Management Report on Company Business
Activities and Assets

THE ENVIRONMENT AND RECLAMATION

Protection of the environment is an integral part of Severočeské doly's long-term strategy. The Company puts considerable effort into preparing and realizing projects designed to clean up and reclaim land affected by mining.
The harmonization of Czech environmental protection legislation with European Union legislation is placing increasing demands on the equipment and technology used, the measures applied to restrict negative impacts on the surroundings, and inspections conducted to ensure limits are observed. The Company is investing into anti-noise and anti-dust measures, and technology designed to treat pit water, waste water, and air pollution. Environmental investments are being channelled into waste, chemical, and product management. In 2001, the Company expended CZK 432 million on this area. The Company and its employees are fully aware of their liability and responsibility in relation to environmental protection.

Clean-up and Reclamation

Thoroughly prepared and executed post-mining clean-up and land reclamation is an integral part of the Company's activities. All measures taken to date are included in two studies: 'Environmental post-mining landscape formation'and the 'Long-term reclamation plan'. Together, these two documents present a complete picture of the newly formed landscape and its integration into the surrounding areas, including an estimate of the amount of financial provisioning that will be needed.

Clean-up and Reclamation Provision

In 2001, we increased the balance of the clean-up and reclamation provision from CZK 2,154.9 million to CZK 2,385.9 million. A total of CZK 243.3 million was drawn from the provision, and another CZK 21.0 million was used for depositing 266,300 m³ of arable soil.

Land Clearance Programme

In order for mining to advance within the area approved for extraction, land must be cleared early. The Company spent CZK 66.3 million on land purchases. The land clearance programme included providing compensation for loss of vegetation and roads as well as financing a railroad track rerouting project, all in an aggregate amount of CZK 213.6 million.
An important fact is that mining activity in the set mining area does not require the relocation of human settlements.

Road and Track Rerouting

Of pivotal importance was the continuation of the rerouting of the ČD – DDC railroad track at Březno u Chomutova.

Mining Damage Settlement Provision

The Company has set up a statutory provision for settlement of anticipated mining damage claims. The balance of the provision was reduced from CZK 987.9 million to CZK 879.9 million, mainly due to the financing of the above-mentioned track rerouting.

Protection Against Air and Noise Pollution

The Company has invested substantial funds into anti-noise and anti-dust measures. To ensure objective, independent assessment of the impact of mining activities around the Company's quarries, the Company operates a dust monitoring programme involving continuous measurements and remote data transmission. Noise levels are monitored on a regular monthly basis in all towns affected by the mining operations. The monitoring is carried out by independent accredited testing laboratories. In 2001, none of the permitted dust level and noise level limits were exceeded for any of the municipalities covered by the monitoring programme.

State of reclamation at year-end 2001 (ha)

Water Protection

Severočeské doly a.s. places great emphasis on its waste and mining water treatment technologies. Monitored discharge water quality is guaranteed by the Company's own laboratory, which is equipped with state-of-the-art analytical equipment. The laboratory was awarded a 'Laboratory Best Practice Certificatein 2000. Besides the quality of discharge water, the Company also monitors the amount discharged.

Waste Management

The number-one priority for Severočeské doly a.s. is to minimize waste generation, especially with regard to hazardous waste. The Company organizes waste collection, sorting, treatment, recycling and reuse. Waste that cannot be reused is liquidated. The Company is involved in the new Internet programme called ENVIWEB (www.enviweb.cz), a platform it uses to offer waste it is unable to reuse.

Outlook

External evaluations of environmental protection results suggest that the trend pursued by the Company is the right path to take. The approach to this issue will not change much in the upcoming period.