OKK → Pavel Woznica in his new executive role

Coke ovens are key for heat production in Ostrava

Text: Luděk Vokáč, photo: Barbora Mráčková

Coke production is a conservative discipline that may appear to be stagnating in terms of progress. Nevertheless, a number of interesting projects are underway at OKK Koksovny and the company continues to face new challenges. Chief Executive Director, Pavel Woznica, talks about them in the following interview.

OKK Koksovny (hereinafter just OKK) has changed management for the first time since it joined MTX Group. After many years, Zdeněk Durčák passes the torch to formal Financial Director Pavel Woznica. He has worked with Zdeněk Durčák since OKK joined MTX Group and then became his successor. Pavel Woznica took over a healthy business but has had to deal with a number of challenges. You took over from Zdeněk Durčák more than a year ago.

What has the year been like for you?

I can’t believe it’s been so long; it feels like it was only yesterday. When I was Financial Director, Zdeněk Durčák and I were on the same page. So, as far as I’m concerned, the main processes and operations were set up well. No big changes needed there. We have always invested in areas that have long-term, practical benefits for us. Our operation is somewhat traditional. Not many trends apply to us, unlike other operations. Take automation, for example. It has experienced a boom in industry, but there’s not much space to use it in our operation, so we don’t invest in it as much as other companies. That being said, we are working on automating and streamlining our office processes, and I think we’re doing OK in this regard. But as far as our production line is concerned, apart from a handful of successful projects, security concerns prevent us from replacing humans with machines. Also, some operations can’t be automated due to their nature. We don’t want to invest in automation just to pat ourselves on our backs, especially if it doesn’t have a positive outcome. That's not how we work. Nevertheless, we are working on new projects that should bring about positive change at OKK.

Can you be more specific?

There are two investments: One to implement technology that will help us eliminate fugitive emissions when distilling benzol. It will make our operation more environmentally friendly. The other investment is in coke sorting, which will make our operation more competitive. We’ll be able to supply coke more efficiently and better meet our clients’ needs. We want to make these major investments before the end of the year. A lot of work has gone into them and they will bring about some changes.

Can you elaborate?

I will start with the benzol distillation. This, of course, has a broader context. We are basically a chemical operation. Producing coke creates a number of chemical byproducts. You could say we are a zerowaste production, if you exclude municipal waste, scrap, and waste generated by repairing our machines. In terms of investments, our aim is to have an as environmentally friendly production process as possible. We invest a lot of money into this each year. We have concluded agreements with the city of Ostrava and the Moravian-Silesian Region, in which we commit to projects and measures around our coking plant that reduce our environmental impact beyond our legal obligations. Social responsibility is our priority. We have recently renewed this agreement with the Moravian-Silesian Region and our agreement with the city of Ostrava ends this year, but it can be extended for three more years. In our agreement with the region, we commit to potentially eliminating fugitive emissions from benzol distillation. The chemical process can release unpleasant odors in the close vicinity of our chemical plant during certain weather conditions. Some time ago, we discovered a company that could supply us with technology that would significantly decrease the amount of fugitive emissions from benzol distillation. It’s still a relatively new technology that uses plasma catalysis to break down benzene into harmless compounds. It has successfully passed testing, so I hope implementing it will help in real-world operations as well. That would help us eliminate the unpleasant odors, as well as reducing our benzene emissions.

And what about the improved coke sorting?

This is an important project that will significantly change the way we make foundry coke and make our production logistics more streamlined, which will strengthen our relationships with our major clients. Each of our clients requires different coke grain sizes. We’ve decided to invest in new technology that sorts foundry coke, which will help us meet our clients’ needs better. We’ve invested around CZK 60 million and it should be finished in the last quarter of this year. Next year, we should be able to offer new coke sorting parameters. Consequently, we will be able to guarantee better and more efficient grain sizes, which will make us more competitive.

Does the war in Ukraine affect you in any way?

What Russia has done to Ukraine is awful. We have actively supported Ukrainian war refugees by contributing CZK 200,000 to buy a van for the Czech Red Cross in Ostrava that will be used to help Ukrainian refugees. Other than that, the conflict hasn’t impacted our operation in any way. We used to have some clients in Ukraine and Russia, and we sometimes used Russian coal before, but it wasn’t anything substantial that can’t be replaced. How vever, the war has handed us a new set of responsibilities. Our byproduct is coke gas, which can replace natural gas in many ways. We export our coke gas to the Přívoz heating plant, which is part of the Svoboda coking plant belonging to Veolia Energy Czech Republic. Since we import most of our coal from Poland and the USA, we basically make non-Russian gas. We have been supplying coke gas to the heating plant for a long time. It uses our gas to produce steam, which it then distributes back to us, but they also produce heat for households and businesses in Ostrava. Our gas can heat up to a third of all the distribution points in Ostrava. Hence the new responsibility. Since the supply of natural gas is shrouded in uncertainty these days, we have become a reliable gas supplier and our responsibility is to keep supplying it. So, while many industrial enterprises have to limit their operation because of smog, we have to stay operational to keep supplying as much gas as possible. If there’s a lot of smog, we can limit coke manipulation and other auxiliary activities that sometimes release a lot of dust into the air. But production can’t stop if we’re to keep supplying gas.

