Acta Montanistica Slovaca Ročník 19(2014), číslo 2, 70-116
70
Economic situation of hard coal mining industry
in Upper Silesian Coal Basin.
Ewa Wanda Maruszewska1
, Michal Vaněk2
, Šárka Vilamová2
Abstract: Article aims at investigating the economic situation of hard coal mines localized in Upper Silesian Coal Basin in Central
Europe. It is interesting to compare financial situation of four chosen entities that do business in two neighboring countries: the Czech
Republic and in Poland. Special focus was paid to legal status of mining companies, scope of their activities, profits gained, employment
level, and effectiveness of coal sale. In conclusion authors state that although hard coal mining is important so as to provide uninterrupted
supplies of coal for state energy sector, it shall meet a free market requirements regarding economic effectiveness. As two out of four entities
encompassed in the study have been privatized and are competitive coal producers, authors suggest using their experience in order to
improve unfavorable financial situation of two remaining entities. Nationality distinction of entities seems to be less important than
ownership classification of hard coal mining enterprises operating in Upper Silesian Coal Basin.
Key words: hard coal mining industry, The Czech Republic, Poland, economic analysis, hard coal mining
Introduction
For centuries coal production in Central Europe has been considered a strategic energy resource as
the countries of the region seek to secure their energy future and independence. The largest mining fields are
stationed in Upper Silesian Coal Basin (called also Moravian-Silesian Region) that is located on the boarder of
two states: Poland and the Czech Republic.
Upper Silesian Coal Basin (USCB, Polish: Górnośląskie Zagłębie Węglowe; Czech: Hornoslezské uhelné
pánve) is triangle shaped with concave base. It can be appointed by the city of Frenštát pod Radhoštěm in Czech,
while in Poland by Myślenice and Sucha Beskidzka on the south, and Tarnowskie Góry on the north. This way
USCB encompasses Cracow region together with the territory of Upper Silesia and Ostravsko-Karvinsky land in
the Czech Republic [17, 22, 27].
The area of USCB is 7490 km2
. Polish part amounts 5760 km2
. The territory occupied by productive works
is about 5 400 km2
, of which 4 450 km2
belongs to Poland. About 300 km2
of productive area lies on the territory
of the Czech Republic, which is approximately 6% of southern part of Upper Silesian Basin [1, 3, 4].
Due to geological conditions mining industry has developed in two neighboring countries. It gave rise to
two metropolitan areas: Upper Silesian Industrial District with capital in Katowice (in Poland) and
agglomeration around Ostrava (in the Czech Republic). Both agglomerations are important industrial areas since
XIX century. Nowadays Poland and the Czech Republic are leading coal producers in the European Union with
a combined yearly production of coal reaching half of Australia's coal production.
The average sufficiency of the Polish operational reserves deposited in working horizons and horizons
under construction, in conditions of the output level planned by Polish coal companies is about 20 years [25].
Czechs also continuously document their coal reserves so as to ensure continuous mining also in the upcoming
years. Mineable reserves of Czech as of 31 December 2013 amounted 66 241 thousand tones, while reserves in
Poland amount to almost 16,9 billion tones [10].
Tab. 1. Hard coal operational reserves in Upper Silesian Coal Basin [kt].
JSW KHW KW OKD
Name
Jastrzębska Spółka
Węglowa S.A.
Katowicki Holding
Węglowy S.A.
Kompania
Węglowa S.A.
OKD a.s.
Country of
operation
The Republic of
Poland
The Republic of
Poland
The Republic of
Poland
The Czech Republic
Hard coal
operational
reserves [t]
285 838 708 027 1 979 493 228 119
Reserves by the
country
2 973 358 228 119
Source: [1, 6, 27, 28, 23, 25]
1
Ewa Wanda Maruszewska, University of Economics in Katowice, ul. 1 Maja 50, 40-287 Katowice, Poland.
ewa.maruszewska@ue.katowice.pl
2
Michal Vaněk, Šárka Vilamová, VŠB – Technical University of Ostrava, Faculty of Mining and Geology, Institute of Economics and
Control Systems, 17 listopadu 15/2172, 708 33 Ostrava-Poruba, Czech Republic; michal.vanek@vsb.cz ; sarka.vilamova@vsb.cz.
