Mining in Poland

Poland - a European coal potentate

Poland is one of Europe’s top coal and copper producers. Poland’s mining industry has suffered declining production and consequently several mining sectors have reported job losses and closures. However, there have been signs of recovery, with the country’s silver, zinc and copper production showing an increase over previous years.

Poland has experienced the strongest economic growth of any of the former Soviet bloc nations and has began several economic initiatives which include privatisation of state-owned industries and restructuring of the coal and heavy industry sectors.

All of Poland’s copper production comes from KGHM Polska Miedz (Polish Copper) SA which produces approximately 520 000t of refined copper and 1 100t of silver each year (2000). The parastatal, considered one of Europe's largest copper producers is to sell its remaining government shareholding of 49.55% to private investors. Production is sourced from three underground mines, Lubin, Polkowice – Sieroszowice and Rudna. Poland has several lead zinc silver mines, but has had to import zinc ore and concentrates from Australia, Peru and Canada. Poland’s iron and steel industry relies solely on imports of ore and raw materials. Iron ore is imported from Ukraine, Russia, Brazil and South Africa whilst manganese is imported from Gabon and South Africa.

Information from Ministry of Economy

 The role of Polish hard coal in the European Union

So far the annual average consumption of the primary energy in 25 countries of the European Union was at the level of 2.4 billion tonnes of theoretical standard fuel units, including:
- 37% of primary energy from oil,
- 24% from natural gas,
- 18% from coal (hard coal and brown coal),
- 14% is nuclear energy,
- 7% from renewable energy sources.

It is projected that coal will maintain its role in the energy market within the European Union, which appears from the following facts.

1. The European Union has limited sources of energy carriers. There are resources of oil, gas, hard coal and brown coal in the EU however viability of the first two energy carriers is estimated about 25 years whereas viability of coal, at current state of resources identification is estimated about 100 years.

2. The oil and gas prices almost doubled in 2004 – 2005. It is expected that while the global demand for oil and gas increases their prices are likely to stay high.
According to forecasts included in the Communication from the Commission to the European Council and the Parliament of 10 January 2007 (KOM /2006/843) one should expect that coal will cover about one forth of the global demand for primary energy. As in next twenty years the global primary energy consumption will increase by 60%, similar increase will concern coal.

Hard coal may still constitute a valuable contribution to ensuring security of energy supplies and into the EU and whole world economy, provided technologies enabling radical reduction of CO2 emission, which is generated at combustion, are applied.

The only countries producing hard coal in the European Union are: the Czech Republic (annual output ca. 14 million tonnes), Spain (ca. 13 million tonnes), Germany (ca. 29 million tonnes, Poland (ca. 100 million tonnes in 2003, ca 99 million tonnes in 2004, 97.1 million tonnes in 2005, ca. 94.3 million tonnes in 2006), UK (ca 28 million tonnes).
Poland is the biggest hard coal producer in the European Union. 15.8 million tonnes of coal was sold for shipments to the European Union and third countries, while 16.9 million tonnes was shipped and exported (the difference results from sales of coal from stock of “Węglokoks” S.A. purchased from mining enterprises beforehand) in 2006.

Poland supplies to the EU market about 16 million tonnes of hard coal per year. Mainly steam coal is sold which accounts for 86% of total Polish coal shipments to the EU markets.

Hard coal output in Poland constitutes over 50% of the EU output while in the case of steam coal it accounts for about 59% and in the case of coking coal about 39%. Poland is the second, after Germany, coking coal producer in the European Union.

The role of Polish hard coal in the European Union will depend on Polish producers.
Only maintaining an adequate cost level will allow to compete in the common European Union market with coal imported by the EU countries from other directions and to compete with other energy carriers.

 Vision and strategic objectives of the hard coal mining sector

Having regard to the role and significance of native hard coal resources in satisfying power industry needs of the country, the state policy towards hard coal mining sector will ensure its competitiveness and successful operation in the market economy after 2015. Having achieved profitability mining enterprises should be characterized by a high degree of work safety, modernity and innovativeness of the production process and a low degree of negative impact on the environment as well as stability and flexibility of employment and work systems, which should support scientific and technological development of mining regions.

Rational utilization of hard coal deposits should contribute to ensuring of energy security of the country and to development of new technologies of obtaining energy based on hard coal. During execution of restructuring processes aiming at achieving competitiveness mining enterprises will obtain public aid for restructuring whereas after completion of these processes they will be able to exercise other forms of public aid for development.

Taking into account the hard coal mining sector diagnosis, in particular the analysis of the most important problems and the strategic analysis as well as the foregoing vision of sector operation after 2015, the strategic objective of the State policy towards the hard coal mining sector has been formulated as follows:

The objective of the State policy towards the hard coal mining sector is to rationally and effectively manage the coal deposits located in the territory of the Republic of Poland so that these resources serve next generations of Poles.
The strategic objective will be pursued by measures concentrated around the following specific objectives:

- ensuring energy security of the country by satisfying the domestic demand for hard coal, including utilization of coal for production of liquid and gaseous fuels.
- maintaining competitiveness of Polish hard coal in conditions of free market economy.
- ensuring stable deliveries of hard coal of the required quality to domestic and foreign customers,
- utilization of modern technologies in the hard coal mining sector to improve price competitiveness, occupational safety, environmental protection and to create the basis for technological and scientific development in particular in the Silesia and Małopolska regions.

