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Czechoslovakia

 
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Czechoslovakia

Mining and Energy

In the mid-1980s, Czechoslovakia's mineral resources were meager. The country was heavily dependent on imports of raw materials for use in industry (see table 9, Appendix A). Deposits of ferrous metals were small and low grade; in 1983 production amounted to 1.9 million tons. Imports, especially from the Soviet Union, supplied the dominant share of iron ore for the country's important iron and steel industry. Magnetite, a basic input for the steel industry, was more plentiful, making exports possible during the 1970s and 1980s. Deposits of nonferrous metals were limited or nonexistent. Imports supplied most of the country's needs for these metals. In 1983 about 9,500 tons of copper and 3,800 tons of lead were produced. The same year, 7,000 tons of zinc were mined, but imports supplied the bulk of requirements. The country also produced limited amounts of gold and mercury. Imports supplied most of the country's needs for nonferrous metals. Czechoslovakia did supply most of its own requirements for nonmetallic minerals to support the manufacture of building materials, glass, and ceramics.

The bulk of the country's mining activity involved coal, the principal domestic energy source. Located primarily in northern Bohemia and Moravia, freely extractable reserves reportedly amounted to 5.8 billion tons as of 1986. Of this quantity, about 30 percent was bituminous coal. In 1985 production of all coal amounted to 126.6 million tons, a 2.1 percent drop over 1984 that signaled the accelerating exhaustion of easily worked, high-grade reserves. In 1985 Czechoslovakia depended on coal for 60 percent of its energy consumption in contrast with 88 percent in 1960.

The decline in the share of total primary energy consumption represented by coal had occurred even though coal production had expanded throughout the 1970s. During these years, the growing need for energy was met primarily by imported oil and, from the mid-1970s, by natural gas; almost all imports of oil and gas came from the Soviet Union. Domestic crude oil sources and production were modest. Within Czechoslovakia itself, numerous small oil and gas fields had been discovered, but production was minor (about 100,000 tons of crude oil and 800 million cubic meters of natural gas in 1985). These supplied only a small fraction of the country's needs. Geological surveys largely ruled out the possibility of future discoveries of major oil or gas deposits, although one significant new source of natural gas was discovered in 1985 near Gbely in western Slovakia.

During the 1970s, the Soviet Union found it increasingly difficult and costly to meet the fuel and raw materials needs of Czechoslovakia and other East European countries. The unexploited Soviet resources tended to be located in Siberia, where extraction and transport were difficult and costly. One solution to the problem was Comecon's decision to adjust Soviet energy prices annually after 1974; as a result, Soviet prices approached--and eventually at times exceeded--world market prices. The adjustment improved the terms of trade of the Soviet Union at the expense of Czechoslovakia and its neighbors when world prices for many commodities, particularly crude oil, rose sharply in the middle and late 1970s. The higher prices in turn resulted in a larger return to the Soviet Union for its exports of fuels and raw materials and helped to finance expansion of Soviet production capacity. In addition, in the 1970s Comecon initiated several joint projects, such as the construction of a major natural gas pipeline from the Soviet Union to Eastern Europe and of large nuclear power plants in the Soviet Union (see Appendix B). The participating countries, including Czechoslovakia, received payments in the form of natural gas and electricity. In the mid-1980s, Czechoslovakia also participated in construction of the Yamburg natural gas pipeline "Progress" in the Soviet Union.

From 1967 to 1984, Czechoslovakia benefited additionally from a special agreement with the Soviet Union--in effect a Czechoslovak credit from 1967--whereby Czechoslovakia received 5 million tons of Soviet crude oil a year at a late 1960s price, which was just a small fraction of the world market price. Thus while increased Soviet fuel and raw materials export prices imposed a severe burden on Czechoslovakia, the cost was substantially less than if the country had imported these materials from noncommunist countries. In 1980 a Czechoslovak official indicated that Czechoslovakia was paying about onefourth the world price for its oil imports. By 1985, however, the situation had changed dramatically. In 1981 the Soviet Union had announced a 10-percent cutback in the crude oil it would deliver to East European countries during the 1981-85 period. Subsequently--and for a variety of other reasons--world oil prices plummeted, but the Soviet price, based on the five-year formula, continued to rise.

In the mid-1980s, the country's leaders considered energy conservation essential. Czechoslovakia's heavy reliance on fuel imports was costly. Imports supplied 95 percent of the country's fuel needs, and the country needed to import about 16.6 million tons of crude oil and 10.5 billion cubic meters of natural gas each year. Conservation was also essential because although Soviet supplies of natural gas were expected to increase, the more important flow of crude oil was likely to stagnate. In the short run, extraction of domestic coal would help Czechoslovakia meet its growing energy needs, but the increase would be slow and costly because deeper deposits had to be mined in order to meet quotas. The fuel problem was especially acute because Czechoslovak industry had a high input of energy per unit of national income, a rate substantially higher than that of Western Europe and some East European countries (7.5 tons of standard fuel per inhabitant per year). Industrial consumption of largely imported raw materials and energy was acknowledged to be perhaps as much as 40 percent higher than in comparable advanced industrial countries. The KSC leadership rightly believed that considerable savings were possible.

Nevertheless, conservation alone would not suffice. Since the 1970s, economic planners had been pursuing an ambitious nuclear energy program. In the long run, in their judgment, nuclear power was absolutely vital to the projected energy balance. In late 1978, the first major nuclear power plant (of Soviet design) began operation at Jaslovske Bohunice. In 1985 and 1986, portions of the Dukovany station began test runs, and preliminary site work was underway for two more power stations, at Mochovce in western Slovakia and Temelin in southern Bohemia. Nuclear power's share of the total electricity supply increased to almost 20 percent in 1986. According to the long-range plan, with expansion of this power station plus construction of additional stations and the import of electricity from joint nuclear projects in the Soviet Union, nuclear power would provide 30 percent or more of total electricity by 1990. Plans called for nuclear power to account for over 53 percent of electricity by the year 2000. Although the 1986 Chernobyl accident in the Soviet Union did not alter the government's commitment to nuclear power, particularly since none of the existing or planned reactors used the kind of technology employed at Chernobyl, Czechoslovak leaders acknowledged the need for a thorough review of safety measures. Subsequently a number of special conferences were held concerning nuclear power issues. Czechoslovakia was well positioned to fuel its ambitious nuclear program; in the mid-1980s, the country was an important producer of uranium. Little information on uranium output was available, but annual production was estimated by Western analysts at 2,000 to 3,000 tons. The reserves were located in the Krusne Hory of Bohemia.

In the mid-1980s, Czechoslovakia had a substantial number of hydroelectric plants, located mainly on the Vah and Vltava rivers. Work was underway on a major hydroelectric power project on the Danube River at Gabcikovo-Nagymaros, a controversial joint project with Hungary to which environmentalists, especially in Hungary, had objected. The completed project was expected to supply about 4 percent of Czechoslovak energy requirements. In 1986 the government approved plans for construction of several additional power stations on the Labe and Vah rivers by the end of the century. Czechoslovakia imported some electricity each year from Romania.

Data as of August 1987

Czechoslovakia - TABLE OF CONTENTS

  • The Economy


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