Kompania Weglowa SA, the European Union’s largest coal producer, faces massive job cuts to survive unless Poland quickens the state-owned industry’s revamp, which may include help from power utilities.
“If we want to quickly heal Kompania, we should shut five mines and fire 15,000 people,” Chief Executive Officer Miroslaw Taras said at an industry summit in Katowice, Poland today. “But if we want to avoid social unrest, we should probably think about somehow combining coal mining with power generation either by means of agreed prices or takeovers of some mines.”
Poland, which relies on coal for 90 percent of its electricity production, is under growing pressure to overhaul the cash-burning industry after its two biggest producers this month failed to sell bonds abroad to finance operations. The government of new Prime Minister Ewa Kopacz yesterday appointed Wojciech Kowalczyk, a former banker, to oversee the mining restructuring.
Coal producers, which employ more than 100,000 people, have struggled to survive as sluggish economic growth cut demand for the fuel and sent prices to a seven-year low. Kompania, which runs 14 mines in the southern industrial region of Silesia, produces about a quarter of the EU’s coal output and half of Poland’s.
‘Laughing Stock’
Kompania and JSW SA, the second-largest Polish coal group, delayed Eurobond sales because yields demanded by investors were too high. Kompania will sell four mines to state-owned coal trader Weglokoks for 2.5 billion zloty ($743 million) to prop up liquidity. Weglokoks will pay for the assets with bank debt, financing from a state development fund and its own cash, Weglokoks CEO Jerzy Podsiadlo said in Katowice today.
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