, as well as regular annual rehabilitation and recreation in order to improve the health of the employees.

Are you satisfied with the production results in “Kolubara”?

When it comes to the production obligations, I would like to emphasize that in four months it has been produced about 10.5 million tons of lignite, which is by about six percent more than planned.  Due to the favorable hydrological conditions, as well as the efforts of “Kolubara”, EPS has exported significant amounts of electricity and in that way we have contributed to the economic stabilization of Serbia.

I’m emphasizing again that the State finally realizes that we are in the most important period of our development and that there is no withdrawal from the investment projects which are the biggest ones in the past twenty years. The opening of new mines, revitalization of the old equipment and procurement of the new one, with the financial consolidation must be the priority this year and the years to come. It is the only way to achieve a high level of production and energy balances of Serbia in the following years.