Polish coal demand expected to fall by seven million tonnes next year: minister

FILE PHOTO: A heap of coal is seen at the Zeran Heat Power Plant in Warsaw, Poland November 4, 2017. Picture taken November 4, 2017. REUTERS/Kacper Pempel

WARSAW (Reuters) - Poland’s demand for coal is expected to fall by around 7 million tonnes next year, or more than 10% of annual hard coal production, after a drop in demand for electricity, Deputy Minister of State Assets Artur Sobon said on Friday.

Poland generates most of its electricity from burning coal, which has become costly due to rising prices of carbon emission permits. The industry has also struggled with falling demand for coal, which accelerated during the COVID-19 lockdown because the country used less power.

“The situation in coal mining is not easy ... We have a fall in electricity production and a fall in production of electricity from coal. We should expect that this is a sustained trend,” Sobon said during a discussion panel on energy transformation during the European Economic Congress in Katowice, the heart of Poland’s coal region.

He said data provided by power stations showed that next year demand for coal would likely shrink by around 7 million tonnes.

Speaking at the same panel, Tomasz Rogala, chief executive at Poland’s biggest coal producer, state-run PGG, said the group had to adjust its output to the demand from Polish utilities, as it would not find new markets for its products.

PGG produces around 30 million tonnes of coal a year, but its output is expected to drop this year due to falling demand and the COVID-19 pandemic.

The company’s management prepared a restructuring plan, which assumed the closure of two of its coal mines, but the proposal was rejected by the trade unions in July. Since then, the government, PGG and unions have been working on a new restructuring scheme.

“The biggest challenge today is to design this change in such a way that it is as acceptable as possible,” Rogala said, adding that figures reflecting the market trends could not be ignored.

Reporting by Agnieszka Barteczko; Editing by Mark Potter