We will make it through if things get tough.

How can you guarantee this supply?

We have been working with Veolia Energy for a long time. Some time ago, we concluded a new gas supply agreement until 2030, which shows how much we think our supply is going to be in the future. On top of that, the agreement has fixed gas prices, so we help slow inflation a bit, which is currently unprecedentedly high. We can afford to guarantee this because our sister company METALIMEX has signed a new coal supply contract with the largest European coking coal miner, Polish company Jastrzębska Spółka Węglowa. Therefore, we have guaranteed the supply of high-quality coal until 2028. On top of that, we have another long-term contract with a supplier in the USA. Since we have these long-term contracts for our primary input material, we can guarantee our supply of coke gas.

Is logistics a problem in this regard?

Logistics is another big issue. Since logistics has become more and more complicated recently, it’s also become more important. Fortunately, the METALIMEX logistics team has extensive experience in this area and works with important carriers. Last year, logistics was affected by Covid and the health measures introduced to combat it. Now, it is affected by the war in Ukraine. A lot of companies that used to import, move, or export commodities from Russia and Ukraine are now looking for new sources and markets. Traditional logistics routes were not able to handle the strain, which meant a lot of delays and complications. For example, coal from the USA is shipped to Gdansk, which takes two or three weeks. We are getting to a point where getting the coal from Gdansk to our plant takes just as long. We need to take that into account, of course, along with potential complications when supplying products to our customers. Those who have great logistics departments can find alternative routes and arrange them with the carriers. Gdansk is congested, so we had to find an alternative route from the USA to Southern Europe, but capacity is close to reaching its limits there as well. These alternatives understandably make logistics more expensive. However, getting hold of the material is our priority, so we have to accept the increased costs. So far, the increase has been acceptable. Coal and coke prices are still more important for us. Other prices are also important, but not as much.

Separating hydrogen from coke gas

The Technical University of Ostrava is researching how to separate hydrogen from coke gas at our coke plant. “The scientists are looking for a suitable way to separate high-quality hydrogen from our coke gas,” Pavel Woznica explains. The research project has been running since 2020 and if it succeeds and the hydrogen separation is financially viable, it will expand the options for the byproducts in our portfolio.

Pavel Woznica

Na počátku své kariéry působil Pavel Woznica v plynárenských společnostech, a to především v oblasti nákupu a facility a fleet managementu. Na krátko si „odskočil“ i do pivovarnictví, aby se následně v roce 2008 vrátil do oblasti energetiky. Tehdy nastoupil na pozici zástupce obchodního ředitele ve společnosti OKD, kde působil až do října roku 2013. Poté již přešel k MTX Group, když v AL INVEST Břidličná dělal poradce pro optimalizaci procesů. V prosinci toho roku skupina koupila OKK Koksovny a Pavel Woznica se zapojil i zde. „Postupně jsem začal trávit víc a víc času prací pro OKK, až jsem se sem přesunul úplně,“ říká. Od konce roku 2013 měl v OKK na starosti controlling nákladů a dohled nad nákupním procesem, a když v roce 2014 do čela firmy nastoupil Zdeněk Durčák, převzal Woznica pozici ekonomického ředitele. Na té pak působil až do loňského roku, kdy po svém předchůdci vedení koksoven převzal.

Why is it mainly about coal and coke prices?

It’s simple – our reprocessing costs weren’t as volatile as other costs. I’m speaking in the past tense because they have significantly increased this year, but that’s something that has happened in all areas of our economy. We still have to invest in repairs. That’s something we can’t cut costs on because it would negatively impact our operation in the future. Besides, even if we significantly cut maintenance, material, and service costs, it would save us only a couple of million crowns a year. But only a slight increase in coal and coke prices, even just a couple of euros, can cost us tens of millions of crowns each quarter. Similarly, our byproducts, such as coke gas, tar, benzol, and ammonium sulfate, are just a couple of percent of our yearly turnover. However, the prices of chemical derivatives have moved in our favor. Of course, it is very difficult to predict how this situation will change. We expect an economic recession, but nobody knows how significant it will be. We are trying to prepare for it but we don’t want to make any rash decisions. When we have good results, we stay humble because we know nothing lasts forever. That being said, I am very confident we will make it through if things get rough.

MTX Group in the eyes of Pavel Woznica

“It may seem that our coke plant doesn’t fit into the MTX Group structure, but that’s what’s great about the group. They know how to find synergies in different areas where other people don’t see them,” Pavel Woznica says. He says the main benefit is that METALIMEX trades all their materials and products. For OKK, this means importing coal and exporting coke. METALIMEX has a wide range of contacts and many years of experience, which means they can get good deals for materials as well as sell products to a wide variety of clients. Thanks to this, the group can evolve dynamically and is particularly strong and stable. “The group’s scope brings stability. It has traditional operations such as OKK, but also automation experts and ICE, who are introducing innovation to concrete 3D printing, for example,” adds Woznica. At the same time, the group allows individual companies to operate within the scope of their responsibilities, which means they have a great deal of autonomy. “But there have to be some limits, of course. That said, meetings with the group’s management are always useful and help us make fast decisions,” says Woznica, concluding his take on the MTX Group.