Acta Montanistica Slovaca Ročník 19(2014), číslo 2, 70-233
71
Article aims at investigating the economic situation of hard coal mines localized in Moravian-Silesian
Region in Central Europe. It is interesting to compare financial situation of four chosen entities that do business
in the Czech Republic and in Poland. Special focus was paid to legal status of mining companies, scope of their
activities, profits, employment, and effectiveness of coal sale. Literature analysis together with analysis of
financial reports and official governmental documents were basis of methodology of the paper.
Changes in coal prices
The study of the price levels for steam coal in the European Union reveals that since 1991 there has been
a long term declining trend due to oversupply of coal in global markets. Furthermore, since 1999 the price
change cycles have been shortened. The macroeconomic uncertainty that continued in Europe with a slowdown
of major global economies have influenced financial results significantly. A lower demand for coal in the steel
and energy sectors, together with increased supplies mainly from Russia, and the subsequent huge surplus of
coal on the market pushed coal prices down during 2013. On a year-on-year basis, the sale price of OKD
dropped by 19 %, while Polish prices decreased by 13 % [1]. It is worth mentioning that coal prices in 2013, in
spite of the decrease, are higher than 10 years ago (Fig. 1).
Fig. 1. Average monthly coal rating index [USD/t].
Source: [12]
Low prices, failing to cover production costs of coal (especially exploited from deep underground mines)
influenced the decisions to reduce European coal production capacity recently. Decisions, consequently, lead to
make the European countries dependent on the suppliers from other continents. According to most of the experts,
the decline in coal prices will continue in the long-term perspective [28]. Due to low prices of coal, at present the
price of electricity generated from coal is one of the lowest compared to electricity generated from other sources.
According to experts, taking into account the global situation in the oil and natural gas markets, in medium-term
prospect the price of electricity generated from coal, compared to the price of electricity generated from other
sources will still be one of the lowest. Similar situation is in the case of price of heat generated from coal. Its
price is lower than the price of heat produced from other sources [25]. Forecasts for short-term global coal
market are divergent: Morgan Stanley, Macquaries and Citi predict an increase in prices due to a decrease in
exports from China, Australia and the United States, and the increased demand for energy from China. Analyst
from Bank of America, Merril Lynch, and Fitch agency believe that prices will continue to decline due to
oversupply of coal [5, 7, 12, 25, 27].
Situation on European coal market in 2013
In the beginning of year 2013, European coal market was characterized by a small activity. Demand for coal
was limited due to the increased supply of coal from Columbia and the south Africa, and high winter
temperatures in many parts of Europe. The continuing oversupply of coal and small demand from buyers were
another reasons for coal price decline in Europe. The inventories of unsold coal in the ports of Rotterdam and
Amsterdam reached the level typical for winter months. According to forecasts, import to Germany was
enormous while exploitation in three active German mines was 30 % (7,5 million tones) less than in 2012
although coal consumption increased by 4 % (that is by 60,7 million tones). High levels of coal import were also
Ewa Wanda Maruszewska, Michal Vaněk, Šárka Vilamová: Economic situation of hard coal mining industry
in Upper Silesian Coal Basin
72
observed in Great Britain. The main reason for the increase of supply of imported coal was a reduction of coal
production in Great Britain that amounted by 4 millions tones. The decline in production was due to the closure
of two deep mines, difficult geological conditions in other mines and the collapse of Scottish Coal Company. In
France, high temperatures and increased usage of renewable sources of energy affected the decrease in coal
consumption. Reduced imports alltogether with reduced demand from the French allowed to rebuild coal
inventories in power plants, which at the end of October 2013 exceeded 5 million tons. In Russia coal extraction
diminished by 1 % as a result of difficulties with transportation of coal to the ports of the Baltic Sea and the Far
East and lack of additional supply from other countries. In spite of decrease in exploition of coal, export of
Russian coal amounted to 142.9 million tons, which constitues an increase of 12.6 % [5, 12].
Year 2013 in Colombia remained with tensions regarding unexplained situation of coal loading at the port
of Drummond due to the strike of loading company, which resulted in a slight increase in coal prices. Supplies
from Colombia to Europe decreased by 10.1 % to 52.7 million tones. The biggest recipient of Colombian coal
was the Netherlands (19.4 million tones), Turkey (7.7 million tones), Chile (6.6 million tones), United Kingdom
(6 million tones) and the USA (5.9 million tons). At the beginning of 2013 suppliers of coal from the South
Africa showed high activity and a customers have benefited from decline in the coal prices and attractive freight
rates. Strong Colombian coal competition that was observed on Asian markets (especially in China), and fall in
demand for coal in India has contributed to the reduction in coal prices. Increased interest in coal from South
Africa arose mainly due to the uncertainty of consumers as to the availability of coal from Colombia. Limitations
in Colombian coal supply have also resulted in securing supplies form the South Africa. Export from South
Africa to European countries has reached 38 % of all international sales from the South Africa [5, 6, 7, 9, 10].
