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Polish hard coal miner PGG to hold back restructuring plan

Highlights

Unions rejected plan, threatened strike

Leaked plan details included mine closures, payment suspensions

Warsaw — Poland's Ministry of State Assets on July 28 decided not to present a restructuring plan for the country's largest hard coal miner, PGG, because union leaders had already declared it was unacceptable.

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Instead, deputy prime minister and state assets minister Jacek Sasin has proposed setting up a new working team, including union representatives, to formulate a restructuring plan that is acceptable to all.

"From the beginning, the government and deputy prime minister Sasin said that there was absolutely no question of carrying out such a complicated operation without trade union approval," a Ministry of State Assets spokesman said. Union leaders had started strike preparations in reaction to the plan.

According to information leaked to the media, the state-owned company's restructuring plan, drawn up in conjunction with the ministry, would have closed the loss-making Ruda and Wujek mines by October.

The Ruda mining complex, which consists of three previously separate mines, produces 4.3 million mt/year while Wujek produces 0.8 million mt/year. Both mines together employ 7,700 workers.

In the years 2010-2019, Ruda made losses of Zloty 2.273 billion ($604.8 million) and Wujek Zloty 232 million ($61.7 million). A third mine owned by the utility Tauron would also be closed, cutting Tauron's annual production by about 1.5 million mt.

Katowice-based PGG, which is also the largest hard coal miner in the EU, employs about 41,000 people and last year produced about 30 million mt of thermal coal.

In 2019, Poland's hard coal output, which also includes production from Tauron, coal trader Weglokoks and coking coal miner JSW, reached 61 million mt. The ministry had planned to cut output to 54 million mt through the restructuring.

PGG said restructuring is required to avoid bankruptcy caused by the coronavirus restrictions and falling coal prices in Europe. Poland's thermal overproduction is estimated at 4 million mt this year and up to 7 million mt in 2021. There are currently 15 million of thermal coal stockpiled at collieries and power plants.

Under the plan, miners would also have had a monthly bonus suspended for four years and 30% of their salaries would depend on attaining efficiency targets. A Zloty 5 billion package would help cover the cost of redundancies and mine closures.