Czech government ends talks with OKD mining company

The Czech government has definitively called an end to negotiations with the ailing mining company OKD. Industry and Trade Minister Jan Mládek on Wednesday advised the company to file for bankruptcy and said the government would now focus exclusively on helping the thousands of employees to be laid-off.

Jan Mládek, photo: Filip Jandourek

Communication between the government and OKD has been highly problematic for some time. At the end of last year the industry minister accused the company of facing the government with a 4 billion crown ultimatum bailout if it wanted to save thousands of jobs in the Moravia-Silesia rejoin. The request was refused and after OKD general director Dale Ekmark recently announced the planned closure of three mines without informing the government about the planned move in advance, the industry minister said the government was no longer willing to continue negotiations with the company.

“The state will not assist the legal entity OKD, although it is prepared to help employees who will be laid off. The responsibility lies fully with OKD’s management. If the company is in trouble it should file for bankruptcy.”

Photo: archive of OKD

The joint working group which government representatives and the company’s shareholders agreed on in mid-January will not be established and the government’s offer to buy the Frenštat mine for a symbolic one crown in order to enable a gradual phase-out of mining in the region is no longer on the cards. According to the government OKD did not even bother to respond to the offer.

The mining company employs over 10,000 people and another 3,000 jobs in the region are linked to the company’s operations. Should OKD go ahead with its plans to close the Paskov, Darkov and Lazy mines over 5,000 people would be out of work in a region with an already high unemployment rate.

The gradual-phase out of mining in the region which the government and trade unions advocated, no longer appears realistic and the cabinet will need to take effective measures to cushion the social impact of the planned closures. Some are already on the table and being discussed by Parliament’s Committee for Economic Affairs. Its chairman Ivan Pilný said the measures, such as investment into new job opportunities and requalification courses, appeared reasonable but they would not tide over the thousands of people suddenly left jobless. Another member of the committee František Laudát says not all of the measures are realistic.

František Laudát, photo: archive of TOP 09

“What I am convinced will not work is the government’s plan to support labour mobility by covering the cost of travel expenses for those who are willing to commute to work. We all know that in the Czech Republic this is unrealistic.”

When and how many employees the OKD company will lay-off is still unclear. Minister Mládek said the company had responded vaguely to his inquiry about the planned closures saying the matter was still under consideration. Some indication of OKDs future could come from the annual report on its mother company’s economic results for 2015 due to be published on February 24th.