Limitation of production in many Australian mines led to a shortage of coal with higher calorific value and
contributed to the increase of coal prices in 2013. According to the latest forecasts, in 2014 in India the demand
for coal import will increase. Greater demand for coal in the Indian power sector (with an expected decrease in
domestic production) is likely to contribute to an increase in purchases of imported coal. In 2013 China imported
a total of 327 million tones of all types and kinds of coal, which is 13,4 % more than in 2012 [5, 12, 18].
Methodology of survey and analysis of data
Analysis encompassed 4 enterprises: three Polish entities and one Czech company, all exploiting hard coal
in mines located in Moravian-Silesian Region. Depending on data available overall time-scope of analysis
comprises the period of 2003-2013. Authors have surveyed tens of financial reports, two prospectus and more
than twenty other documents regarding national strategy for hard coal mining, as well as other reports prepared
by governmental agencies dated back to year 2003.
Number of mines, coal reserves, level of employment, and owners’ structure of chosen companies are
presented in the table 2.
Tab. 2. Main characteristics of hard coal enterprises in Upper Silesian Coal Basin..
JSW KHW KW OKD
Country of
business
operations
The Republic of
Poland
The Republic of
Poland
The Republic of
Poland
The Czech Republic
Owners‘ structure
[31.12.2013]
Publicly traded on
Warsaw Stock
Exchange; 55% of
shares belong
to the State Treasury
of the Republic of
Poland
The State Treasury of
the Republic of
Poland
The State Treasury
of the Republic of
Poland
The sole shareholder
is New World
Resources N.V.
registered in
Amsterdam, the
Kingdom of
Netherlands. New
World Resources is
publicly traded in
Warsaw, London, and
Prague.
Number of mines
[31.12.2013]
5 9 23 4
Employment
[2013]
106 693 12 369
Reserves of coal
[Mt]
5 000 66,2
Production [Mt]
2013 74,9 8,8
2012 78,1 11,2
2009 72,0 11,0
2006 94,4 13,0
2003 100,4 14,7
Source: [1, 6, 9, 12, 14,23, 24, 25]
JSW
and a wel
Union, p
producing
productio
thermal c
In th
and Pask
World Re
866 own
Company
billion [1
Emp
hard coal
Emp
coal min
employm
employee
productio
18 % wh
criteria fo
most imp
Fig. 2: Em
A c
inventorie
they reac
mines ov
W is regarded
ll - establishe
possessing sub
g companies r
on capacity of
coal [12].
he Czech Rep
kov with coal
esources, an in
n employees a
y, OKD adopt
, 11, 12, 26].
ployment and
l mining indus
ployment in O
nes. Figure 4
ment, still the
es and reducti
on since 2008.
hile production
or economic e
portant elemen
mployment in har
omparison of
es of unsold g
ched 6,45 M t
erexploited 17
2
4
6
8
10
12
14
10
20
30
40
50
60
70
80
90
as one of the
d customer ba
bstantial cokin
remain under
f nearly 40 mi
public coal is
reserves until
nternational g
and 16 432 c
ted a so-called
production ca
stry is much b
OKD amounte
reveals that
e number of
ion in hard co
. Czech OKD
n by 31 % in
evaluation, esp
nt of business
rd coal mines loca
f production
goods. In 2003
tons. Analysis
7 M tons of ha
Fig. 3.
0
20 000
40 000
60 000
80 000
00 000
20 000
40 000
2008
0
0000
0000
0000
0000
0000
0000
0000
0000
0000
2008
top mining c
ase of steel pr
ng facilities o
state ownersh
llion tons of c
currently extr
l 2055. OKD
group. In 2012
contractors. In
d savings pack
apacity compa
bigger than Cz
ed 12 369 em
, although m
employees e
oal exploation
D presents bigg
n the period fr
pecially in de
doing.
ated on the territo
So
and sales of
3 inventories
s of productio
ard coal.
