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Poland planning to export coal from stockpiles to Ukraine

Poland is planning to sell its hard coal stockpiles to Ukraine in order to raise cash to inject liquidity into the country's struggling state-owned coal miners, development minister Mateusz Morawiecki, said Monday.

"There is a coal deficit in Ukraine. We are working on selling our excess coal there," Morawiecki told reporters.

Morawiecki, who is in charge of the new Polish government's economic development policy, did not say what type of coal he was referring to.

Low coal prices and high production costs saw the state coal mining sector record a net loss of Zloty 1.67 billion ($420.5 million) in the first three quarters of this year. At the end of September the state miners had 5.76 million mt of coal stockpiled, according to government figures.

All of the miners are facing liquidity problems, especially the European Union's largest miner, Kompania Weglowa (KW). It employs 40,000 workers in its 11 mines, which mainly produce thermal coal.

Poland's state-controlled coking coal miner, Jastrzebska Spolka Weglowa (JSW), had 1.33 million of coal stockpiled at the end of September.

In January-September, Poland's state-controlled miners exported 5.6 million mt of coal, of which 3.6 million was thermal coal and 1.6 million mt coking coal. Germany was the largest market, taking 35% of all exports inside the EU. Ukraine was the biggest market among non-EU countries, buying 121,700 mt, of which 113,400 mt was coking coal.

Market analysts say exporting thermal coal to Ukraine could bring in cash to ease the Polish companies' liquidity problems, but the move would likely be a short-term solution because Poland's thermal coal accounts for just 20%-30% of the Ukrainian market, which is dominated by anthracite.

Polish suppliers could not expect Ukrainian consumers to pay an extra margin for their coal and the additional transportation costs would make the trade less attractive.

source: http://www.platts.com