Mining to Poland
Trends and opportunities
Poland has a long mining tradition with the Karolina mine in the Silesian coal region opening as early as 1788. The country is the ninth largest coal producer in the world and is the largest in the European Union (EU).
The major commodities mined are hard coal, lignite, copper and sulphur. The mining sector is supported by a large mining equipment, technology and services (METS) industry and specialist education, research and development organisations. The nation’s recoverable hard coal and lignite reserves are estimated at 3.09 billion tonnes (Source: World Energy Council).
Currently, the Polish hard coal mining industry is experiencing an economic downturn. The mining industry in Poland has been affected by the significant global decrease of coal prices, to the extent that some of the major local coal companies came close to bankruptcy. In Poland, the ongoing process of bringing the sector back to profitability is aimed at investment in modernisation, adjusting production volumes to match market demand, reducing costs and increasing productivity.
Within the framework of the Polish Government’s mining industry restructuring program, a new company Polska Grupa Gornicza (PGG – Polish Mining Group) has been established, PGG took over assets of Kompania Weglowa comprising eleven mines. Other mining companies are also working to reduce costs and raise efficiency. The most unprofitable mines or units of integrated mines are being transferred to Spolka Restrukturyzacji Kopaln (SRK – Mines Restructuring Company) for eventual closure. By November 2016, seven mines had been transferred to SRK.
The structural changes are showing promise and the decision in November 2016 of the European Commission to allow state aid for the closure by 2018 of uncompetitive operations allows the process to continue with the co‑operation of investors and social partners.
Despite the current downturn coal will remain an important component of the Polish energy mix, as the country continues to rely on domestic coal output for over 80 per cent of its heat and electricity generation (Source: Polish Ministry of Energy presentation). The coal industry also remains an important employer with over 85,000 people working in the industry.
Large-scale coal reserves are considered strategically important from an energy security perspective. The government is supportive of the coal industry and envisages that it will remain a key energy source for the medium-term; however, it acknowledges that efficiency in the sector needs to be improved.
The varied mineral deposits are concentrated mainly in the southern upland regions and adjacent areas. The most important mineral resource is hard coal, most of which is located in Upper Silesia and the Lublin coal basins. Poland also has significant deposits of lignite, located mainly in the basins surrounding the cities of Turoszów, Konin and Bełchatów.
Sulphur and copper are the most important of the country’s non-fuel mineral resources. Some of the world’s largest sulphur deposits are found near the city of Tarnobrzeg in the south-east and large reserves of copper are located in Lower Silesia. Important reserves of zinc and lead are in Upper Silesia. Other minerals of economic importance are rock salt, potash, iron ore and gypsum.
Commercially exploitable hard coal reserves are located in Upper Silesia and in the Lublin basin in the east of Poland, with the Upper Silesian coalfield accounting for 78.9 per cent of the total. The coal reserves in this region consist of 400 coal seams with thicknesses of 0.8 metres to three metres. About half of these seams are economically workable. Some 72 per cent of the reserves consist of steam coal, 27.0 per cent are coking coal (Source: ARP Polish Industrial Development Agency). All hard coal is deep mined at an average working depth of approximately 600 to 1200 metres. Mining in Poland is fully mechanised, with over 90 per cent of coal produced by longwall systems.
In the past, only coking coal was cleaned to meet international quality standards. However, the expansion of existing coal preparation plants and the commissioning of new facilities in recent years, has led to an improvement in the quality of Polish steam coal.
Poland’s hard coal production amounted to 70.4 million tonnes (Source: ARP Polish Industry Development Agency) and coal exports from Poland totalled 8.9 million tonnes in 2016, which is 1.8 million tonnes less than the previous year.
More than half of the shipments were transported overland to neighbouring countries, mainly Germany, the Czech Republic and Austria, while the remaining volumes were transhipped via the Baltic ports, Weglokoks, the largest coal exporting company in Poland, estimates its exports to total around four million tonnes in 2017.
Coal imports/exports in 2016:
- hard coal imports: 8.3 million tonne
- hard coal exports: 8.9 million tonnes.