A comparison of
Source:[1,
2009 20
2009 2010
Acta
companies in
roducers. JSW
of about 3 hip:
KW, the E
coal, and KHW
racted by OKD
has been priv
2, saleable out
n 2013 in ord
kage - a range
arison of Czec
zech (Fig. 2).
mployees in 20
mining industr
exceeds 115
n it can be ob
ger fall in emp
from 2008 to
ep undergroun
ory of Upper Sile
urce: [1, 12, 21,
f hard coal sh
of hard coal a
on and sale vo
of production and
, 2, 6, 12, 13, 14,
010 2011
2011 20
a Montanistica
Poland with r
W is also the la
4 million ton
European Unio
W with a prod
D a.s. at four
vatized in 199
tput was 11,4
der to preven
e of cost-cuttin
ch and Polish
013, that is 1
ry in both ne
thousand pe
bserved that e
ployee efficien
2013. But ef
nd mining wh
sian Coal Basin i
25]
hows (Fg. 3)
amounted for
olume dated b
d sales volumes [k
22, 28, 32]
2012 2013
12 2013
Slovaca Ročn
reserves of go
argest coke pr
ns annual cap
on’s largest co
duction capaci
r deep mines:
9 and since 2
million tons,
nt a market s
ng measures –
mining enterp
1,6% of emp
eighboring co
ople. Compa
employment h
ncy as their e
fficiency cann
here safety of
in the period from
that Polish
2,9 M tons, w
back to year 2
k tones].
3
Czech
Polish
Polish prod
Polish sale
Czech prod
Czech sale
ník 19(2014), čís
ood quality co
roducer in the
pacity. Two o
oal mining gro
ity of 12 milli
Karvin., ČSM
2005 it is a pa
with a workfo
situation impa
– worth almos
prises shows t
loyment in P
ountries dimi
aring the cut
has decreased
employment d
not serve as a
f employees sh
m 2008 to 2013 [i
mines have i
while at the en
2008 reveals t
h mines
h mines
duction
duction
slo 2, 70-233
73
oking coal
European
other coal
oup with a
on tons of
M, Darkov
art of New
force of 12
act on the
t CZK 2.3
that Polish
olish hard
inishes its
down of
d less than
ropped by
an explicit
hall be the
in persons]
increasing
nd of 2013
that Polish
Ewa Wa
74
Con
exceeded
that stock
compared
while Cz
exceeded
hard coal
for issued
supply to
arising fr
Ano
Sale
2008 and
influence
domestic
Polish co
imported
to interna
In E
5).
The
the same
years ago
anda Marusze
trary to Polis
d production in
k was sold o
d to 2012. As
ech sale in 20
d coal producti
l mines, sellin
d bonds and o
o the market
om past agree
other interestin
e price of Czec
d it amounted f
ed the level o
sale [12], wh
oal as it impo
from Poland
ational group D
European Unio
sale price of
period. It is w
o. Polish coal
2
4
6
8
10
12
14
0
20
40
60
80
100
120
140
ewska, Micha
sh productionn
most years.
out in 2013. U
s a result, in
013 exceeded
ion by 0,8 M t
ng out overexp
other liabilitie
demand. Com
ements, the sit
ng finding reg
F
ch hard coal w
for almost €50
of average sa
hile 48 % of C
orted 3,3 M to
in 2013, altho
Dalkia, Verbu
on, as well as i
Fig
OKD coal dr
worth mention
prices were a
0,00
20,00
40,00
60,00
80,00
00,00
20,00
40,00
2008
63
55
112
42
2008
S
al Vaněk, Šár
in Uppe
-sales relation
. The biggest
Unsold finish
2013 Polish m
2013 product
tones selling o
ploited hard c
es [12]. Const
mbining the la
tuation of Poli
ards an averag
Fig. 4. A compari
S
was higher in
0 per ton of ha
ale price. In 2
Czech coal wa
ons in 2013.
