Weglokoks Joins JSW, Tauron to Save Largest EU Coal GroupMaciej Martewicz and Marta Waldoch
Weglokoks SA, a Polish state-owned coal trader, plans to buy four mines from Kompania Weglowa SA, joining two other government-controlled energy companies to save the European Union’s biggest coal producer.
Weglokoks will buy “two good and two bad” coal mines, financing the “significant” investment with debt, Chief Executive Officer Jerzy Podsiadlo told reporters in Krynica, Poland today. Coal producer JSW SA in April acquired Kompania’s Knurow-Szczyglowice mine for 1.49 billion zloty ($467 million), while utility Tauron Polska Energia SA bought out Kompania’s stake in a mining venture for 310 million zloty in December.
Unprofitable Kompania, which produces about a quarter of the EU’s output, has struggled to survive as global coal prices fall amid sluggish economic growth while production costs remain high. Kompania needs to cut its workforce by more than a third while sustaining 30 million-ton output to avoid collapse, Chief Executive Officer Miroslaw Taras said on Aug. 28.
“The purchase is a temporary solution that gives some time to Kompania as well as to other energy companies, such as PGE SA and particularly Enea SA, which faced risk of providing similar aid to the coal group,” Pawel Puchalski, an analyst at Bank Zachodni WBK SA in Warsaw, said by phone today.
Prime Minister Donald Tusk wants to curb profit-seeking at state-controlled power utilities to rescue Kompania, the country’s third-biggest employer, and bolster the mining industry, according to government plans announced in May. Kompania posted a loss of about 1 billion zloty on coal sales last year while net income at PGE, the country’s biggest power producer, rose 14 percent to 4.1 billion zloty.
As part of its restructuring plan Kompania plans to sell four out of its 14 mines and reduce coal stockpiles to regain liquidity, CEO Taras said last month. Its workforce is to fall by 20,000 from 55,000 through retirements, voluntary departures and sales of mines, Taras said.
Weglokoks, based in Katowice, Poland, will buy Kompania’s Piekary mine producing about 1.2 million tons of coal a year, and has yet to decide on other targets, CEO Podsiadlo said today. The company will give details of the purchase as well as of its planned debt sale within two weeks, he added.
Weglokoks’s “borrowing capacity” allows it to invest as much as 1 billion zloty, Deputy Economy Minister Tomasz Tomczykiewicz said in June.