Poland

Coal and lignite are strategic fuels for power generation in Poland, where indigenous supplies of these fuels have underpinned growth in electricity supply. The contribution of coal and lignite to total power generation is dominant today and is expected to be maintained in the medium term.

Poland has hard coal reserves totalling 19.1 billion tonnes, mainly located in Upper Silesia and in the Lublin basin. Mineable lignite reserves amount to almost 1.6 billion tonnes.

More than half of Polish power stations are over 25 years old, whilst about one quarter has been in operation for more than 30 years. The lignite - fired power plants are amongst the newest ones and they are being refurbished to meet EU environmental standards. Poland has no nuclear power stations, but has plans to construct a new nuclear power plant by 2020.

Several European energy companies, including VATTENFALL, RWE, EDF and GDF SUEZ are currently active in the Polish energy sector, having a certain impact on energy production and distribution as well as on the government’s privatisation policy. Polish national energy policy is focused on security of energy supply, with competitive cost structures, minimal environmental impacts and increased energy efficiency.

According to the “Energy Policy of Poland to 2030”, coal is expected to remain the main fuel for electricity generation, but a general reduction of energy consumption by industry and a 19 % share of renewables by 2020 are targeted. Nevertheless, electricity consumption in 2030 is expected to increase by 30 %, gas consumption by 42 % and petroleum products consumption by 7 %.

Poland does not have significant reserves of oil and only modest natural gas reserves, although it may have great potential to exploit unconventional gas. The government has issued over 90 licenses for shale gas exploration and reliable assessments are expected to be presented in due time. However, initial analysis shows that Poland has huge shale gas deposits, stretching from the northern Baltic Sea coast to the eastern borders with Ukraine and Belarus, totalling over 5 000 billion cubic metres. Experts estimate that this amount could cover domestic needs for over 100 to 200 years. If these estimates were confirmed, it would change the fuel mix of the country and reduce energy dependence on Russia.

Hard coal

Poland is Europe’s biggest hard coal producer and was once one of the world’s leading suppliers. In the 1970s, Poland became Europe’s biggest coal producer, with an annual output of around 150 million tonnes. In the late 1970s, it was the second largest coal exporter in the world, after the USA, exporting around 40 million tonnes each year. Although the role of Poland, as an exporting country, was already declining in the 1980s, the output was maintained at a significantly high level (193 million tonnes in 1988) compared with other European countries.

It was not until the political turnaround in the Eastern Bloc countries and the ensuing transition to a market economy system, that Poland began to experience a contraction of hard coal mining during the early 1990s that had begun in Western Europe two decades earlier. Nevertheless, coal continues to play a major role, making a 52 % contribution to the country’s primary energy supply. In recent years, the output of hard coal was about 75 million tonnes reaching 79.2 million tonnes in 2012. In 2012, the Polish hard coal industry employed a workforce of some 113000.

Commercially workable hard coal reserves are located in the Upper Silesian basin and the Lublin basin in the east of Poland, with the Upper Silesian coalfield accounting for 93 % of the total. The coal reserves in this region contain some 400 coal seams with thicknesses of 0.8 metres to 3.0 metres. About half of these seams are economically workable. Some 56 % of the workable coal reserves consist of steam coal, while the remaining 44 % are coking coal.

All hard coal is deep mined at an average working depth of approximately 600 metres. Mining is fully mechanised, with over 90 % of coal produced by longwall systems. The run - of - mine coal from underground operations contains discard and requires preparation. In the past, only coking coal was cleaned to meet international quality standards. The expansion of existing coal preparation plants, and the commissioning of new coal upgrading facilities in recent years, has resulted in a significant improvement in the quality of Polish steam coal, which meets world market requirements.

 Most of the country’s natural resources, including coal, are in public hands and coal mining is still mostly a state – run activity. However, in recent years, the state has made decisions on ownership changes in the Polish hard coal industry. In 2009, LUBELSKI WĘGIEL “BOGDANKA”, a steam coal producer operating in the Lublin basin, was privatised and listed on the Warsaw stock exchange. Its debut on the stock exchange was seen as a success.

