Polish Coal Industry
An analysis
Development factors
• Resources - 3 main
coalfields
• Nearby power plant
Why was the coal industry in
Poland given back to private
owners?
• Private owners guarantee rational management
• Actually only private owners can make an effort
to rationalise costs of output, employment, etc.
• Only private owners can be executors of a
restructuring plan
• State-owned management generates higher
costs
Forms of government
intervention
• Because of increasing costs of output and
competitiveness of imported coal and alternative sources
of energy (e.g. gas, petroleum), coal industry in Poland
nods to its fall. Most often price of coal doesn’t cover
costs of output. The difference between costs of output
and price of coal is covered by subsidizing this industry.
In 2003 subsidies for coal industry amounted to 17 billion
PLN (it is about 450 PLN from each citizen).
• Those subsidies are realized by:
– Paying off or liquidating debts of coalmines
– Liquidating financial commitments, like taxes
– Giving special credits, loans for development, benefits for
employees and retirement gratuities
Profitability of coal industry
• Nowadays coal companies absorb lots of
money. Government incurs high costs within
restructuring plan, assuming liquidating debts. A
system of coal companies results in irrational
and inefficient management of coalmines.
• Even if the coal industry is not profitable, it is
subsidized by government because it can be
very important for the power security in the
future. Coalmines cannot be closed either,
because of social commitments. Eventual
liquidation of coalmines would be a long- lasting,
complicated process.
Decline of industry:
• Lack of investment to build new coal mines in
face of needs, which are assessed at about 3,5
billions PLN by the end of 2010.
• Available resources are predicted to run low in
about 15 years.
• Legal difficulties: preparations before
establishment of mine
• Trend to close unprofitable mines.
• Development of alternative energy sources.
• Support of PHARE and similar projects.
• Bureaucracy.
Output trends:
• Price of coal is going to be stable until 2030, according to European
Energy And Transport Trends.
• Poland should take care about quality of coal, to intercept part of
import to EU.
• Poland can take advantage of its geographic location to propose
lower prices for transport.
• Government plans to implement new technologies in output, such as
liquid petrol. It will also influence environment positively by reduction
of CO2 emission, and develop science.
• Plans to be independent in area of petrol, thanks to new technology
- profits for Polish economy.
• Modernization and replacement of existing power sources based on
coal
• Budget in 2007 on industry- 52 mln PLN.
Employment patterns:
• Professional hierarchy.
• Reduced pensions.
• Lack of qualified boards substituted by
pensioners.
• Restructuring - changes in age structure of
employees.
• Possibility of reductions in number of
employees.
• Need for a new generation of miners.
• Two out of ten Poles work in Upper Silesia.
• Increasing number of mining catastrophes.
Trade patterns:
•
•
•
•
•
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Decrease of retail sale and prices of coal.
Increase of production expenses.
Polish coal should be rival in prices.
Danger to companies prosperity.
Cost of transport.
Monitoring import to EU.
Influence on local industry
• GOP- Gornoslaski Okreg Przemyslowy.
GOP
 One of the most
densely inhabited
areas of country.
 Increasing number
of unemployed
people (effect of
employment
reduction).
 High level of
infrastructure.
 Environment
degradation.
The end.
Thank you for your attention.
Magda Tomczak, Karolina Kapala