MBF Group
The conclusion of the agreements and contracts, which occurred in late 2022 and early 2023, has given us a number of key tasks and responsibilities. We need to meet all these challenges in order to declare 2023 a landmark year and move on. Act operationally and in the long term, but also look to the regulated market of the WSE as soon as we reach the required capitalization.
In the context of the near and distant future, all good things, of course, have their beginning in obtaining the status of an excise entity and permission to broker coal. Efforts in obtaining the relevant permits were initiated many weeks earlier, but we decided to report only on the final result. In line with the practice adopted last year of reporting and reporting on accomplished facts.
Further developments came very quickly, as we already signed a contract with a Croatian entity on December 7, 2022 to receive 100,000 MT of hard coal, at a very competitive price. The contracted raw material is of the 5-20 mm sort (according to the accepted classification, grain size corresponds to the so-called medium sort, which includes grits and peas). Guaranteeing the supply enabled us to enter into immediate talks on its divestment with entities from Poland and neighboring countries.
This resulted in the signing of 2 framework agreements in the following weeks to establish the terms of supply and contracting of coal:
- December 16, 2022 with the German entity International Consulting, headquartered in Neunkirchen – up to 50,000 MT (vide: ESPI Current Report Signing a contract for the sale of hard coal by the Issuer), and
- January 10, 2023 with a Lithuanian entity – up to 360,000 MT (vide: Current Report ESPI Signing of a strategic contract for the sale of hard coal by the Issuer).
On top of that, notwithstanding the above, we are in very advanced talks with an entity from Slovakia regarding the sale of another 50,000 MT.
At the moment, the critical element needed to start deliveries is scheduling and selecting a competitive rail transport offer (which is not easy after spikes in electricity prices). Hence our agreement with a Dubai-based entity for consulting and advising on the organization and implementation of hard coal deliveries from Bosnia and Herzegovina.
However, regardless of all the ongoing negotiations with buyers, consultants and shippers to arrange transportation (at the end of the day, everyone has to fit within the budget and profitability of each deal), there is no denying that we have far too little contracted coal in the context of signed contracts to sell it.
Even if we drop deliveries to entities in Germany and Slovakia, we are still short 260,000 MT for a company in Lithuania. On the other hand, giving up such a huge contract and focusing on smaller customers would be painful. Of course, even if we stay at the level of delivery of 100,000 MT / year, this will involve an increase in the company‘s revenues by several dozen times (and that’s accumulating our revenues from the time of the company’s debut on the NC until today), but we want to measure as high as we can 😊.
That’s why all of us at the company now, management, colleagues and the supervisory board, are focused on increasing our coal reserves, the quality of which has been accepted by contractors from Germany, Lithuania and Slovakia. In addition to appropriate activities in the domestic market using our contacts among brokers and intermediaries, we want to try the most difficult one, namely signing a contract directly with mines in the Balkans. This could mean negotiating a better price, a larger allocation for coal offtake, but above all a completely different position as a coal broker.
The very invitation to the talks will be a great honor for us and will show that MBF Group SA is taken seriously. The ability to list the mine as a customer and the prospect that we may become the only importers of this coal to Poland and neighboring countries will become the next step for our development. And in the background will remain what is most important – the greatest possible opportunity to fulfill the 360,000 MT hard coal supply contract over the next 12 months.
While everything should be approached with cautious optimism, we hope that the tasks and challenges facing our company will be substantially met. 100,000 MT of receipts are already guaranteed, but we intend to fight for the largest possible pool. Only the brave win, and immodestly we will write that we want to win and claim the top pot. And we will win 😊 Please expect the unexpected, as Balkan topics may be just the beginning of good news.
Stay tuned 😊
