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Article: if going gets tough, will foreign get to go?

According to Polish Coal Daily, Grzegorz Tobiszowski and others involved in the establishment of Polska Grupa Gornicza (PGG), not many foreign investors are interested in helping KW’s mines. Read Polish Coal Daily's analysis on the situation.





This article is an opinion piece by Polish Coal Daily. This article does not reflect the views of Coaltrans.


If the going gets tough will foreign investors save the day?

Perfunctory statements by Grzegorz Tobiszowski and others involved in the establishment of Polska Grupa Górnicza (PGG) seem to suggest, that there are not many entities or foreign investors interested in helping KW’s mines. While state-owned companies may be impelled to come to the rescue, it seems domestic private firms are not so willing. So the question remains is there a field for foreign companies in this game?

Today (Feb 8) Tobiszowski announced again that there are ongoing negotiations with potential investors and that none of them will in the end have the dominant position in the PGG structure. Węglokoks is still the only company that is certain to have a share of the cake (at the moment Węglokoks Group owns the PGG trademark), but if TF Silesia which according to the original plan was supposed to be the foundation of NKW/PGG was pushed aside, as according to Tobiszowski, “it is not able to play a significant part in the coal mining industry, since it was never involved in this sector”, is there then a chance that the Ministry of Energy and Kompania Węglowa will seek investors outside Poland and are there any entities which could be interested in such investments?

A week ago Piotr Kosowicz, Executive Director of Balamara Resources, said that his company is still interested in taking over Makoszowy mine, which has been dying on the vine in the Mines Restructuring Company (SRK) since spring last year. Kosowicz stated that Balamara would keep employment and payments at the current levels. In September the Australians made an offer and later met with labor unions, but nothing came out of these attempts, as unions are sticking to their guns (or pickaxes) on being moved to PGE.

Difficulty in finding investor appears too to have been caused also by the reluctance of European banks to finance coal-related investments. It has been suggested that the Chinese might be the ones to fill this gap. For quite some time now Czech EPH (tied with energy conglomerate CEFC, one of the largest companies in China) has been buying up European fossil fuel power plants and seeking further acquisitions (both in steam coal and lignite). EPH is also the company that owns PG Silesia, a mine that is presented in Poland as a role model for a restructured facility.

If they are interested in investing in the Polish coal sector, is it possible that Balamara and EPH will be involved in a PGG project? Not likely. Let’s be honest: none of the private companies will be willing to put money on the table if they are hearing from the Ministry of Energy that they will have no say in PGG anyway. Also, Balamara follows the same modus operandi used by EPH 5 years ago: waiting until the mine is tagged “unprofitable” and moved for liquidation, so it can be brought back to life from SRK with less effort. The plan for PGG envisages giving all the KW mines a fresh start, with a deadline for internal restructure of each facility till the end of 2016. If by that time some of them will still be economically inviable, they will be moved to SRK for liquidation and that most probably will be the moment, when other privately owned companies will start fishing.

Hear the latest insights from from Kompania Węglowa and BALAMARA Resources Ltd at the 4th Coaltrans Poland conference in May.


 

This content is provided by Coaltrans Conferences for informational purposes only, and it reflects the market and industry conditions and presenter’s opinions and affiliations available at the time of the presentation.

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