Polish coal mine closure timetable agreed

The Polish government and mining trade unions have reached an initial agreement on the schedule to end domestic coal mining by 2049.

The initial agreement following five months of negotiations is a major step but not a breakthrough for Poland's coal mining rescue and phase-out plan. The approval of the EU's competition authorities is still needed before the plan can be finalised.

The agreement, which will be formally signed next month following a detailed review by trade unions, covers the timetable for mine closures, social assistance to miners who will lose their jobs and support funds for the mining regions.

The government has also agreed to increase miners' wages and has committed to major investment in clean coal technologies to secure 10mn t/yr of demand for Polish coal over the next decade or so, according to the unions.

The mine closures will start as previously planned, with two sites to shut this year. All Polish thermal coal mines, including the currently profitable Bogdanka mine operating shallow coal deposits in east Poland, are expected to shut by 2049, according to the agreement.

The government will seek approval from the European Commission for the proposed state aid for the mining sector after the agreement is signed next month. The government expects these negotiations to be a "difficult process", but hopes the Polish plan will win support for "being fully aligned with European Commission climate policy".

Environmental lobbies have criticised the plan for not committing to a quicker coal phase-out. The accord also fails to address the short-term financial pressures facing the mining sector, following huge losses of more than 5bn zlotys ($1.3bn) in 2019 and 2020.

Underinvestment and high operating costs have hit the Polish mining sector, which produces mostly low-calorific value coal, despite a modest recovery in Polish coal burn over the past six months. Polish mine stocks are down by around 1.6mn t on the year at 5.2mn t, but still high by historic standards.

Utility stocks have also been gradually drawn down in recent months as power sector coal burn rose by about 1mn t on the year to nearly 8mn t in January-February. This cut stocks at power plants by about 1mn t on the year to less than 7mn t at the end of February, according to Warsaw-based firm ARE, which monitors power plant operations.

Imports of higher-calorific coal continue to compete with domestic coal, despite rising international prices this year. Polish thermal coal imports rose by 2.5pc on the year in January-March to nearly 1.7mn t, as a shortage of high-grade domestic coal left buyers with no alternative but to import coal to meet their requirements.

By Tomasz Stepien