Polish state-controlled utility Energa denied on May 19 speculation that it is planning to invest in ailing miner JSW. The statement follows comments from the government, which said JSW needs greater additional capital than previously estimated.

JSW is yet another Polish coal miner that has been struggling because of tanking coal prices. While Warsaw has carried out a rescue operation of the country’s largest miner, Kompania Weglowa, JSW remains undercapitalised. Energy Minister Krzysztof Tchorzewski told local media on May 18 that JSW needs more than the previously estimated PLN1bn (€230mn) of capital and said the state is willing to lower its stake in the company below 50% by offering a rights issue.

Shares of Energa and other large Polish utilities PGE, Tauron, and Enea all fell in reaction to the minister’s words. Following a tussle of over a year, the listed companies were finally pulled into the rescue of KW, which has now become a new mining group PGG.

Poland may carry out a rights issue for JSW by early 2017, Tchorzewski said, with details to be made public in June. In recent weeks, JSW has sold some of its non-mining assets. It was also handed PLN300mn-400mn from state fund FRP, which focuses on restructuring companies.

According to analysts, JSW’s capital needs may in fact be close to twice the original estimate. “The company has PLN1.4bn in net debt plus PLN500mn in working capital financing that would need to be returned and is burning cash at a rate of PLN150mn per quarter at current prices,” Erste notes.

“Given likely divestment proceeds of PLN 0.5-0.6bn, we would expect capital requirements to be in the range of PLN 1.9-2.2bn in order to make JSW debt-free and inject enough capital so that it can function for at least another 4-6 quarters,” the Austrian-owned bank speculates.