Embattled Polish coal giant initiates talks with investors

KW, which was on the brink of bankruptcy in 2015 though was saved following government assistance and a restructuring program, is expected to launch the Polish Mining Group (PGG) this May and transfer eleven of its mines over to the new company.

According to KW’s chairman Krzysztof Sędzikowski the company needs to raise PLN 2.2 billion (EUR 0.5 billion) to go ahead with this, of which PLN 1.5 billion will come from investors.

The director did not disclose the identities of the companies involved in the talks, though revealed that so far none of the entities which have signed confidential agreements with KW and gained access to the company’s data are foreign.

Sędzikowski argued that the restructuring is already having a positive effect, and that in just a year the average cost of producing a ton of coal has fallen from PLN 300 (EUR 68) to PLN 260 (EUR 59). The business plan for the PGG projects that this will fall further to PLN 214 (EUR 49) by 2017.

However, there are still challenges ahead as according to KW data last year only three of the eleven mines in question were profitable, with another two mines coming close to making a profit in 2015 and the rest making a clear loss.

“Ultimately all the mines must be profitable; we have already succeeded in doing a lot to improve profitability, but there is still much to do,” commented chairman.

In 2015, KW extracted almost 26 million tons of coal, making it Poland’s largest producer in the sector. The company employs around 34,000 people. (sl/nh)

Source: PAP