Shares of Polish miner JSW jump as CEO offers to quit to end strike

By bne IntelliNews February 15, 2015

Jan Cienski in Warsaw -

The share price of state-owned Jastrzebska Spolka Weglowa (JSW), one of Poland's largest coal miners, soared on February 13 after a tentative deal was reached between management and striking workers, who had demanded the head of CEO Jaroslaw Zagorowski as one of their condition for returning to work.

Zagorowski said he was prepared to leave his post if miners returned to work. He had proposed an ambitious cost cutting programme at the hard coal miner, which pared back privileges which include 14 monthly pay cheques, generous medical benefits and payments to help equip children for school - all vanishingly rare in the private sector.

"This is not normal. If there are problems on the coal market and the company has lower revenues then savings have to be found," government spokeswoman Malgorzata Kidawa-Blonska said earlier in the week.

Zagorowski, in charge of the company since 2007, said he would be prepared to quit as of February 16 as long as staff agreed to tie their 14th month of pay to company results and to agree to work six days a week. If those conditions are met, the company could save as much as PLN300mn (€72m). Zagorowski has become the focus of union anger, and told reporters that "there were real dangers to my safety" and the "psychosis of hate" towards him made it difficult to stay on.

The move towards ending a strike that began on January 28, and was costing the company PLN27mn a day, sent shares up by more than 8% to PLN22.93 in afternoon trading on the Warsaw Stock Exchange (WSE). The company is 51% owned by the state treasury and was floated on the WSE in 2011. Shares have lost more than 80% of their value since the IPO.

JSW has seen profits plummet thanks to falling world coal prices. The company had a net loss of PLN296mn in 2014, compared to a profit of PLM82mn a year earlier.

Unrest at JSW began after a round of strikes at Kompania Weglowa (KW) in January, a larger coal miner wholly owned by the government. Warsaw had proposed a cost-cutting programme that would have closed four of KW's weakest mines, sparking labour unrest in the industrialised Silesia region. 

Prime Minister Ewa Kopacz backed away from that idea, creating a sense that her government would buckle under pressure. At the same time, JSW presented its cost-cutting measures, as well as saying several union leaders at JSW who had supported a wildcat strike supporting the KW miners would be penalised.

That set off the strike at JSW. Thousands of workers stayed home, while miners refused to leave their shifts underground, and some embarked on hunger strikes. Kopacz insisted that this was an issue between management and unions, not one involving the government, but the strike immediately became political. Andrzej Duda, presidential candidate for the opposition Law and Justice party, has made attacks on Kopacz and Zagorowski a central part of his campaign.

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