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A balancing act: Polish coal miner must maintain output but cut jobs

World Coal,

Polish state-owned company, Kompania Weglowa, plans to reduce its workforce by more than a third while maintaining output at current levels.

CEO, Miroslaw Taras, said the company needs to continue producing about 30 million tpa of coal, as its workforce falls by 20,000 from 55,000 through retirements, voluntary departures and sales of mines.

Speed is of the essence, according to Taras, who said the measures were necessary if Kompania is to avoid bankruptcy.

“We want to do it as quickly as possible, but it won’t happen overnight, it may take years,” Taras said. “If we don’t cut jobs, Kompania will cease to exist.”

Polish mines, one of the few industries in state hands in central Europe’s biggest country, have struggled as global coal prices fall amid sluggish economic growth while production costs remain high. The industry lost 1.1 billion zloty (US$ 344 million) on thermal-coal sales in the first half of 2014 while stockpiles jumped 26%, according to the Polish Economy Ministry.

According to Bloomberg, The revamp programme prepared by Kompania’s new management last month includes selling four out of 14 mines and reducing coal stockpiles by 5.9 million t to help the Katowice, Poland-based company regain liquidity.

“Labour unions are aware that employment must decrease and we’ll talk to them” this week, Taras said. “They’d rather not cut jobs and we’d like to do it efficiently, so we need to meet somewhere in the middle.”

Deputy Economy Minister Jerzy Pietrewicz said the government has received Kompania’s plan.

“We need to understand that there’re different parties involved in the process and we’re analyzing whether this is the only solution for Kompania,” Pietrewicz said.

New markets: new frontiers

Kompania is also looking for new markets as domestic power producers accumulated a record 6.5 million t of coal. The company is in talks to sell coal to Ukraine after the military conflict in Poland’s eastern neighbour cut supplies of the fuel to power plants from the Donbas area, Taras said.

“Donbas has practically stopped producing coal so there’s an opportunity for Polish mines,” he said. “The only issue is agreeing on the right price.”

DTEK Holdings BV, Ukraine’s biggest utility, said last week that three of its 31 mines in Ukraine have been shut down due to the fighting. Ukraine’s July coal output fell 27% from a year earlier to 3.88 million t, the lowest since at least 2012, according to data from the country’s State Statistics Committee.

Poland has issued calls of support for Ukraine in the face of Russian aggression and recently suggested the EU should sanction imports of Russian coal as long as the Ukrainian conflict continues. 

Edited from various sources by Sam Dodson

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