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‘The future of the German mining industry with special reference to EU enlargement’

Paper given by Wolfram Kuschke, Government Minister and Head of the State Chancellery of North Rhine-Westphalia, to the first symposium session of the mining supervisory group of the IG BCE, with follow-up debate, held in Hanover on 17 May 2003.

Wolfram Kuschke

Many of you know that I have lived for many years in a coalfield region. This was my constituency and mining in North Rhine-Westphalia was part of my political remit when I held the office of Chairman of Arnsberg Regional Council. I therefore feel close ties with those who work in the coal industry, which even today is still a hazardous occupation.

I am therefore very much aware of how our mineworkers rely on the work of highly-skilled and highly-motivated mining supervisors. This group of professionals provides a form of “life insurance” for practically every branch of the industry.

Anyone who looks at the accident statistics of the German coal industry will see that our health and safety levels are unmatched anywhere in the world of mining. And much of this is down to the mining supervisors.

Health and safety has been developed in every sector of the industry to the point where

 

·  most of the recorded accidents relate to individual incidents;

·  mining disasters like the Luisenthal colliery accident of 1962 in Völklingen are, thankfully, a thing of the past.

And we all hope that this will remain so.

The coal industry mining supervisors laid the foundations for this achievement, the mine operators and the IG BCE played their part and the results speak for themselves. Of course I know that high performance is not something that can easily be improved on: so allow me to thank you all for what you have achieved and to wish you even greater success in the years ahead.

What you have achieved highlights how important German mining safety technology is for every mining industry in the world, for this in turn helps secure the future of our own industry.

Wolfram Kuschke

Many of you know that I have lived for many years in a coalfield region. This was my constituency and mining in North Rhine-Westphalia was part of my political remit when I held the office of Chairman of Arnsberg Regional Council. I therefore feel close ties with those who work in the coal industry, which even today is still a hazardous occupation.

I am therefore very much aware of how our mineworkers rely on the work of highly-skilled and highly-motivated mining supervisors. This group of professionals provides a form of “life insurance” for practically every branch of the industry.

Anyone who looks at the accident statistics of the German coal industry will see that our health and safety levels are unmatched anywhere in the world of mining. And much of this is down to the mining supervisors.

Health and safety has been developed in every sector of the industry to the point where

·  most of the recorded accidents relate to individual incidents;

- mining disasters like the Luisenthal colliery accident of 1962 in Völklingen are, thankfully, a thing of the past.

And we all hope that this will remain so.

The coal industry mining supervisors laid the foundations for this achievement, the mine operators and the IG BCE played their part and the results speak for themselves. Of course I know that high performance is not something that can easily be improved on: so allow me to thank you all for what you have achieved and to wish you even greater success in the years ahead.

What you have achieved highlights how important German mining safety technology is for every mining industry in the world, for this in turn helps secure the future of our own industry.

As well as workplace safety the current debate therefore also focuses on job security. We need to shape the future of the German mining sector and to this effect we need to concern ourselves with the logic of a subsidised domestic mining industry. The future of all other mining activities can generally be regarded as relatively problem-free, aside from the growing problem of public acceptance. I should therefore like to talk mainly about what is likely to wait in store for our industry in the years ahead.

The indigenous coal industry has shown that it has the viability needed to maintain production at a reduced level. In defiance of all its critics it has proven this time and time again in recent years and in the most difficult of economic environments. Let me list the key factors here:

In 1997 the then Federal Government, in conjunction with the regional governments of the Saar and North Rhine-Westphalia, reached an agreement with the coal industry and with the mining and energy trade unions on a financial framework for continued aid to the coal industry that would run until 2005. This provides for the level of subsidy to be reduced from € 5 bn in 1997 to around € 2.7 bn in 2005.

This is more than the overall reduction in aid of 10% that many have been demanding in the current debate on reducing subsidy levels to the mining industry.

No other branch of German industry has had to endure subsidy cuts such as those being applied to coal mining. In fact quite the reverse, for according to a survey by the Kiel Institute of World Economics Germany’s total subsidy package increased from € 150.1 bn to

€ 155.6 bn between 1998 and 2001. Financial aid to the wind power sector will in fact overtake aid to coal mining in the foreseeable future. Various other statistics show even more clearly the efforts that the coal industry has made to ensure its viability:

· Since 1997 the coal-industry workforce has been downsized by 27,500 to its current figure of 44,500. By the end of 2005 the industry will lose a further 8,500 employees to give a total workforce of 36,000.

· Over the same period production will be cut by 42 million tonnes a year to end at a figure of 26 million tonnes. And the years ahead will see further reductions in output and in the level of state aid.

This is even now being negotiated with the Government and the IG BCE.

The coal industry will therefore be more than meeting the requirements for a reduction in aid and the fact that it has the capacity to do so demonstrates its viability.

Over the next few years we have to continue realistically to bring our domestic mining industry to a level at which it can achieve what is expected of it with a minimum of state aid.

Our industry has to

· be able to contribute to energy supply security,

· provide the mining suppliers with a development environment that reflects the reality of underground mining,

· give the plant constructors the incentive to continue to develop their power-station technology in Germany and

· in this way to help global emission-reduction efforts

I agree with the European Commission’s views about security of energy supply. In the long term there is no energy security without indigenous coal and lignite and our coal deposits need to be kept accessible for this reason. Coal and lignite are the only fossil fuels that we have available in any significant quantity. They also have the greatest life span of any of the global energy reserves. I consider this to be the most conclusive argument for supporting the further development of coal-based technology. We have done this successfully in the past and it is here that I see our economic future.