ough a decrea
und AG and S
in both neighb
g. 5. Unit gross m
So
ropped by 19 %
ning, that desp
at a level of €
2009 2010
68
65
92
47
2009 2
Sale price in Po
rka Vilamová
er Silesian Co
ns, a positive
overproductio
hed goods in
mines did not
tion consumin
overproductio
coal is not pos
tant overprodu
ack of flexibi
ish hard coal m
ge sale price o
ison of average s
Source: [1, 12, 22
every year si
ard coal. The
2013 almost
as delivered ab
The Czech R
asing trend can
W Munchen i
boring countri
margin regarding
ource: [1, 2, 12, 2
% in 2013, w
pite of the de
€30,35 in 2003
2011 2012
74
7
66
114
51
010 201
lish mines
á: Economic s
oal Basin
trend can be
on in Czech m
Polish mine
t manage to s
ng excess of 2
on from 2012 y
ssible as coal
uction of Poli
ility in produ
mining indust
of Polish and C
ale prices [EUR/
2]
ince 2008. Th
market on wh
90 % of reve
broad [8]. Ger
Republic is on
n be observed
in Germany.
ies, the marke
g hard coal [EUR
24]
while average p
crease, averag
3 and €71,12
2 2013
7
83
64
76
124
10
58 63
1 2012
CoGS
situation of ha
e observed in
mines occurre
s decreased b
sell overprodu
2012. Among
year. In case o
inventories a
ish mines exp
uction volume
try looks much
Czech compan
/t].
he biggest diff
hich the coal is
enues of Poli
rmany is the b
n the second
d. Czech hard
et is pushing c
R/t].
prices in Pola
ge prices in 2
in 2013. Com
Sale prices of
mines
Sale prices of
mines
71
73
02
72
51
2013
S in Polish mine
ard coal minin
Czech mines
ed in 2012, bu
by 5 % in 20
uction from y
Polish mines,
of KW, the ow
are pledged as
poses inability
e with legal c
h worse than C
nies (Fig. 4).
ference was ob
s being sold m
ish mining c
biggest coal im
place with 1
coal is being
coal prices dow
and dropped b
013 are highe
mparing Czech
f Polish
f Czech
es
g industry
s, as sales
ut most of
013 when
year 2012,
JSW sale
wner of 23
s collateral
y to adjust
constraints
Czech.
bserved in
might have
ame from
mporter of
,6 M tons
g delivered
wn (figure
by 14 % in
er than ten
h OKD to
Polish JS
other thin
in 2013 w
latter is a
in 2013. T
As s
has incre
geologica
of goods
decreased
Figu
hard coal
Czech co
hard coal
that avera
at a minim
hard coal
market. I
industry.
sold. Ope
generated
Assu
a differen
that two
32 mines
process g
adjustmen
[21]. On
hard coal
Orga
in Polish
employm
operation
Polis
increasing
A large s
to existin
Polish m
industry.
summariz
Fig. 6. Com
50,9
%
SW, it can be
ngs because se
while OKD’s
a leader amon
The average s
stated above,
ased in the sa
al conditions o
sold by almo
d by 29 % whi
ure 6 shows th
l mining. The
oal, which is m
l not only is m
age Czech har
mum cost of 5
l mining indu
In 2013 the c
Czech OKD
erational costs
d 15 % gross p
uming similar
nce in selling
out of three P
s out of 37 m
governed by
nt of producti
the other han
l production an
anizational ch
h hard coal in
ment in Polish
nal costs (Fig.
sh miners’ so
g the cost of
hare of payro
ng market dem
mines. Both de
It is worth m
zed Polish min
mposition of oper
9
%
19,
%
17,48
%
3,04
%
92
Polish min
stated that th
elling price of
€72. Averag
ng Polish hard
sale price drop
selling prices
ame period of
of coal seams
ost 63 % in P
ile cost of goo
hat difference
ere are two re
much higher th
more expensiv
rd coal cost of
55 EUR per to
ustry detectin
cost of produc
also reported
s of 2013 ros
profit in 2013.
r geological c
prices and co
Polish enterpri
mines covered
the Ministry
ion capacity t
nd, miners’ so
nd maintain h
hange, includin
ndustry, as p
hard coal ind
6).
ocial benefits
labor. By co
oll draws atten
mands. Other
epreciation an
mentioning tha
nes, as Polish
op
rational costs (by
Source: [1, 12]
,05
%
,51
%
8
4
nes
hese two com
f JSW is muc
ge prices of al
d coal enterpri
pped by 23 %
has lowered
f time mainly
s. Analyzing th
Polish mining
ods sold increa
e between sell
asons for hig
han the Polish
ve on the mark
f production a
on (in 2008).
ng that they m
ction exceede
d a loss on op
e above reven
.
