Our production is gradually decreasing, but apart from regulatory issues, this is mainly due to economic reasons.
If we give up coal, it is best to use domestic coal as soon as possible due to prices. However, this raw material will remain crucial for our economy for years. According to the Polish Energy Policy approved by the government, in 2030 the share of coal in electricity generation may still reach 56%. However, it will not necessarily come from Polish mines – comments Sławomir Wołyniec, president of the management board of V-Project.
When it comes to the mining itself, in Poland we have been talking about a rapidly progressing move away from hard coal for years. Over the last 40 years, the extraction of domestic raw materials has decreased by over 75%. – from a record 200 million tons in 1979 to less than 49 million tons in 2023. It looks completely different on a global scale.
As estimated by the International Energy Agency (IEA), global coal production already exceeds 8.8 billion tons. Unlike what we observe in Europe, its consumption is also growing, currently estimated at 8.3 billion tons. Asian countries are the leaders in both.
Compared to the rest of the world, we are limiting coal, but in Europe we dominate mining
Although hard coal mining in Poland is gradually decreasing, and 49 million tons in 2023 is not impressive compared to 4.66 billion tons mined in the same period by China or 775 million tons mined last year by Indonesia, the fact is that it is still we remain one of the largest producers of this raw material in Europe.
According to data from the European Commission, in 2024, only two European Union countries will extract hard coal: the Czech Republic and Poland, with our country responsible for as much as 93%. EU mining. Despite policies and strategies aimed at reducing CO2 emissions and increasing the share of renewable energy sources, coal still plays a key role in the Polish energy mix.
The Polish government plans a gradual energy transformation, but the demand for coal remains high due to the existing energy infrastructure and difficulties in quickly switching to other energy sources.
Coal is the main energy raw material in the country, and its use is related to the production of both electricity and heat.
In recent years, hard coal consumption in Poland has averaged approximately 70-80 million tons per year. Although generation from other sources is gradually increasing, estimates say that by 2030 our energy sector will still need approximately 55-60 million tons of hard coal.
The demand for this raw material is falling much faster in the European Union, and the current consumption is approximately 160 million tons. The needs of our economy will remain high in the coming years. Most of them could be satisfied by domestic mining, because there is no shortage of coal in our country, or rather we have an excess of it – comments Sławomir Wołyniec, president of the management board of V-Project.
In February 2024, hard coal stocks were over 206 percent higher. higher than a year earlier, but also by 10%. bigger than in January.
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We can move away from domestic coal, but not from coal in general
The transformation of the Polish energy sector towards zero-emission or low-emission sources is inevitable. Not only due to decarbonization obligations, but also the increasing age of coal units, the operation of which will become more and more expensive. However, the specificity of our energy system means that we will need coal for a long time.
The question remains where we will get it from. According to the government's plans, domestic mining will end after 2050.
However, we still have supplies, so the easiest way would be to reach for the raw material, which is full of dumps in Polish mines and warehouses. Especially since the oversupply of domestic coal causes its price to fall. However, this is too little for it to compete with the imported one.
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The efficiency of coal mining comes at a price
It might seem that the raw material transported to Poland halfway around the world must be more expensive than the one extracted locally. However, it is exactly the opposite. Everything is based on efficiency.
Coal mining in Poland is expensive. Deep mining is not and will never be competitive with open-pit mines. The extraction costs of open-pit mining in the world are several to a dozen times lower than the costs of extraction in Polish mines. To meet the needs of the Polish market, we import coal from other continents, which often, compared to the prices that have to be paid for domestic raw material, despite the high costs of sea and land logistics, still remains a better option for recipients – explains Sławomir Wołyniec, president of the management board of V- Project.
Prices of Polish coal are systematically falling
It must be admitted that the domestic raw material has been regularly declining in price since the end of last year. According to the ARP index, in March they reached PLN 481.76/t for PSCMI1 and PLN 618.75/t for PSCMI2.
At the same time, however, the market price of coal according to the ARA index was at most PLN 478/t, and it should be noted that this was a definite peak compared to earlier and later quotations. Imported coal for the energy industry in the form of screenings in fine fractions is even cheaper and can be purchased on the market for prices well below PLN 20/GJ, i.e. approximately PLN 400/t – explains Sławomir Wołyniec, president of the management board of V-Project.
Taking into account that to achieve extraction of one million tons per year, depending on the mine, it is necessary to employ from 800 to 1,600 miners in the country, compared to 100-150 miners in the USA or Australia.
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However, domestic mining plays an extremely important role. It is primarily about security, independence and energy self-sufficiency. How important they are was shown by 2022, when coal prices (right after Russia's aggression against Ukraine) on international markets soared by several hundred percent.
At that time, domestic coal was two or even three times cheaper than imported coal, but its availability was limited only to customers with long-term contracts.