The German mining supply sector comprises some 250 firms, of which 20 are based in North Rhine-Westphalia. It is exclusively because of the development and application opportunities provided by the coal industry in North Rhine-Westphalia and by the salt and potash industry in other parts of Germany that these mining suppliers have been able to maintain their high technical standards as global market-leaders.

The mining supervisors, colliery operators and the IGBCE have all done their bit too. The safety requirements you have laid down have challenged the suppliers to live up to the highest technical standards. 

I am thinking for example of the ‘Technical requirements for shaft and inclined winding installations’, which define the current international state of the art.

Last year the mining suppliers were able to increase their export turnover to more than € 2 bn and in doing so succeeded in offsetting the losses suffered the previous year in the Saar and North Rhine-Westphalia coalfields.

These companies are now supplying a world market whose apparent sales potential, according to the World Energy Council, is worth an estimated 4,000 bn dollars in investment – and it is based on cutting-edge technology from North Rhine-Westphalia. Let us hope that it remains so. And this business needs our domestic mining industry if it is not to disappear.

Our coal-fired plant constructors are now designing state-of-the-art power stations that will soon be capable of efficiency rates of 47% and more. We have created the framework conditions for such a blueprint and intend to monitor and support this project. However, this requires the continued use of indigenous coal for power generation. Otherwise the electricity generators will switch fuels and our plant builders will lose interest and move some of their facilities overseas.

I see in Europe and in the world at large a market with a huge potential for our plant constructors. It has been estimated that Europe will need some 200,000 megawatts in new and replacement generating capacity by 2020, to say nothing of the potential demand from the newly industrialising nations.

This is not just significant from a business viewpoint but also represents an important contribution towards international climate protection efforts.

RWE’s new lignite-fired plant in Niederaussem, with its optimised engineering, and the Staudinger coal-fired power station near Frankfurt are two installations already capably of 43% efficiency. A ‘global efficiency offensive’ could tap into an emissions reduction potential of some 1.4 bn tonnes of CO₂ a year if all power stations that have been supplying the grid for more than twenty years were to be replaced with new-technology plant. The saving would be equivalent to 6% of global CO₂ emissions in 2001 – and that should not be underestimated as a contribution to climate protection.

It would take years for such a reduction in CO₂ output to be achieved by way of the renewable energies, whose development has been supported for years by the Government of North Rhine-Westphalia.

And to all those who are already ringing-in the end of the German coal industry I would say: “Rumours of our death have been greatly exaggerated. We are still in the game. Success will prove us right.”

Neither will EU enlargement to include the coal producers of Poland and the Czech Republic knock us off the ball, as it were. I see no cause for changing our energy policy in general and our coal policy in particular.

The geological conditions in the accession countries are in many instances comparable with our own. That means that during the conversion phase, as wages and incidental costs go up, production costs in these new member states will tend to move ever closer to our own. State aid will therefore be required there too. Because of the recognised Community patrimony of the EU member states the same rules will henceforth also apply to Poland and the Czech Republic.

For their part, these two countries will help put on a broader footing the security of energy supply that we all want to see in the European Union. For we need them too. According to the EU Green Paper ‘Towards a European strategy for energy supply security’ energy consumption in the Community is set to increase further. For the Community of Fifteen a level of gross energy demand has been predicted for 2030 that is 11% above the 1998 figure, with the fastest rate of growth being witnessed in the electricity sector. At the same time we are anticipating that in the long term the European Union’s dependence on imported energy will increase to 70%.

Our mining technology with its leading market position can react to demand from the accession states for the products being manufactured by the mining supplier companies and this too can help improve safety standards in these countries. Those who want to mine coal under geological conditions similar to those encountered in Germany will need the best mining technology available.

And our suppliers will be able to provide this as long as there is an active exchange of ideas with the German coal industry and the possibility of testing new systems in a harsh mining environment. It may of course in certain cases also be desirable to collaborate with companies operating in the new member states.

But we can be sure of one thing: without the indigenous mining industry our suppliers would have no option but to transfer their operations to one of the new member countries. And of course the indigenous companies operating there would already have their noses in front.

The power generating sector in the new accession countries also has a substantial demand for new and replacement capacity and this provides a real opportunity for our plant construction companies to sell their cutting-edge products. Poland has already started work on a lignite-fuelled power station. In this case the power plant operators are looking towards BoA technology that is to be supplied by a German engineering company.

This is certainly a welcome start and I hope that our firms will have an opportunity to join in. I see this as a future benefit for our climate and as a bonus right here and now for health and safety in the mining industry.

More and more Polish mineworkers are now working in the opencast lignite mines near to the German-Polish border and the same industrial safety standards apply to them as to anybody else. Here the mining supervisors, mine operators and the IG BCE have made it their business to ensure that the workers are made familiar with good working practices and, more especially, are instilled with an awareness of workplace health and safety.

When word gets around about what the German coal industry has to offer it will arouse even greater interest in German-made products.

I think that this will soon take off and trigger another positive development. And then I really see a great future for the German mining industry.

May you all succeed in this. Good luck and my best wishes!”