Coal news and updates

Poland hopes to split its state-owned coal mining assets into a “good miner” and a “bad miner” under a controversial proposal to turn around the fortunes of the lossmaking industry.

The country sits on top of the second-largest coal deposits in the EU, but the industry is suffering heavy losses from inefficient mines and low prices.

 

A government task force is set to recommend the mines be divided into two groups as a way of rescuing the industry. One would manage viable mines that could seek investment while the other would restructure, or close, financially unsustainable pits.

“That is what it will boil down to. It is just a question of how you get there,” said Wlodzimierz Karpinski, Treasury minister, whichmanages state-owned assets.

The state-owned coal miners, including Kompania Weglowa (KW), Europe’s largest hard coal producer, lost 1bn zloty ($300m) in the first half of the year, and more than two-thirds of the country’s mines lose money on each tonne of the coal they sell.

“From a business point of view, this would be the most reasonable solution – to close down mines that are not profitable or have no chance of being profitable in the future,” said Miroslaw Taras, chief executive of KW.

The company runs 14 mines, of which four are profitable.

The mining industry employs more than 100,000 and Mr Karpinski accepts the plan will be difficult to sell politically. But a consensus was developing across the coalition led by the Civic Platform party that the industry needed to take tough decisions, he said.

“We would like to do it in a way that balances the local interest. These are communities that for decades saw mining as the sole reason for their existence,” Mr Karpinski told the Financial Times.

“Those people have a mindset that they have had the job for generations . . . but you need to balance it against the harsh requirements of market reality.”

Oktawian Zajac, of Boston Consulting Group in Warsaw, said the separation of good and bad mines depended “on the courage and determination” of the government.

“You can either solve the problem . . . or you can try to ‘sweep the problem under the carpet’, but that will cause the collapse of the whole industry in the future,” he said.

 

 

Source: http://www.ft.com/