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August 2016 www.coalage.com 43 eastern europe continued Since the beginning of the armed con- flict in Donetsk and Luhansk Oblast, Kiev has lost access to the coal mines in the re- gion controlled by the pro-Russian rebels. The country's energy ministry during the last two years has had to purchase coal from the rebel mines, despite the war. Still, according to Ukraine Energy Ministry Igor Nasalik, each year Kiev purchases up to 4 million mt of coal from rebel territories at the average price of only $600/mt to $700/mt. He added that this is mostly a social move, as "Ukraine cannot let local min- ers die from hunger." In reality, Ukraine has no choice, which was demonstrated in 2015 when it purchased "experimental" coal from Poland and Russia. It turned out that imported coal had too much ash and an inappropriate calorific value for local plants, which were designed to burn coal for the Donetsk region. As the result, according to Mikhail Volynets, the head of the country's miners' labor union, it resulted in an acute deficit of coal at the thermal power plants and nearly lead to the collapse of Ukraine's en- ergy industry in mid-2015. Production data from the mines con- trolled by rebels is hard to find. Prior to the crisis, these mines accounted for 30 million mtpy of coal production, while it's believed they are mining 14 million mtpy. According to regional officials, last year, one of two rebel republics — the so-called Donetsk New Republic (DNR) — produced 9.5 million mt of coal, while this year is go- ing to increase this figure to 13.5 million mt. Production data from the Luhansk New Republic (LNR) is unreliable and es- timated at 4.5 million mtpy. Both the DNR and LNR spend about 6 million mt of coal for the needs of lo- cal consumers and export 4 million mt to Ukraine. Where the remaining 4 mil- lion to 5 million mt or even more is sold is unclear. Some Ukraine officials claim this amount is illegally exported by truck to Russia, while others believe it is sold to Ukraine on the black market. PPG Takes Over Production in Poland As of May 1, within an agreement between banks, and mining and energy companies, Polska Grupa Górnicza (the Polish Mining Group or PGG) will take over 11 coal mines and four Kompania Weglowa establish- ments as well as the entire workforce of ap- proximately 30,000 employees. With a total production capacity of about 40 million mt of coal, PGG will become the largest Euro- pean coal producer. Poland's total coal production last year amounted to 72.2 million mt, a slight de- crease compared to 2014. The Polish gov- ernment expects that figure to drop to 45.5 million mt by 2020. At the same time, the Katowice Agency for Industrial Develop- ment estimated last year's losses at PLZ 1.9 billion ($481 million), which is PLZ 150 million ($38 million) less than 2014. The average loss per ton of coal was PLZ 26.81/ mt ($6.8/mt), while the industry's debt climbed to PLZ 14.7 billion ($3.72 billion). Most of the losses were compiled by Kompania Weglowa, which have put the Polish coal industry on the brink of bank- ruptcy since the beginning of 2016. A new agreement designed to save the business combined nine adjacent mines into three mining complexes consisting of two to four mines each to reduce operating costs and simplify the corporate structure. The remaining two mines will continue their operations independently. At the beginning of April, Kompan- ia Weglowa's debt totaled PLZ 8.5 billion ($2.15 billion). The three largest Poland energy companies already declared their willingness to pump PLZ 1.5 billion ($379 million) into PGG, while the energy min- istry promised support in restructuring of company's debts of PLZ 500 million ($126 million) on bank loans. Last year, Poland's three biggest min- ing firms, including Kompania Weglowa, KHW and JSW as well as the three state- run power producers, which burn the coal, posted a net loss of almost PLZ 10 billion ($2.6 billion). With the depth of extraction reaching 1,300 m in some parts of Silesia, DTEK has six subsidiaries, 28 mines and 12 prep plants. (Photo courtesy of DTEK, 2014) DTEK has six subsidiaries, 28 mines and 12 prep plants. (Photo courtesy of DTEK, 2014) A miner cuts coal at one of Weglowa's longwall mines in Poland. (Photo courtesy of Kompania Weglowa) A miner cuts coal at one of Weglowa's longwall mines in Poland. (Photo courtesy of Kompania Weglowa)