Bulgaria Shipping Report Q3 2012

The Bulgaria Shipping Report provides industry professionals and strategists, corporate analysts, shipping associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Bulgaria's shipping industry.

Despite relatively strong 2011 throughput results at Bulgaria's Port of Varna, BMI is holding with its bullish outlook for the facility in 2012. Our view that the port's total tonnage throughput growth will slow to 1.55% in 2012 from 13.8% in 2011 and that container volumes will slow to a year-on-year (y-o-y) increase of 2.07% – down from an estimated growth of 5.86% in 2011. This is due to Bulgaria's exposure to the eurozone, which is its main trade partner.

On the back of austerity packages in the region we forecast demand to slow. This will feed its way back up the supply chain to Bulgaria's export sector, and by extension lead to a slowing in throughput at the nation's ports.

On top of the depressed outlook, BMI highlights the risk to the downside for our current throughput forecasts from the extreme winter in Europe in Q112, which led to icy conditions so extreme that the Port of Varna was closed for part of February. Due to the fact that the port does not release monthly data, we cannot currently access the impact of the closure on port throughput, but any interruption in a port's workings traditionally has a negative impact on annual throughput.

Over the medium term we believe that the Port of Varna will continue to play a minor role in the box shipping sector in the Black Sea. Out of the ports that we cover in the region, Varna currently holds the smallest market share of container throughput.

We hold the view that Varna's role will continue to be minor despite potential interest from China in the port over the quarter. We note that China has not committed to any specific investment plan and that Varna is just one of the Balkan ports that China has shown an interest in. Romania's Port of Constantza and Croatia's Port of Rijeka have also been identified as ports which Chinese companies are considering investing in. We also highlight that China is just one of the investors Bulgaria has sought for investment in Varna: Germany and Japan have also been offered the opportunity to invest in the port, but have so far not made any moves to do so.

Headline Industry Data
- 2012 Port of Varna tonnage throughput forecast to grow 1.55% to reach 9.29mn tonnes.
- 2012 Port of Varna container throughput forecast to increase 2.07% to reach 128,263TEUs.
- 2012 total trade growth forecast to rise 4.19%. Key Industry Trends China Interested In Varna China is the latest country to announce interest in the Bulgarian port of Varna. The Chinese Ambassador to Bulgaria Guo Yezhou announced in April 2012 that he had met with the Mayor of Varna Kiril Yordanov to discuss the participation of Chinese companies in the concession of the Port of Varna.

Wooing Austrians With Danube Ports Bulgaria is also seeking to interest foreign firms in their river ports. The country is hoping that Austrian firms in particular will be keen to become concessionaires of some of Bulgaria's Danube ports, which include Ruse, Vidin, Lom, Nikopol and Tutrakan.

Risks To Outlook In the short term, the risk for the Port of Varna's throughput is to the downside. We believe the closure of the port for part of February (due to icy conditions) will have interrupted operations and will have had a negative impact on throughput. We also highlight the downside risk attached to a deepening in the eurozone crisis. Currently, a projected recession in the eurozone will lead to a projected slowing in throughput growth at Bulgaria's ports in 2012. A steeper decline in the eurozone would have a negative impact on throughput, however, with about 60% of the country's exports heading to the EU.

Over the medium term, we highlight the entry of a private port operator in Bulgaria would offer upside risk to our forecasts, but as we have highlighted there is little to attract a potential investor to the country's port sector at present. SHOW LESS READ MORE >

Executive Summary 5

SWOT Analysis 7

Bulgaria Political SWOT 7

Bulgaria Economic SWOT 7

Bulgaria Business Environment SWOT 8

Global Mining Outlook 9
Table: Selected Companies' Q111 Production Results 10
Table: Recent Attempted Acquisitions 10
Table: Government Intervention 11
Table: Other Developments 12

Industry Trends And Developments 13

Overview 13
Table: Mines In Bulgaria 13

Key Projects 16

Metals 16

Gold 16

Copper 18

Lead, Zinc And Silver 19

Uranium 21

Minerals 23

Coal 23

Diamonds 25

Business Environment Ratings 26
Table: Europe Mining Business Environment Ratings 26

Russia 27

Kazakhstan 27

Poland 28

Mongolia 28

Ukraine 28

Slovakia 29

Political Outlook 30

Domestic Politics 30

Industry Forecast Scenario 32
Table: Bulgaria’s Mining Industry, 2008-2015 32

Regulatory Structure And Developments 35

Competitive Landscape 36
Table: Key Players In Bulgaria’s Mining Industry 36

Company Monitor 37

Asarel Medet 37

Chelopech Mining 39

Commodities Forecast 41

Aluminium 41

Copper 41

Gold 43

Lead 43

Nickel 45

Tin 45

Zinc 46

Global Assumptions 48
Table: Global Assumptions, 2009-2015 48
Table: Regional Real GDP Growth, 2010-2013 (% chg y-o-y) 49
Table: Selected Exchange Rates, 2010-2013 (average) 49

Developed States 50
Table: Developed States’ GDP Growth, 2010-2013 (% chg y-o-y) 50

Emerging Markets 51
Table: Emerging Market’s GDP Growth, 2010-2013 (% chg y-o-y) 52

Consensus Forecasts 53
Table: Consensus Forecasts, 2011 And 2012 53

Business Environment Ratings Methodology 54
Table: Mining Business Environment Indicators 55
Table: Weighting Of Components 56