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Romania Mining Report 2012 Published : July 2012

No. of Pages : 49

Price:US$1175

We expect Romania''s mining sector to go into decline from 2012 as coal output, which accounts for the majority of the mining sector''s value, falls. However, one bright spot, which will mitigate against some of the losses in the coal sector, is that the gold sector will see rapid growth from its low base. Overall, we expect the mining sector value to decline to US$1.2bn in 2016, from US$1.6bn in 2011. In one of the most important mining projects in the country in 2012, Romanian energy officials revealed that the Chinese government is considering investing in the EUR700mn (US$997.7mn) DoiceĹ&#x;ti coalfired power plant in southern Romania. China Huadian Engineering Company signed an MoU with stateowned utility Termoelectrica, with the former understood to be preparing a feasibility study on the project. Coal Sector In Decline Romania coal production is set for declines over the coming five years, continuing a decade long trend as falling grades and environmental concerns weigh on the sector. Romania is one of Europe''s largest coal producers with output in 2010 coming in at 30.8mnt (million tonnes) in 2010, with the majority being lignite coal. Romania possesses 801mnt of hard coal and 1.36bn tonnes of lignite coal reserves, some of the largest in Eastern Europe. However, these deposits are not only low-grade but also by lack sufficient maintenance and investment. Our Power team estimates that in 2011 coal-fired generation accounted for 39.5% of supply, with gas-fired power claiming a share of 15.6%. Hydroelectricity contributed an impressive 26.8%, with nuclear energy accounting for 14.8%. The European Commission (EC) decided in July 2010 to call on member states to shut down loss-making hard coal mines by October 1 2014, in a move that would affect coal mines in Romania''s Jiu valley. The decision requests the shutdown of the mines but leaves lignite coal mines intact and allows state subsidies for hard coal mines that have a closure plan in place. The decision brings forward a hard coal mine closure plan to 2018. Gold Sector To Drive Growth Romania''s gold sector is one of the bright spots in an otherwise bleak outlook for Europe''s mining sector, with the country set to see rapid growth in gold output, albeit from a low base. Romania produced 16koz (thousand ounces) of gold in 2011, accounting for a fraction of a percent of Europe''s gold output. While the country will not become a major European gold producer, we expect to see output increase rapidly to 238kozpa in 2016. Much of this growth will be driven by El Dorado''s (which acquired European Goldfields in February 2012) Certej mine, one of the largest gold mines in Europe. While the mine has relatively low grades, at 1.6g/t, it is likely to remain profitable given elevated gold prices. Indeed, we are bullish on gold, expecting prices to average US$1,850/oz in 2012 and US$1,950/oz in 2013. Romania Mining Industry 2012 Table of Content Executive Summary ... 4 SWOT Analysis . 6 Romania Mining Industry SWOT . 6 Global Mining Outlook ... 7 Table: Recent Tax Increases 9 Table: Largest Coal Projects . 11 Table: Major Frontier Mining Projects . 12 Europe Mining Sector Outlook ... 13 Table: Major Nordic Mining Projects.. 15 Table: Key Gold Projects In Eastern Europe . 16 Industry Trend Analysis 17 Table: Key Mining Projects In Romania 17 Table: Romania''s Mining Industry Value & Production Forecasts ... 19 Industry Forecasts ... 20


Coal: Modest Growth On The Horizon 20 Table: Romania’s Coal Production Forecasts . 22 Gold: Output To Grow As Europe''s Largest Gold Mine Comes Online . 23 Table: Romania’s Key Gold Projects ... 24 Table: Romania’s Gold Production Forecasts . 26 Regulatory Structure 27 Europe Business Environment Ratings ... 29 Table: Mining Business Environment Risk/Reward Ratings 29 Competitive Landscape . 33 Company Profiles . 34 Mechel . 34 Table: Mechel Financial Results . 37 El Dorado Corporation 38 Table: European Goldfields – Financial Results . 39 Commodity Strategy 40 Copper . 40 Aluminium 41 Lead ... 41 Nickel . 42 Tin.. 43 Zinc 44 Gold ... 44 Business Environment Ratings Methodology... 46 Table: Mining Business Environment Indicators . 47 Table: Weighting Of Components 48Table: Recent Tax Increases . 9 Table: Largest Coal Projects . 11 Table: Major Frontier Mining Projects . 12 Table: Major Nordic Mining Projects. 15 Table: Key Gold Projects In Eastern Europe . 16 Table: Key Mining Projects In Romania . 17 Table: Romania''s Mining Industry Value & Production Forecasts . 19 Table: Romania''s Coal Production Forecasts . 22 Table: Romania''s Key Gold Projects . 24 Table: Romania''s Gold Production Forecasts . 26 Table: Mining Business Environment Risk/Reward Ratings . 29 Table: Mechel Financial Results . 37 Table: European Goldfields – Financial Results . 39 Table: Mining Business Environment Indicators . 47 Table: Weighting Of Components . 48

Romania Mining Report 2012  

We expect Romania''s mining sector to go into decline from 2012 as coal output, which accounts for the majority of the mining sector''s valu...

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