Mining for Montenegro
As the Balkan nation develops its economy and bids for membership of the European Union by 2025, the transformed mining operation based near Pljevlja continues to power progress
Writer: Tom Wadlow | Project Manager: Thomas Arnold
Montenegro has cause for optimism. A scenic gem of a nation sat in the Balkans, its economy had been steadily growing before the onset of coronavirus, and its application for European Union membership has progressed to the final chapter.
Once part of socialist Yugoslavia, Montenegro is opening itself up to the world – trade is on the up, construction activity is increasing and more and more tourists are adding the country to their bucket list of must-see places in Europe.
All of this requires power, and nestled in the north is Coal Mine Pljevlja, an operation which has been a constant presence throughout the past seven decades of the Montenegrin story.
Today, it supplies the Pljevlja Thermal Power Plant which produces some 40 percent of the nation’s electricity, doing so in a profitable manner thanks to a somewhat remarkable reversal in fortunes witnessed over recent years.
In 2014, Slavoljub Popadic was not intent on angling his career away from more than 20 years in Montenegro’s public and private telecoms industry. Working for regional and state-level governmental organisations, in 2001 he became the Executive Director of Internet Crna Gora, the country’s first ISP, before joining Deutsche Telekom.
“My involvement in the mining industry was somewhat unplanned,” says Popadic, who is also the long-standing President of the CEO Forum of Montenegro. “It was at the request of Coal Mine Pljevlja’s owners, who believed that my engagement could help overcome the difficult business situation of the company.
“I came to the company as CEO at the end of 2014, when it was in the danger of going bankrupt. The accumulated losses amounted to more than €20 million, while the tax debt was at the level of more than €17 million. Nowadays, six years later, Coal Mine Pljevlja is a profitable company operating without losses or debts, with the accumulated profit of more than €13 million at the end of 2019.”
It has been a remarkable turnaround.
Facing financial extinction, Popadic pins the dramatic reversal of fortunes on what he terms as the creation of a favourable business environment within the organisation, a cultural shift which has enabled employees and management to express their full commitment.
This in turn led to enhanced short- and long-term planning, a drastic increase in productivity, reduction in operating costs and growth in export sales and overburden production.
A quick look at 2019’s figures put this into perspective. Coal Mine Pljevlja produced 1,561,618 tonnes of coal, of which around 90 percent (1,419,968 tonnes) was delivered to its major customer, the Pljevlja Thermal Power Plant.
Around 7.5 million cubic metres of solid overburden mass was delivered – this is 14 percent higher than planned and as much as 32 percent higher than the results achieved in 2018.
Another small, albeit important and growing source of revenue, lies away from the Pljevlja Thermal Power Plant.
“Within the previous four years we have managed to triple sales in the mass market and reach a level of more than 141,000 tonnes at the end of 2019,” Popadic says. “This is very important for the coal mine, as it provides additional income amounting to more than €6 million.
“In 2019 we earned profit amounting to €9.5 million, which is considerably better compared to the previous year. In fact, it makes for one of the best results achieved in the course of the 67 years of the mine’s operation.”
A new era
Indeed, Coal Mine Pljevlja is the largest producer of coal in Montenegro and one of the most significant operations in the Balkans, a major selling point being its moderate calorific value and low sulphur content.
Despite facing challenges in relation to environmental tariffs and a general shift in consensus away from using coal-fuelled power, the company continues to increase its output and profitability, a feat which has become possible ever since it became part of Elektroprivreda Crne Gore (EPCG) in 2018.
“The coal mine has obtained the long wished-for financial and operational stability and daringly initiated the procurement of new machinery, as well as construction of the key facilities,” Popadic says. “Each invested euro has undoubtedly been returned through an increase in operational and financial results.
“The newly procured dump trucks and excavators have directly contributed to an increase in the volume of produced overburden, relocation of the crusher-belt conveyor-spreader system has directly influenced the reduction in the costs of production, while construction of a new, modern maintenance hall has ensured better availability of the mining machinery.
“We also introduced a new ERP system and finished the adaptation of the administration building, miners club and pensioners club.”
All of this amounts to €16.6 million of investment over the past two years, the plan at the beginning of 2020 being to commit another €19 million to complete existing and initiate new projects. However, as with almost every industry, plans have been hit by the unforeseen outbreak of coronavirus.
It has posed tremendous challenges to the operation in a practical sense.
Social distancing, mandatory mask wearing and meticulous sanitisation, as well as temperature checks and daily checks to ensure compliance with ‘new normal’ standards, have all disrupted the routine way of doing things. Add in the impact that movement restrictions and border closures have had on exports, and it is easy to see how difficult much of 2020 has been.
However, Coal Mine Pljevlja has forged ahead undeterred. “By investing great efforts, we have managed to keep business activities at last year’s level or even a little bit above that level,” Popadic confirms. “At the end of the sixth month, profit was 12 percent higher compared to the same period last year.”
Although initial signs look positive, Coal Mine Pljevlja has prepared three models of investment ranging from €4.9 million to the original €19 million target, the final outcome very much a case of seeing how the rest of the year rides out.
Another important priority will be the organisation’s continued support within both the local Pljevlja community and wider contributions to Montenegrin society.
Indeed, CSR is a critical part of the firm’s identity, which stretches far beyond providing the raw material needed to power 40 percent of the country’s electricity output.
“We support sports, culture, healthcare, arts, environmental and social activities,” Popadic adds. “We help local hospitals and community health centres through donation of new, state-of-the-art equipment, specialised vehicles and the like.
“Together with the local authorities of the Municipality of Pljevlja, we improve city stadiums, parks, fountains and other infrastructure. We are the leading sponsor of the city’s main football, handball and volleyball clubs. We have excellent cooperation with SRK Lipljen, an environmental organisation whom we assist with breeding of autochthonous trout and fish stocking of the local rivers and lakes.
“At a national level, we help the main clinical centre in Podgorica and support nationally important events.”
The CEO is also determined to improve the welfare of Coal Mine Pljevlja’s own people, a target for the coming year being to increase staff salaries alongside the constant goal of optimising operations.
While he recognises that achieving the two outcomes will be challenging, Popadic is confident that continuous improvement will be made, and that the mine will stand as a key contributor to Montenegro for a great many years to come.
He signs off confidently: “Coal mines are facing serious challenges. We are witnessing the closure of a number of mines across the EU, the industry and households are making shifts to alternative energy generating products and we are facing new, very high environmental fees.
“However, together with Elektroprivreda, we have created a model that should ensure sustainable operation of the thermal power complex for the next 30 years. We will do everything to implement the plans from the model and keep the business activity sustainable.
“This will be significantly contributed to by the environmental reconstruction of Pljevlja Thermal Power Plant which is underway, and this will enable it to meet strict EU standards, as well as to obtain new materials through the technological process of desulphurisation, useful in future cement production.
“All the envisaged activities have been going as planned, and therefore I am optimistic about the coal mine’s continued important role in the development of Montenegro for the next 30 years.”