“Bogdanka” mine is executing a development strategy that will see a doubling of production. It intends to expand the mining area to new mining fields. Taking advantage of its geographic location, “Bogdanka” has, for the time being, no problems with selling all of its production. In December 2010, the Czech group EPH took over “Silesia” hard coal mine from KOMPANIA WĘGLOWA. The newly created company, PG SILESIA, started coal production in 2012. In 2011 JASTRZĘBSKA SPÓŁKA WĘGLOWA (JSW), the largest Polish coking coal producer, listed on the Warsaw stock exchange. After having reached an agreement with trade unions, the government gave a “green light” to the initial public offering of a minority share in JSW. JSW is regarded as one of the top mining companies in Poland with reserves of good quality coking coal and a well - established customer base of steel producers. JSW is also the largest coke producer in the EU, possessing substantial coking facilities of about 3 - 4 million tonnes annual capacity.

 The government has presented a policy which aims to fully privatise all coal mining companies in the coming years. WĘGLOKOKS SA, the biggest Polish coal exporter, is scheduled to be listed on the Warsaw stock exchange in 2013.

Two other coal producing companies remain under state ownership: KOMPANIA WĘGLOWA SA (KW), the EU’s largest coal mining group with a production capacity of nearly 40 million tonnes of coal, and KATOWICKI HOLDING WĘGLOWY SA (KHW) with a production capacity of 12 million tonnes of thermal coal. The government plans to list both of these entities on the stock exchange in the next two or three years, but such ambitions will be largely dictated by the economic outlook and general market conditions.

The main objectives of the coal industry over the coming years are to overcome legal barriers that restrict access to new coal deposits and to apply efficient and modern mining technologies alongside low - emission technologies in the power generation sector.

Coal exporters and recently also coal importers have an efficient infrastructure at their disposal, with cross – border rail links to neighbouring countries and to Baltic Sea ports for exports and imports. These comprise Gdańsk, Świnoujście, Szczecin and Gdynia ports. Among these terminals, Gdańsk and Świnoujście are able to load capesize vessels. Hard coal exports from Poland totalled 6.4 million tonnes in 2012, and about half of these were transported by land to neighbouring countries, while the remaining volumes were trans - shipped via the Baltic ports.

Polish ports such as Szczecin - Świnoujście and Gdańsk have built permanent piers for the import of coal and, over time, both the ports and railways may offer better transport conditions for importers with large contracts.

Indeed, Poland has become a net importer of coal. In 2010, imports of coal were 13.4 million tonnes, in 2011 they reached 15 million tonnes, before dropping to 10.2 million tonnes in 2012, mainly due to the economic slow - down. Imports were dominated by deliveries from Russia. Much smaller quantities come from other countries, including the Czech Republic, Colombia, Kazakhstan and the USA.

Polish coal mines still have a geographic advantage, but this is beginning to shrink with the expansion of ports and logistic hubs near Poland’s eastern border, both of which facilitate coal imports from abroad. Indigenous coal is becoming less attractive for power generators than cheaper imported coal. This is a big challenge for Polish coal producers, because electricity generators are no longer guided by loyalty, but mostly by economic calculations.

The thermal hard coal market also faces increasing pressure from environmental targets being dictated by the European Union which oblige member states to generate more and more electricity from low - carbon sources, whilst the coking coal industry is at the mercy of the performance of the European steel industry.

In order to increase the use of hard coal, not only for its combustion but also for non - conventional use, it was decided to open a Centre of Clean Coal Technologies co - financed by EU funds and co - managed by the Central Mining Institute (GIG) and the Institute of Chemical Coal Processing. This is an important opportunity to give Polish coal the chance to become an environmentally friendly and socially acceptable fuel in future.

Beside its hard coal mining industry, Poland also has a well - developed and technically advanced mining machinery and equipment industry. Together with the research institutes and technology centres KOMAG, EMAG and GIG, the machinery and equipment sector assists the Polish hard coal industry to continuously develop and modernise its activities.

Despite the current economic slow - down, coal companies and other investors, including those from abroad, are interested in making investments in new Polish coal mines.

 

Lignite

Poland’s lignite deposits are exclusively mined in opencast mines. Two of these operations are located in central Poland and a third one lies in the south - west of the country. In 2012, total lignite production reached 64.3 million tonnes (18.2 Mtce), 98.4 % of which was used by mine - mouth power plants. Lignite - fired power stations generated 55.6 TWh of electricity, representing one third of the total gross power generated in Poland.

