Covid-19 shuts Polish coal mines

Poland's largest thermal coal producer Polska Grupa Gornicza (PGG) has stopped output from three of its mines, affecting about 20pc of its capacity, because of a worsening Covid-19 outbreak among its employees.

The company halted output from part of the ROW and Murcki-Staszic mines on 27 April, while the Sosnica mine stopped production on 6 May. Production will remain halted until 10 May, PGG said.

The company decided to cease production citing the health and safety of its miners because of increasing coronavirus cases at the mines and employee absences due to the outbreak. The coal mining area of Silesia became the epicentre of the outbreak in recent days and miners are particularly at risk of becoming infected. PGG said that staff absences at mines that have stopped production range from around 60-73pc.

PGG operates a total of eight mines in Poland. ROW mine — which partially shut output — is the company's largest mine in terms of production volume and crucial for PGG's economics, as in addition to thermal coal, it produces more profitable coking coal.

Some traders in Poland believe that PGG will need to significantly scale back its production capacity to survive the current turmoil.

The production halt hits PGG at a sensitive time, with the company struggling with rising costs and falling demand from the electricity generation and heavy industry sectors even before the pandemic hit.

Smaller coal mining firm Tauron Wydobycie, a subsidiary of Polish utility Tauron, has also reduced output. While trade unions of the Silesia mine, owned by Czech utility EPH, said on 6 May that the mine plans to discontinue operations by the end of 2021 because of weakening demand for its coal.

In March, Polish coal mines produced 5.1mn t of coal, including coking coal, down by more than 7pc on the year. First-quarter output was 2pc down on the year at 15.3mn t.

Even as Polish coal mines struggle, demand for coal in Poland has picked up since March. Traders attribute growing demand — mainly from the household, agriculture and light manufacturing sectors — to buyers' desire to restock amid low prices of imported coal. Relatively cold spring weather has supported demand. Average temperatures in March and April in Warsaw were 1-1.5°C below April 2019. Temperature so far this month have been in line with seasonal norms but below-par weather is expected from 10 May.

By Tomasz Stepien

source: Argus Media