EU and Poland’s Coal Industry: State Aid to Mines to Be Approved by Brussels

Written by | Saturday, February 21st, 2015

Poland is going to inform the European Commission later this month about its plans to provide state aid to some loss-making coal mines, the Polish minister in charge of restructuring the industry, Wojciech Kowalczyk, said. “We declared that we will submit the notification application on the aid program in February,” he commented. Poland’s mining companies have been harshly hit by a number of factors – plummeting coal prices, a fall in demand, and rising production costs – in response to which some of them lost their profitability. As a result, the mining companies have been mounting stockpiles of coal.

Earlier this year, Warsaw revealed its plans to close down four loss-making mines owned by state-run Kompania Weglowa, the largest coal-mining company in Poland and Europe producing around 48 million tons of coal annually. The government said that between January and November 2014, the four mines produced losses of about €270 million, with liabilities of more than €1 billion.

However, following the protests by Polish minors, the country’s government, which faces elections later this year, made a decision to keep the four mines open and potentially sell them to an investor. Restructuring of the four mines will not be cheap though. It is expected that the process will incur costs of about €500 million, but the government has said that this number might be higher by 10-20 percent after an agreement with unions.

Yet, Warsaw cannot give coal companies aid without the approval of the European Commission as EU state aid regulations regarding mines are usually applied to mines earmarked for closure. Mr Kowalczyk, however, said earlier that he was very optimistic and believed that the Commission would grant Poland an approval. The country’s dependence on coal has for long been a source of disagreement between Warsaw and Brussels as the EU wants to curb emissions and promote more renewable energy.

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