onditions in U
ost of product
ises included
d by the study
y of Industry
to meet marke
ocial privilege
high fixed cost
ng lowering o
ayroll cost co
dustry has dim
that arise fro
mparison labo
ntion in the co
cost items of
nd consumptio
at the structur
h hard coal ind
perating 23 har
nature) in 2013 [
0,51%
31,44
C
Acta
mpanies are co
ch higher than
ll Polish mini
ises. JSW has
in 2013 when
recently in bo
due to environ
he period of 2
g industry. Co
ased by 19 %
ling prices and
her gross mar
h one. The sec
ket, but also i
amounts for 42
Data reported
might have p
d the selling
erational activ
nues by more
Upper Silesian
tion between
in the analysi
y. Entities are
y in Poland.
et needs are a
es and energy
ts of mining in
of employmen
onstitutes the
minished by 56
om the rights
or cost in Cz
ontext of discu
f Czech mines
on of materia
e of operation
dustry is most
rd coal mines
[%].
15
25,
26,76%
4%
Czech mine
a Montanistica
ompetitors on
n average Poli
ing companie
also experien
n compared to
oth neighborin
nmental requi
2003-2013 rev
omparing year
.
d cost of goo
rgin value. Th
cond reason re
its production
2-63 EUR per
d on charts sup
roblems with
price generat
vities, althoug
than 20 % in
n Coal Basin,
Polish and Cz
is (KW, KHW
e under organ
Market com
among primar
y policy stress
ndustry in Pol
nt, is an impor
e largest part
6 % since 199
acquired dec
zech mines ac
ussed inability
s present a la
als and energy
nal costs of JS
ly influenced
[8, 12].
5,65%
63%
es
Slovaca Ročn
European ha
sh selling pric
es and prices
nced a decreas
year 2012.
ng countries.
irements, safe
venues increa
r 2006 and 2
ds sold is mu
he first reason
egards cost of
n process is ch
r ton, while Po
pport unfavor
h competitiven
ting loss on c
gh sale price e
n OKD. By co
, a question a
zech mines? O
W) are state ow
nizational and
mpetitiveness i
ry tasks for re
sing independ
land.
rtant element o
of the opera
98, salaries sti
cades ago are
ccounts for 31
y to adjust Po
arger share tha
y are 6 points
SW is more s
by the bigges
Depreciation
Consumptions
of materials
and
energy+others
External
services
Taxes and fees
Employee
wages and
benefits
ník 19(2014), čís
ard coal mark
ce and it amo
of JSW show
se in average
The cost of p
ety restrictions
sed by 58 % w
013, revenues
uch bigger in
n is the sellin
coal producti
heaper. Figure
olish mines ex
rable situation
ness on Euro
coal sale in P
exceeded cost
omparison, Po
arises why the
One must bea
wned entities
d financial res
in terms of
estructuring pr
dence limit red
of restructurin
ational costs.
ill exceed 50
e still largely
1 % of total c
olish productio
an their count
s higher than
similar to OKD
st mining com
slo 2, 70-233
75
ket, among
unted €93
ws that the
sale price
production
s and hard
while cost
s of OKD
the Czech
ng price of
ion. Czech
e 6 reveals
xtract coal
n of Polish
opean coal
Polish coal
t of goods
olish JSW
ere is such
ar in mind
operating
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rogramme
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ng process
Although
% of total
respected
costs only.
on volume
terparts in
in Polish
D, than to
mpany KW
Ewa Wa
76
Ana
mining in
period fro
Sinc
Polish an
Negative
above sta
As s
shows tha
suffered t
made a p
also hard
It is
the value
value is
findings
neighbori
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-40
-30
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-10
0
10
20
30
40
50
-20
-10
10
20
30
40
50
60
anda Marusze
alysis of opera
ndustries. Figu
om 2008 to 20
ce 2010 profit
nd Czech min
profitability
atement does n
seen on figure
at 2013 was a
the biggest lo
profit in 2013,
for OKD as t
F
worth menti
of net profit c
very high alt
show that C
ing enterprise
me challenges
0%
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2008
00
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201
ewska, Micha
ational costs le
ure 7 informs
011.
