In late August 2006, news about the possible purchase of three mines from Kompania Weglowa (KW [1]) by Weglokoks hit the headlines. Interest in this deal stemmed mainly from the fact that such a transaction, if completed, would be the first ever cash deal in the Polish coal mining sector. Furthermore, the purchase would lead to the emergence of a new and strong competitor in the sector.[1] http://www.kwsa.pl/
Trade unions have criticised plans made by Poland’s biggest coal exporter, Weglokoks, to purchase three coal mines from Kompania Weglowa in what would be the first ever cash deal in the national mining sector. The unions in Kompania Weglowa oppose the idea, claiming that the company’s competitive edge would suffer as a result. The unions warned that they would take any measures necessary to prevent the sale.
In late August 2006, news about the possible purchase of three mines from Kompania Weglowa (KW) by Weglokoks hit the headlines. Interest in this deal stemmed mainly from the fact that such a transaction, if completed, would be the first ever cash deal in the Polish coal mining sector. Furthermore, the purchase would lead to the emergence of a new and strong competitor in the sector.
Company profiles
Weglokoks is Poland’s largest coal exporter, recording sales of 19 million tonnes of coal at international markets in 2004. The company mostly relies on domestic supply, and thus maintains close ties with major mining companies in Poland.
KW is the largest mining enterprise in Europe, comprising 17 coal mines. In 2005, the company’s output amounted to 53 million tonnes of coal.
Background to cash sale
These two companies are still controlled by the State Treasury; therefore, the idea of a sale – as part of a new strategy for the sector – came from the government. The original plan was a swap transaction in which KW was to exchange its three most profitable mines for PLN 400 million (€104 million) worth of Weglokoks shares. Unofficially, Knurów, Szczyglowice and Sosnica-Makoszowy mines had been chosen as the three locations in question.
Eventually, however, the Ministry of Economy (Ministerstwo Gospodarki, MG) decided that, to avoid weakening the two companies, Weglokoks should acquire the mines in a cash deal instead. As a result, a large diversified group consisting not only of the exporting company but also of production facilities could emerge.
Reaction of trade unions
As the news of the possible sale spread, major trade unions represented in KW publicly denounced the idea, claiming that the company’s competitive edge would suffer as a consequence of the sale. The unions warned that they would take any measures necessary to prevent the deal from going ahead.
Vice-Chair of the Miners Trade Union (Zwiazek Zawodowy Górników, ZZG), Waclaw Czerkawski, castigated the proposed deal as a provocation against the miners. In an interview with the daily newspaper Gazeta Wyborcza, Mr Czerkawski stated that there was no reason for KW to give away its best operations.
In addition, the unions are not alone in their disapproval of the ministry’s plans: the newly appointed Chair of KW, Grzegorz Pawlaszek, has also reportedly distanced himself from the anticipated transaction.
Jan Czarzasty, Institute of Public Affairs (ISP) and Warsaw School of Economics (SGH)
Eurofound recommends citing this publication in the following way.
Eurofound (2006), Trade unions oppose planned purchase of coal mines, article.
