Polish Black-Hole Mining Risks Labor Unrest Before Election – by Maciej Martewicz and Dorota Bartyzel (Bloomberg News – August 16, 2015)


Poland’s struggle to help Kompania Weglowa SA, the European Union’s biggest coal producer, return to profitability risks unleashing union-led protests before October’s general election.

A threatened eruption of street demonstrations next month may seal Prime Minister Ewa Kopacz’s fate, with the ruling party already trailing the opposition in opinion polls. The cabinet extinguished demonstrations in January by scaling back its plans to shut unprofitable mines and agreeing to revamp Kompania with the aid of state-controlled utilities.

The government has missed two self-imposed deadlines for the overhaul and has a third looming on Aug. 31 as it seeks to stem the coal industry’s 1.4 billion-zloty ($372 million) loss in the first half of 2015.

Power producers are reluctant to invest in an industry they regard as a black hole, especially as this month’s heatwave triggered electricity supply curbs which, according to UBS AG analyst Michal Potyra, may raise calls for further investment in infrastructure by utilities.

“Unless investors for Kompania are in place by the end of the month we will resume strikes,” Dominik Kolorz, the head of the regional Solidarity union for the coal region in Silesia, said in a phone interview. “It may get even hotter” in September “than during the summer.”

The potential investors, mostly publicly traded state-controlled companies, have suffered on the stock market whenever they’re mentioned alongside Kompania. An index of energy stocks dropped 17 percent year to date, almost three times that of the WIG20 gauge of the biggest and most-liquid companies.

Bid Blowup

PGE SA, the biggest power group, lost 18 percent this year, while peers Energa SA also declined 18 percent and Tauron Polska Energia SA, which may buy Kompania’s Brzeszcze mine in a separate deal, fell 36 percent.

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