Page 40 - bne_Magazine_July_2017

40 I Special focus bne July 2017
Polish coalmining enjoys its good times while they last
turn favourable compared to those offered domestically. Coal imports to Poland rose by an estimated 200,000 tonnes – or 3.5% y/y – to 5.9mn tonnes in January-October 2016, according to data from the state Industrial Develop- ment Agency (ARP).
The imported coal comes to Poland mostly from Russia. Currently, Russia
is selling the bulk of its coal output to China. However, as soon as China’s plan to reduce coal consumption in the name of fighting global change takes off, the Chinese demand will fall, and Russian companies will start looking for other markets to sell to.
Russian coal company SUEK, for exam- ple, is already looking to double sales in Poland after increasing sales by 30% last year, it said in its 2016 annual report. Russian coal is cheaper and – arguably – of better quality than its Polish equiva- lent. Russian companies are so confident they can beat Polish competition that some of them – such as another giant KTK – are taking part in tenders for coal supply organised by local authorities across Poland, energy sector analysis website wysokienapiecie.pl reported in late May.
If demand trends for domestic coal play out in line with forecasts, Polish miners are not only going to face problems with sales but also with finding money to invest in new supply. The investment plans are huge. PGG, for example, plans capex of PLN20bn by 2030.
Wojciech Kosc in Warsaw
Polish coalmining is enjoying good times. The Law and Justice (PiS) government has fulfilled its promise to help mining companies by orchestrating the bailing out of
the indebted and loss-making miners and pushing state-controlled energy companies to invest new capital in
the sector.
The largely positive market environment, together with the financial restructuring, have enabled Polish miners to turn in decent results in the first quarter.
However, the question remains: can
the good times last? Coal – a global commodity – comes under pressure from many sides. The obvious challenge is the international drive to clamp down on the polluting fuel in order to mitigate climate change. The resulting development of renewable energy
and gas-fired power plants, as well
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as progress in energy efficiency, are a visible threat to coal demand already.
According to a recent study by the Polish Academy of Science, demand for coal to burn for power generation
“Polish miners still appear unprepared for the likely shape of the coal market in the near to mid-term”
in Poland will diminish by 6.9mn-9.6mn tonnes by as early as 2020. That is
25% of production by Poland’s biggest miner PGG.
There also is a more immediate pres- sure of volatile domestic demand that can shift to imported coal if its prices
Without new supply, Poland – if it wants to stick to coal as its staple fuel – will have to import more and more. That runs counter to the government’s rhetoric of energy self-sufficiency.
It might also mean the incentive to develop renewable energy, gas or nuclear power will strengthen, though