Czech Coal AS, the privately-held lignite miner, said late Thursday it may cut production as early as this year, and halt production permanently in 2020 at its key CSA mine, due to Czech mining limits regulations.
Czech Coal provides roughly one-third of the brown coal used at the lignite-fired power plant fleet belonging to CEZ AS (BAACEZ.PR).
Czech Coal is the country's second largest lignite extractor in terms of production, and controls the largest coal reserves in the country via its subsidiary Mostecka Uhelna.
"We are ready to invest up to 22 billion koruna ($1.38 billion) to access the reserves beyond the limits," Vasil Bobela, chairman of Mostecka Uhelna said, adding: "The prerequisite for this is that there will be no political hurdles in the way of this project."
"As early as 2012 extraction at the CSA site will have to drop to one half of the current level, to approximately 2.5 million tons a year," the company said.
There are only 48 million tons of brown coal currently legally accessible, while there is an approximately 750 million tons available in currently off-limit areas.
Czech coal mining limits, enacted in 1991, were created to prevent communities from being wiped off the map by the open-pit mining operations.
Amid skyrocketing global energy prices, there is an ongoing debate in the country about whether the limits should be canceled to allow access to coal reserves that could help fuel CEZ power plants for another 50 years.
CEZ, which produced 42.2 terrawatt hours of electricity in 2007 via coal, has recently said it is searching for long-term coal supplies, but in the meantime is diversifying its generation to include natural gas in place of some coal generation.