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18 Dec 2018, Vicky Bufton, EMIS Content Manager

Poland Coal Mining Sector by Numbers

The coal mining sector accounts for just over 1% of Poland’s GDP, but it remains important for the labour market as it employs over 80,000 people. Admittedly, this number is far below that of nearly 160,000 when Poland joined the European Union (EU) in 2004. However, since the government is looking to help out the country’s ailing and mostly state-owned coal-mining companies via other state-controlled companies, from both the coal trading and financial services sectors, the significance of the coal sector’s situation may be even greater than it appears at first sight.

Entry Modes

The hard coal and lignite mining segments are rather stable and an acquisition would be a better entry option for a would-be newcomer than a greenfield investment, although the investments required for an acquisition would be significantly higher. The latest entrant in the segment is Australia’s Prairie Mining, which in July 2016 received exclusive rights to apply for and receive a mining concession for the Lublin coal project. The coal retail segment is easier to enter. However, with some 10,000 registered vendors, competition in the segment is fierce.

Segment Opportunities

After several years of low coal prices – domestically and globally – the price upswing of 2016-2017 means that the sector's firms have vastly improved their financial standing and are better equipped to finance the investments that are needed in new coal fields (e.g. Poland's main lignite field in Belchatow is expected to be depleted in 2032-2036). Poland's burgeoning economic development means more and more electricity will be needed. This applies also to the electrical vehicles segment, as the government plans to have 1mn such vehicles in operation in 2025. These intentions mean that coal, the main fuel for power plants in the country, will remain in demand. Another opportunity lies in the ambitious plans involving coal gasification technologies. However, these are in their early stages: for instance, Grupa Azoty and Tauron Polska Energia have signed a letter of intent on such a project, envisaging a EUR 400mn-600mn coal gasification facility starting operation at Azoty’s KedzierzynKozle plant in 2021-2022.

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Original source: EMIS Insight Report Poland Coal Mining Sector 2018/2019

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