Polish coal mining sector’s loss exceeds €830mn at end-October

Polish coal mining sector’s loss exceeds €830mn at end-October
By bne IntelliNews December 14, 2020

Poland’s coal mining sector was PLN3.67bn (€830mn) in the red at the end of October, the loss deepening by over PLN1.3bn compared to the full-year result for 2019, the ministry of state assets said on December 10.

Largely state-owned coal mines in Poland are going through one of the worst crises of recent years. The coronavirus (COVID-19) pandemic limited operations as mines became major outbreak centres of the illness. The pandemic also reduced demand for coal due to the economic slowdown, which dampened electricity use. Close to three-quarters of electricity is produced in coal- and lignite-fired power plants.

Demand for coal is also suffering because of utilities developing other sources of electricity – gas and renewables in the first place – as Poland is incrementally moving forward to cut coal’s share in its energy mix in line with the requirements of the EU’s climate policy.

Production of coal fell to just 54mn tonnes in 2020 to date, the lowest since the late 1940s and just 26.8% of peak output of 101mn tonnes in 1979.

The sorry state of the sector is a political problem for the government, which still has to reckon with mining unions, even if their strength has declined together with the overall weakening of the once all-powerful industry.

The government said last week it would present a draft “social contract” for the sector – a reform plan that would somehow meet unions’ demands with the inevitability of moving away from coal as Poland’s main source of energy - on December 15.

“By December 15, a social contract regulating the functioning of the hard coal mining sector will be worked out [and] the contract will be presented to the European Commission,” Deputy State Assets Minister Artur Sobon said, according to the state-run newswire PAP.

Poland also hopes that the Commission will agree to keep some of the country’s coal-fired power plants – and therefore maintain some demand for the commodity – after 2025, the last year of support for the most polluting power installations.

Poland emits around 600-700 grams of climate-warming carbon dioxide per kilowatt-hour (kWh) of electricity produced from its coal-reliant power system. There are plans to bring that down by investing in offshore wind power plants as well as in nuclear power. 

The nuclear power major France emits just around 60-70 grams of CO2 per kWh.