A new opportunity for the Spanish Coal

INTRODUCTION:

NATURAL MINING RESOURCES 1926 SL(‘NMR’) was born, from the experience of its founders, developed for decades, in the fields of “trading” and “exploitation of natural resources”,  as a “vertical” company approach within the minerals  sector. From  its headquarters in Madrid,  and  with an important Logistics platform in the Port of El  Musel  (Gijón),  NMR is working to become one of the  references in the coal and derivatives sector.

Within a few months of its creation (2H2018), the company began its international activity, as well as its strategic development in the Port of Gijon – where it has become a reference in the movement of goods – from which it serves the countries of North Africa, the Mediterranean Region and Northern Europe, through related commercial operations , mainly with the steel and energy industry, Anthracite and other coals, clays, petroleum coke and related products.

2019 ended  for NMR  with a movement (IN/OUT), from Gijón,  of around 2 million tons and a turnover of more than 135 million euros. Forecasts for the end of 2020 estimate to double these figures.

1. How and why the Project emerges?

NMR applies to the “General Directorate for Mining” of the “Principado de Asturias”, through an affiliate company, a Research Permit  called “Carballo Norte nº 30806”, which  was granted  on February 8, 2012.

This permit is located on the assets of the former MINARSA  (Minas del Narcea, SA),in  the vicinity of Carballo, Corbeiro and Las Tiendas, in the council of Cangas del Narcea, and had belonged to the UNION FENOSA Group, which ceased its operation in the 1990s.

The results of the research and data collection work of the deposit “revealed  the existence of technically, economically and environmentally exploitable coal (anthracite)”.  From the first moment, the idea has  been, taking advantage of the existing infrastructure, exploit  the    remaining anthracite reserves.

KEY DRIVERS

  • NMR was born as a company in 2018, and positions itself, initially, as a trading company
  • Although it possess mining assets, in the first phase NMR focuses on creating a market based on its access to international coal, a deep technical and commercial knowledge about customer requirements,  and the conviction that  the  best way to compete, in such a complex and competitive market, was to “provide a differential value”.
  • One of the elements of such differentiation, in this first phase of NMR’s development as a mining company, was the creation of our Logistics Platform,  located in the Port of El  Musel, which has 120,000 m2 and which consistently houses between 500,000 and 800,000 Tm of different types of coals. Additionally,  our platform carry out mineral’s “valuation” activities to offer customers the specifications they require in time, form and price.

This “Value Proposal” has allowed us to grow during 2019 and, at the same time, to swing our original (more thermal) market towards others, less “narrow in terms of margins”,”and where higher   value-added products have a place. These new markets are those linked to the  metallurgical sector,and these products are  metallurgical coals  (whichprovide the necessary carbon to the manufacturing process).

In this new strategic context, the Carballo mine, with proven reserves of quality anthracite, is configured as an interesting option for NMR to compete “more and better”  in its new finalist markets. NMR is committed to such indigenous deposits, owned,  porbecauseit  understands that they will play an important role in the development of their markets (national  andinternational), located mainly in the arc of the Mediterranean and Northern Europe.

2. What’s going to be done?

The coal boom in the area  came when the former UNION FENOSA put into operation the Thermal Power Plant in Soto de la Barca (1965), and was favored by the oil crisis of the early 1970s, with the large increase in its price, which forced the Spanish government to design the National Energy Plan (PEN) in 1979. At that time of splendor of the Cangas del Narcea basin, some companies had more than 1,000 miners, and the total number of miners was close to 2,000. This situation changed drastically from 1986, with the consequent economic impact on the area and in Asturias, in general.

At the present time, once the operating permit has been granted by the  Authorities Mining, NMR has begun the “conditioning and preparation” work of the mine for exploitation.

These work cover three complementary scopes to be able to start the mining operation: the preparation of the accesses so that the material can be evacuated (by truck), safely and efficiently, from the mine to the Port of Gijón; the review and tuning of the existing infrastructures and media in the mine; and the construction of the facilities necessary to house the means and production equipment.

These activities should be completed throughout 2020  as NMR’s goal is to start production as soon as possible. NMR has committed cargos to clients, for the next 12  months,  in which the “anthracite” of the Carballo mine would be part of.

The mine will be operated by ourselves, and will involve the creation of local jobs, in a number not yet defined, but which will be favored by NMR’s intention to bring the mine to its maximum possible technical production, making commissioning tasks decisive for this purpose.

In the current planning, the company proposes a first phase of five-year operation, which will be expanded into successive work plans, in which the resources of the so-called Layer 5 (with existing infrastructure) would be exploited, accumulating total reserves, from the investigations carried out, of more than one  million tons. The company considers exploiting a second layer of the deposit if technical conditions permit.

The method of operation is simple, and the required underground infrastructure is available. The drainage and transport of coal in the mine may be carried out by gravity, and the coal and sterile evacuation of the base guide shall be carried out by wagons carried out by a locomotive.

With regard to environmental impact, the company submitted the corresponding Studies, necessary for the granting of the Concession for Exploitation, which valued that the environmental condition was very low, and contemplated restitution work at the end of the operating period,including, butnotlimited to, dismantling of auxiliary facilities, levelling of platforms and cleaning of ditches to facilitate drainage of runoff waters, profiling of slopes, stocking and spreading of plant land, etc..

In addition to the start-up of the mine, NMR is in the process of implementing an anthracyte drying plant in the Port of El  Musel, which will allow to adapt the specifications (humidity) of its products to the requirements of customers, thus increasing the added value of them, and their competitive capacity.

The objective of NMR is to maximize the participation of indigenous anthracite in its supply mix for the Metallurgical Sector. Carballo’s operation is not proposed as an isolated and “opportunistic” event, but as a first step in the recovery of some mining assets, whose decline began at the end ofó   the twentieth century among other reasons, because of the lack of competitiveness in a very aggressive price environment. In this sense, while indigenous thermal  coal does  not compete  in today’s price environments, quality anthracite  has a value that offers an interesting opportunity to support its extractive recovery