Polish coal miner slashes production forecast amid restructuring
|
Poland-owned JSW, the largest coking coal miner in the European Union, has cut its 2014 production target by 9% to 12% and slashed investment in an effort to regain profitability after steep falls in coal prices and an ongoing corporate restructuring.
The announcement comes as Polish authorities work on a plan to group its loss-making mines into a “bad” or a “good” unit. The first group, FT.com reports (subs. required) will face a major reshuffle or closure, while the “good” one would manage the country’s viable mines. But with the industry employing more than 100,000 people, any radical change is likely to be a tough political sell.
Poland’s vast coal reserves, the second-largest in Europe, were seen as the energy ace up its sleeve – offsetting reliance on Russian resources and providing enough cheap, domestic fuel to power decades of economic growth.
But since the US shale boom sent coal prices down the drain, the country’s state-owned miners inefficiencies became evident.
The Polish coal mining sector is going through a difficult period, with the four biggest, state-owned companies generating lower revenue than in previous years. They are especially vulnerable to low coal prices because they have higher costs than miners in Asia or Australia.
Kompania Węglowa, Europe’s largest hard coal producer, had a loss of more that 600 million zloty (about $180 million) last year.
JSW’s shares have lost nearly half of their value this year and 80% since the company’s stock market debut in 2011. In the first six month of this year the miner lost 340m zloty ($102m).
In addition, the nation is facing additional pressure from the EU, which has asked Poland to wean itself off the fossil fuel based on environmental concerns.
Cecilia Jamasmie