The Bełchatów basin, situated in the central part of Poland, incorporates two lignite fields: Bełchatów and Szczerców. In 2012, the Bełchatów mine produced 40.1 million tonnes (10.8 Mtce) of lignite, this being 62.5 % of Poland’s total lignite production. Mining this lignite required the removal of some 106.9 million cubic metres of overburden, which equates to an overburden - to - lignite ratio of 2.6 cubic metres per tonne. The depth of the mining operation in the Bełchatów field is about 300 metres and the average calorific value of the fuel is 7 960 kJ / kg. Bełchatów mine is expected to remain in operation until 2038. The lignite output is supplied entirely to a mine - mouth power plant, with a capacity of 5 298 MW. The power plant generates 27 - 28 TWh per year, covering about 20 % of domestic power requirements. Built between 1981 and 1988, it generates the cheapest electricity in Poland. A new 858 MW power unit was put into service on 27 September 2011 in the PGE GiEK SA Bełchatów power plant.

 In the Turoszów lignite basin, located in the south - west of Poland, the Turów mine has a production capacity of 15 million tonnes per year (4.1 Mtce). Reserves are estimated at 340 million tonnes (91.6 Mtce). In 2012, the mine produced over 10.3 million tonnes of lignite (2.8 Mtce), representing 16.1 % of Poland’s total lignite production, with a calorific value of 9 564 kJ / kg. Up to 96 % of the lignite is supplied to the PGE GiEK SA Turów mine - mouth power station. This plant has been modernised and upgraded to a capacity of 2 100 MW. On 31 December 2012, unit No. 9 at the power plant was decommissioned. Currently, the Turów power plant has a capacity of 1 698 MW and is one of the most modern in Poland. In 2012, some 45.6 million cubic metres of overburden were removed, giving a stripping ratio of 4.4 cubic metres per tonne. Turów mine is expected to be in operation until 2045.

The Bełchatów and Turów lignite mines, as well as Bełchatów and Turów power plants, belong to the group of companies included in the PGE Górnictwo i Energetyka Konwencjonalna (PGE GiEK SA) having its office in Bełchatów. The company is one of the six key companies belonging to the majority state - owned Polish utility POLSKA GRUPA ENERGETYCZNA SA (PGE).

The Konin - Adamów basin, located in central Poland between Warsaw and Poznań, has been producing lignite for over 50 years. There are two active mines: Konin and Adamów, which belong to the PAK Group and are named PAK KWB Konin SA and PAK KWB Adamów SA.

PAK KWB Konin SA has a production capacity of 15 million tonnes per year (4.1 Mtce). Lignite is produced at three opencast sites: Jóźwin IIB, Drzewce and Tomisławice. Total lignite production reached 10.1 million tonnes (2.7 Mtce) in 2012. It required the removal of 70.7 million cubic metres of overburden, a stripping ratio of 6.9 cubic metres per tonne. The working depth at these pits varies between 25 metres and 80 metres. The extracted fuel has an average calorific value of 9 220 kJ / kg. The planned lignite production from PAK KWB Konin SA is estimated to be about 195 million tonnes (52.5 Mtce). The Konin mine supplies lignite to three mine - mouth power plants: Pątnów I with an installed capacity of 1 200 MW, Konin (583 MW) and Pątnów II (464 MW).

PAK KWB Adamów SA operates three opencast pits, named Adamów, Władysławów and Koźmin. Adamów mine’s overall production capacity is 5 million tonnes per year (1.3 Mtce). The depth of mining operations is between 44 metres and 70 metres. The deposits currently being exploited have workable reserves of 44 million tonnes (11.8 Mtce). In 2012, lignite production reached 3.6 million tonnes (0.9 Mtce), all of which was supplied to the 600 MW Adamów mine - mouth power station. Some 31.7 million cubic metres of overburden was removed, which gives a stripping ratio of 8.7 cubic metres per tonne.

The entire Pątnów - Adamów - Konin (PAK) lignite basin generates approximately 8.5 % of Poland’s electricity requirements. The mines belong to ZESPÓŁ ELEKTROWNI PĄTNÓW - ADAMÓW - KONIN SA which listed on the Warsaw stock exchange in October 2012. PAK KWB Adamów SA is expected to remain in operation until 2023 and PAK KWB Konin SA until 2040.

The average productivity at Poland´s lignite mines was 4 236 tonnes per man - year in 2012 and employment totalled 15 156. Poland’s lignite mining areas can maintain their annual production output at current levels of around 60 million tonnes and lignite is expected to play an important role in Poland’s energy supply until at least 2030.

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