Contract for the sale of hard coal

MBF Group SA on. On December 7, 2022, he signed a contract to sell hard coal. The agreement was concluded with a capital company (društvo s ograničenom odgovornošću) based in Zagreb, Croatia. Pursuant to the signed Agreement, we contracted with mines located in the Balkans to purchase and receive no less than 100,000 tons of hard coal with a grain size of 5-20 mm (according to the classification adopted, the grain size corresponds to the so-called medium sort, which includes grits and peas).

The aforementioned Contract guarantees immediate commencement of purchase and transportation of coal to the final customer (recipient). The contract is for a minimum of 100,000 tons within the allocation of this quantity from the mine, with each delivery and receipt coordinated on an ongoing basis with the mine’s production capacity and their ongoing commitments to other customers. The contract was concluded for an indefinite period, and its provisions will apply to all subsequent transactions executed by the parties. The other terms of the Agreement do not deviate from the commonly used standards. The Company is required not to provide detailed transaction terms in view of the fact that disclosure of such information could harm the competitive position and legitimate interests of the parties.

Hard coal can be divided into types. The different types differ in their properties and combustion method. Thus, you can end up with coal that will burn cleanly and smoothly, but you can also buy one that will melt and dirty the boiler. When separating classes of coal, three parameters of this raw material are taken into account: calorific value, ash content and sulfur content. Of greatest importance is the calorific value. This is the amount of energy that coal is able to convert into heat in the combustion process. The calorific value is largely determined by the moisture and ash content of the coal. This parameter is most often given in MJ/kg (megajoules per kilogram).

Basic information about the offer:

Sort: peas | grits (5 mm – 20 mm)
Calorific value: 16,500 kJ/kg – 19,000 kJ/kg
Ash: 11.00% m/m – 15.00% m/m
Transaction conditions: according to Incoterms EXW
Transportation: railroad cars
Receiving potential: up to 8,000 tons / week

At the same time, the Issuer’s management announces that the conclusion of the Contract enables the Company to offer and sell coal at a competitive price not exceeding $175/ton (or about PLN 780/ton, respectively), where the quoted amount includes the margin due to the Issuer. Currently, advanced negotiations on coal supplies are being conducted with contractors from Poland and neighboring countries.