ability of coal
nes recorded
makes coal m
not apply to JS
e 8, negative p
a difficult peri
oss that amoun
, Polish hard c
the financial re
Fig. 8. Net profit/l
oning that Cz
compared to a
though the en
zech hard co
es located in P
nowadays. L
20
10
al Vaněk, Šár
in Uppe
eads to the lev
about higher
Fig. 7. Retur
S
l sale is decre
negative pro
mining econom
SW, as the com
profitability is
iod for all com
nted for almo
coal mining in
esults present
/loss of USCB har
Sou
zech OKD, al
assets’ value i
ntity operates
oal mining re
Poland. On th
Last year overp
09
Polish mines
2011
rka Vilamová
er Silesian Co
vel of return o
return on coa
rn on hard coal sa
Source: [1, 12, 15
easing with de
ofitability in 2
mically ineffec
mpany reporte
s not a long-la
mpanies extrac
st €163 M. D
ndustry ended
ed a loss of €0
rd coal companie
urce: [1, 6, 15, 23
lthough opera
n the analyzed
only 4 out o
epresents muc
he other hand,
production an
2010
s Czech
2012
á: Economic s
oal Basin
n coal sale ac
al sale in the C
ale [ROS; %].
5]
eep loss of bot
2013 as costs
ctive and que
ed a positive g
asting trend am
cting in USCB
Despite of the
d up with a lo
0,7 M.
es in the period of
3, 24]
ates 4 mines o
d period. The
of 41 mines i
ch better eco
OKD is not
nd decrease in
2011
h mines
2
situation of ha
chieved by two
Czech Republ
th Polish and
s of producti
stions future b
gross profit in
mong analyze
B, and the big
fact that othe
oss of almost
f 2010 - 2013 [€M
only, is the le
value of equi
included in th
onomic standi
free from ma
n sales has gen
2012
JSW
2013
ard coal minin
o neighboring
lic than in Pol
Czech entitie
on exceeded
business activ
n 2013.
ed mining com
ggest coal prod
er Polish coal
€66 M. Year
M].
eader when ju
ity that equals
he research. T
ing when com
rket impact, a
nerated unsold
2013
JSW
KW
KH
OK
g industry
g hard coal
land in the
es in 2013.
revenues.
vities. The
mpanies. It
ducer KW
producers
2013 was
udging by
net assets
The above
mpared to
and it also
d growing
W
W
HW
KD
Acta Montanistica Slovaca Ročník 19(2014), číslo 2, 70-233
77
stock, liquidity problems and liability increase in all USCB entities extracting hard coal. In Poland, some
companies even faced lowering creditworthiness to the level threatening the continuation of external funds.
Conclusions
Summarizing the analysis of four mining enterprises extracting hard coal in Upper Silesian Coal Basin, it
can be concluded that state-owned entities (KW, KHW) are doing much worse when compared to entities owned
by private investors (JSW, OKD). Capital strength measured by the amount of equity and profitability reveals
that JSW and OKD’s financial results are higher than their state-owned counterparts. JSW and OKD are also
more flexible in the volume of production responding to market demand and coal prices. Operational activities
are more effective as cost of goods produced are competitive on European hard coal market. In authors’ opinion,
nationality distinction is of no importance when analyzing economic situation of USCB mines. Classification
based on the ownership reveals that economic standing of publicly traded companies (JSW, OKD) is much better
when judging by profitability, economic effectiveness, and competitiveness. The above findings lead to
the conclusion that business activities of hard coal mining entities should be based on economic calculations
taking efficiency and effectiveness of non-renewable resources into calculations. Even state-owned entities that
operate in order to meet domestic demand for hard coal shall obey free market economy requirements, and be
economically effective. The study shows that state-owned enterprises seem to respect that, but still have
problems to reach the goal, as employment level and costs of production process are not adapted to market needs
and still require finance assistance from the state. Actions are required in order to improve and rationalize the
structure of operation (production) costs, and reduce them in all business segments.
The example of JSW and OKD, which were privatized, proofs that economic effectiveness and competitive
advantage on free market is possible even in difficult times with lowered consumption of hard coal. Although
2013 was a hard time in the mining industry, JSW and OKD proved that it is possible to secure satisfactory level
of financial liquidity and creditworthiness in order to ensure sustained operation and development. Balancing of
funds so as to enable current payment of liabilities and positive gross margin on hard coal sale were possible
(among others) due to introduction of innovative management practices and optimization of companies’
organization structures, along with pursuing of a rational employment policy.
Polish and Czech hard coal industry has significant identified and available hard coal resources, skilled and
experienced staff in mines, and strong domestic researchers’ base. These strengths should be used in order to
create the basis for profitable business activity, especially if two out of four companies show that hard coal
mining can operate in a free market economy.
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