Warsaw reportedly planning to cut up to 15% of coal mines

By bne IntelliNews January 5, 2015

bne IntelliNews -

 

The Polish government is planning to close around 15% of the country's coal mines as part of its rescue strategy for the struggling sector, local media reported on January 5. 

According to an unconfirmed report by Dziennik Gazeta Prawna, the government plan - which was originally meant to have been released before the end of 2014 - will recommend closing down four or five of the country's 30 or so state-owned mines. A similar number of mines will be transferred to the Coal Restructuring Company (SRK), which will be responsible for making these facilities profitable.

The plan stipulates laying off up to 5,000 miners, the newspaper reports, who will be offered  voluntary redundancy. The costs of the shut downs will not exceed PLN2bn (€460mn), which will be born by the state budget. Kompania Weglowa - the main struggler, which owns owns 14 mines - is out of cash and unable to borrow.

The sector has been ailing for the last few years, on the back of falling coal prices and competition from cheap imports from Russia. In the first three quarters of 2014 the sector reported losses of more than PLN500mn (€120mn). 

Coal is a political hot potato in Poland because the industry still employs 100,000. In an election year, with the ruling Civic Platform (PO) facing tough competition from the opposition, any government decision that adds to the country's high unemployment numbers will be very risky. The government has fought hard in Brussels against EU enviromental programmes that would limit coal use.

Way down in the hole

Listed state-controlled utilities and coal traders, as well as development bank BGK and state development funds, have all been lined up to help dig the miners out of their hole

“The rescue plan needs to be carried out simultaneously in many areas," said Wojciech Kowalczyk, the man charged by the government with crafting the rescue, said on December 9, according to PAP. "We cannot wait any longer, we must act, and that is what the government is doing."

Regardless of Warsaw's attempts to cap the effects on the politically sensitive sector, analysts suggest there's little chance of averting a major drop in production, because investment has already been cut back.

"We still believe that, no matter what the final restructuring proposition for the sector is, the most probable scenario is a decline of the coal supply by approx[imately] 20%, due to the long period of virtually no CAPEX," writes Tomasz Duda at Erste Group.

Related Articles

UK demands for EU reform provoke fury in Visegrad

bne IntelliNews - The Visegrad states raised a chorus of objection on November 10 as the UK prime minister demanded his country's welfare system be allowed to discriminate between EU citizens. The ... more

Poland's Law and Justice nominates hardline cabinet

Wojciech Kość in Warsaw -   Poland’s Law and Justice (PiS) party, which won an outright majority in the parliamentary elections on October 25, has announced a hardline ... more

Kaczynski expected to appoint hardline cabinet

Wojciech Kość in Warsaw -   The Law and Justice (PiS) party, which won an outright ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss