Bulgaria Mining Report
2012

Bulgaria Mining Report 2012

Bulgaria's mining industry grew slightly faster than the country's economy in 2010, as both continued to emerge from deep contractions. Europe's poorest country by GDP per capita has a relatively small mining sector, which it hopes will play an important part in its export-led recovery. As the economy recovers, BMI believes that growth in Bulgaria's mining industry will accelerate to 9.2% in 2011 to be worth BGN1.31bn (US$840mn).

If the country's plans to boost nuclear energy beyond its existing 35% contribution to its energy mix come to fruition, Bulgaria will be able to free up larger proportions of coal for export over the long term.

The government intends to build two new reactors either at the stalled project site in Belene or at Kozloduy, where it also plans to extend the life of two 1,000MW reactors beyond 2017 and 2019.

There was a gold rush in Bulgaria's Graovo area in early 2011, after preliminary exploration work by Sofia-based Trace Resources located huge deposits under the Bardoto natural park. Canada's EurOmax Resources discovered new gold zones in Trun, in south western Bulgaria, while drilling in June 2011. EurOmax's drilling programme revealed 87m at 2.14 grammes per tonne (g/t) of gold in its first test hole at its Ruy target. The company is drilling at other sites as part of what it described as a very large gold project. Chelopech Mining received support from two financial institutions in order to modernise its mine in December 2010. The European Bank for Reconstruction and Development (EBRD) and UniCredit Bullbank announced a US$66.75mn loan to allow the mine to update its facilities and environmental programmes. The mine is on the site of the EU's largest operational gold deposit. Meanwhile, in June 2011, Chelopech operator Dundee Precious Metals launched its US$150mn upgraded ore processing plant for copper-gold concentrate, allowing the company to double ore production to 2mn tonnes per year using improved technology. In February 2011, the company also obtained a 30-year concession from the government to proceed with an open-pit gold mine near Krumovgrad, on Bulgaria's border with Greece. Dundee is expected to produce about 850,000 tonnes of ore at the site and will spend over BGN114mn (US$79.6mn) on the project. The granting of the concession was a huge blow to environmental opponents of the project.

KCM Group expects zinc production in 2011 to be flat, with lead production edging up to 65,000 tonnes from 63,000 tonnes. KCM lifted its zinc production by 7.4% y-o-y to 73,000 tonnes and lead output by 1.6% y-o-y to 63,000 tonnes in 2010. Zinc and lead smelter OTZK announced plans in April 2011 to increase its zinc output to 21,000 tonnes in 2011, from 19,100 tonnes in 2010. The smelter is also looking to finance a US$70mn upgrade to its lead unit by 2013. However, the Intertrust Holdings-owned smelter was forced to shut down its lead production in the same month on an order from the Environment Ministry, which complained that it had breached its lead and sulphur dioxide emissions limits. BMI expects Bulgaria's mining sector to maintain growth at 7.4% in 2012 before edging down to an average 5.8% in the subsequent two years. By 2015, the sector will be growing by 4.8% and will be valued at BGN1.91bn (US$1.23bn).

• Executive Summary
• SWOT Analysis
• Bulgaria Mining Sector SWOT
• Bulgaria Business Environment SWOT
• Global Mining Outlook
  • Table: Recent Tax Increases
  • Table: Largest Coal Projects
  • Table: Major Frontier Mining Projects
• Europe Mining Sector Outlook
  • Table: Major Nordic Mining Projects
  • Table: Key Gold Projects In Eastern Europe
• Industry Trend Analysis
  • Table: Bulgaria's Key Mines
  • Table: Bulgaria's Mining Industry Value & Production, 2009-2016
• Industry Forecasts
• Copper: Modest Growth In 2012
  • Table: Bulgaria's Copper Production
• Coal: Minimal Growth From Sole Miner
  • Table: Bulgaria's Coal Production
• Regulatory Structure
• Europe Business Environment Ratings
  • Table: Mining Business Environment Risk/Reward Ratings
• Competitive Landscape
• Company Profiles
• Chelopech Mining
• Assarel Medet
• Metals Commodity Price Forecasts
• Copper To Edge Lower
• Aluminium: No Sustained Recovery Ahead
• Oil: Prices To Pull Back
• Gold: Still Bullish
• Business Environment Ratings Methodology
  • Table: Mining Business Environment Indicators
  • Table: Weighting Of Components