Mining industry’s black despair

opublikowano: 21-02-2008, 12:30

Warsaw (Puls Biznesu) - The revenues of the mining sector shrink with each year. Three years ago they were 27 times higher than in 2007. Within three years, they dropped from PLN 2,594.6 million (EUR 724.7m) to PLN 96.7 million (EUR 26.9m). The net income of Kompania Weglowa coal group fell 99.5 percent between 2004 and 2007. Jastrzebska Spolka Weglowa generated 95.9 percent smaller income over the same period, while the result of  Katowicki Holding Weglowy shed by 80.2 percent.

In 2007, managements of key coal producers whose sole owner is the Polish state, explained worse results with smaller production. In 2007, coal production amounted to 87m tons and was 7 percent lower than in 2006. Eugeniusz Postolski, deputy minister of economy responsible for the mining sector, believes it was because of neglecting investments in previous years.

“At Kompania Weglowa, coal production fell by 4m tons last year. But our company was the only one to improve its financial results: we went out of the red”, Zbigniew Madej, KW spokesman said.

Poland’s biggest coal group comprising 17 mines would have losses since July 2006. In October 2007, it had PLN 14.2m of loss. At the end of the year, the company had PLN 1.7m of net income.

“In the third quarter, we raised coal prices”, Zbigniew Madej explained.

But this is only part of the truth. In fact, KW’s results were boosted by one-time events, including selling the stock of listed companies (KGHM, Pulawy, Ruch, Kopex) which the group had received from the state. They were sold for several dozens million zloty. On the other hand, there was one-day strike at KW which cut the group’s sales by PLN 43m.

Coal production at Jastrzebska Spolka Weglowa fell 25 percent. The net income dropped from PLN 101.1m to PLN 62.3m. The government is going to privatize JSW via listing on the Warsaw Stock Exchange. Katowicki Holding Weglowy is even closer to an IPO as its miners had approved of it in a referendum. But the firm’s income fell by PLN 80m. Bogdanka coal mine managed to increase income rom PLN 59m to PLN 85.5m in 2007. The company wants to raise PLN 300-600m on the WSE.

The following coal companies had a loss last year: Poludniowy Koncern Weglowy (PLN 57m of net loss) and Bytomska Spolka Restrukturyzacji Kopalni (PLN 22.7m of net loss in 2007).

(PLN 1 = EUR 0.279)

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