Such determined strategic objective and specific objectives are in line with accomplishment of the objectives of the renewed Lisbon strategy currently pursued in Poland by the National Reform Programme for the period 2005-08. These objectives are also in line with the objectives of the Country Development Strategy for the period 2007 – 2015.
To achieve a certain strategic objective and specific objectives, performing of all necessary activities should take account of the following guidelines:

1. Search for new possibilities of coal application and new customers;
2. Adapting production capacities of the mining industry to capabilities of hard coal sales in the market.
3. Maintaining production costs of coal in mines at a competitive level in relation to coal prices and thus maintaining economic viability by coal companies;
4. Maintaining satisfactory level of liquidity and creditworthiness by coal companies;
5. Ensuring stable and economically secure jobs in hard coal mines and rational job resource management;
6. Pursuing by the management boards of coal companies effective non-production fixed assets and long-term financial assets management policy.
7. Taking by coal companies measures related to increase in revenues by rational by-products and waste management (e.g. methane, waste rock, water, scrap);
8. Taking by coal companies measures in order to minimize costs arising between a producer and an ultimate consumer of coal (costs of services related to distribution and transport of coal);

 Privatization of mining industry

Legitimacy of potential privatization will be agreed with the social partner, separately for each company. In the case of potential privatization, it is assumed the following conditions should be met:

1. The method and course of the privatization process should guarantee to maintain the majority interest controlled by the State Treasury.
2. The privatization process may be carried out via the Stock Exchange to get capital for development and modernization of a privatized enterprise.
3. Lawfully the employees will get stock in a privatized company. In the case of employees not entitled, subject to the financial condition of a given enterprise compensatory solutions should be prepared.

LIGNITE RESOURCES IN POLAND

Poland’s lignite deposits are exclusively mined by opencast methods. Two of these operations are located in central Poland and a third one in the south-western region of the country. In 2007, total lignite production reached 57.4 million t (15.5 Mtce), 99.7% of which was used by mine mouth power plants. Lignite-fired power stations generated 51.3 TWh of electricity, which represents 32.1% of total power generation in Poland.

The Belchatów basin, which incorporates two lignite fields, is situated in the central part of Poland. Work at the Bełchatów opencast mine started in 1977. In 2007, the Belchatów mine produced 31 million t (8.4 Mtce) of lignite, representing 55% of Poland’s total lignite production. This required the removal of some 132.2 million cbm of overburden, which represents an overburden-to-lignite ratio of 4.3 cbm/t. The depth of the mining operation in the Bełchatów field is 260 m and the average calorific value of the fuel is 7,960 kJ/kg. The Bełchatów mine is expected to remain in operation until 2038. The lignite output is entirely supplied to the mine mouth power plant, which has a capacity of 4,400 MW. The power plant generates 27 - 28 TWh per year and covers about 20% of domestic power requirements. The power station was built between 1981 and 1988 and at present generates the cheapest electricity in Poland, and probably anywhere else in Europe. A new power unit in Belchatow Power Plant with a capacity of 830 MW is under construction.

The Konin-Adamów basin is located in central Poland between Warsaw and Poznan, and has been producing lignite for over 50 years. There are two active combined mines: Konin and Adamów.

The Konin mine (KWB Konin) has a production capacity of 12 million t per year (3.2 Mtce). Lignite is produced in four opencast sites at Lubstów, Józwin IIB, Kazimierz North and Drzewce. Total lignite production reached 10.2 million t (2.9 Mtce) in 2007. It required the removal of some 67,211 mill. cbm of overburden, which represents a stripping ratio of 6.6 cbm/t. The working depth at these pits varies between 25 and 80 m. The extracted fuel has an average calorific value of 9,220 kJ/kg. The lignite reserves at operating mines are 88.0 million t (23.7 Mtce), while the satellite deposits scheduled for progressive development are estimated to contain about 294 million t (79.3 Mtce). In 2010, overburden removal in the new Tomisławice lignite mine is planned. The Konin mine supplies lignite to three mine-mouth power plants, Patnów I with a capacity of 1.200 MW, Konin with a capacity 583 MW and Pątnów II with a capacity of 464 MW.

In the Adamów mine, three opencast pits are operated, (named Adamów, Wladyslawów and Kozmin), with a lignite production capacity of 5 million t per year (1.4 Mtce). The depth of mining operation is between 40 and 70 m. The deposits currently being exploited have workable reserves of 62.8 million t (16.9 Mtce), while the satellite deposits are estimated at about 725.7 million t (196 Mtce). In 2007, lignite production reached 4.9 million t (1.3 Mtce), all of which was supplied to the Adamów mine-mouth power station (capacity 600 MW). Some 29 million cbm of overburden was removed, which gives a stripping ratio of 6 cbm/t. To maintain the present level of lignite production, the mine is now developing the northern field at Kozmin, which safeguards a production level of about 1 million t (0.27 Mtce) per year until 2008. The entire lignite basin generates 8.9% of Poland’s energy requirements. The Adamów mine is expected to remain in operation until 2023and the Konin mine until 2040.

The Turoszów Lignite basin is located in the southwest of Poland. The reserves are estimated at 403 million t (108.8 Mtce). In 2007, the mine produced over 11 million t of lignite (3 Mtce) with a calorific value of 10,349 kJ/kg. Up to 98% of the lignite is supplied to the Turów mine-mouth power station. This plant was updated and upgraded to a capacity of 2,100 MW, making it the most modern power station in Poland. In 2007, some 32.3 million cbm of overburden were removed, giving a stripping ratio of 2.85 cbm/t. The mine is expected to be in operation until 2040.

Poland’s lignite mines are expected to maintain their production capacity of 65–70 million t (17.7–19.0 Mtce) per year, and lignite is expected to play an important role until about 2035. Lignite production is likely to continue in Lower Silesia and in the Legnica area, where the copper and silver mines currently in operation are expected to close in the 2020s as their reserves become depleted.

sources:
http://www.mbendi.com
http://www.mg.gov.pl
http://www.euracoal.be