Poland reportedly shortlists six coalmines for closure

By bne IntelliNews August 2, 2016

Poland’s government has reportedly come up with a list of six coalmines to shut down due to “permanent unprofitability,” local media claimed on August 2. With around 15,000 jobs at stake, Warsaw is mulling the best way to break the bad news to miners and local authorities.

The Polish energy ministry analysed the financial state of Polish coal mines and decided that six of them offer no hope of a return to profitability, Gazeta Prawna reports. The mines in question lost PLN87 (€20) on average per tonne of coal produced in 2015, compared to an average loss of PLN27 per tonne across the sector, the government established in an audit.

Poland’s mines are struggling in the face of weak markets and inefficiency. In 2015, the sector suffered a loss of PLN1.9bn, only PLN150mn less than in the previous year.

The state has bailed out the country’s largest mine holding Kompania Weglowa and is working on rescues for two other large state miners – JSW and KHW. However, the ministry has apparently concluded that closing six mines is essential for the plan to succeed, the newspaper writes, citing a source “with knowledge on the matter.”

Should the ministry ultimately go ahead with the closures, it might only have until 2018 to do so if it wants to take advantage of a window established by the European Union to allow member states to public aid to help close unprofitable mines. The EU launched the programme in 2010 to encourage the closure of coal-fired generation, but it expires in 2018. 

Warsaw is however likely to have a hard time executing the plan at all, let alone in swift order. The country's powerful mining unions have over the past 20 years faced down successive governments in their bids to reform the sector. The current populist government appears one of the least likely to be happy to whip up anger amongst the 100,000 or so workers in the industry.

Local authorities would be unlikely to welcome any cuts also. “The government has not talked to us about potential closures, which would be a societal and economic catastrophe,” the mayor of Ruda Slaska, where some of the coalmines in question are located, told Gazeta Prawna.

 

 

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