Poland is the fourth largest producer of lignite worldwide and the second in the EU. Lignite is used predominantly by the power generation sector and is mined by open-cast methods. Two of these operations are located in central Poland and a third in the south-western region of the country. Lignite-fired power stations generate approximately 53 -55 terawatt-hours of electricity annually, being one third of the total gross power generated in Poland.
The Bełchatów basin, which incorporates two lignite fields, is situated in central Poland. The open-cast mine is expected to remain in operation until 2038 and supplies the 4400 megawatts Bełchatów power plant, which provides 20 per cent of Poland’s power requirements. The county’s lignite mining areas are expected to maintain annual production output at current levels of around 63-66 million tonnes (Source: Ignite mining and electricity generation in Poland: The current state and future prospects report) as lignite is expected to play an important role in Poland’s energy supply until at least 2030.
Government policy for the industry is based on the following specific objectives:
- ensuring energy security of the country by satisfying the domestic demand for hard coal, including utilisation 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
- utilisation 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 region.
Australian expertise is acknowledged and valued by the Polish industry and there are opportunities for Australian organisations to offer solutions to assist the Polish coal sector as it undertakes extensive transition and modernisation. Areas to consider include:
- improving operational efficiency
- mine planning and deposit assessment
- efficient coal-bed methane extraction, collection and utilisation
- Introduction of roof bolting (strata control) expertise, technologies and equipment
- equipment and services to support modernisation including automation, underground communication systems
- improved drilling technologies, especially directional drilling and navigation capabilities
- training including efficient, safe mining practices
- personnel management, including individual worker/staff tracking systems, work cycle management and payroll systems
- environmental remediation of closed mine sites.
Poland’s coal sector is facing significant challenges due to relatively high costs of production from its deep underground mines. Currently, the cost of production in many coal mines is in excess of global prices and local production is being displaced by lower priced imported coal. This situation is particularly acute in the thermal coal sector and as a consequence, the sector is restructuring and reforming as it seeks to better align production costs to global prices. The sector is experiencing considerable stress with a number of mines and mine companies experiencing loss making conditions.
The majority of coal mining companies with the exception of PG Silesia are controlled by the Polish Government. However, it is expected that several of the remaining operations may be privatised in the coming years.
Tariffs, regulations and customs
Australian companies seeking opportunities in the Polish mining sector need to be aware of the National Geological and Mining Law. The legislation is the basis from which the Ministry of Environment grants concessions for:
- prospecting or exploration of basic minerals (e.g. oil, gas, coal, lignite, CBM, ores of precious metals), brines, curative and thermal waters and all minerals located within the boundaries of the maritime areas of Poland
- non-reservoir storage of substances and disposal of waste in the subsurface
- concessions for other minerals, including common minerals (such as sands, gravels, limestones, sandstones), are granted by local authorities.
Marketing your products and services
Working with a local partner or appointing a distributor are the most common ways of entering the market.
As the majority of the Polish mining companies are state owned, Australian companies interested in supplying mining products and/or technologies will in most cases need to go through a public procurement process. The required procedure and documentation will be specified in the call for tender.
Imported mining equipment must have the required EU certification and associated documentation. New comers to the Polish market and the European Union should consider approaching the following local institutions to clarify the requirements regarding certification and safety testing.
The coal mining industry and exporters have efficient infrastructure at their disposal, with cross-border rail links to neighbouring countries and to Baltic Sea ports for export. These comprise Gdansk, Świnoujście, Szczecin and Gdynia. Only Gdansk is able to accommodate large Panamax vessels. Hard coal exports from Poland totalled 16.4 million tonnes in 2013 and about half of these were transported by land to neighbouring countries, while the remaining volumes were trans-shipped via the Baltic ports mainly to Germany, UK and Ireland.
Links and industry contacts
Major coal companies
Jastrzebska Spolka Weglowa (JSW)
Katowicki Holding Weglowy – (hard coal)
Lubelski Wegiel "Bogdanka" SA - (hard coal)
PG Silesia (hard coal)
PGE Gornictwo i Energetyka Konwencjonalna S.A. (lignite)
PGG (Polish Mining Group) - (hard coal)
Government, business and trade resources
Central Mining Institute (GIG)
Polish Investment and Trade Agency
Ministry of Development
Ministry of Energy
Ministry of Environment
State Mining Authority (WUG)
Technical Approval Department (UDT)
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