Energy 22 August, 2017 10:30 am   

Baca-Pogorzelska: carbon lies have no legs

Putting lipstick on the mining pig is now at full throttle and I guess nobody but me actually cares. I am only wondering what will happen when they run out of this fantastic lipstick, writes Karolina Baca-Pogorzelska from Gazeta Prawna daily (DGP). 

When a few weeks ago DGP and the Rzeczpospolita daily revealed the import plans of the state-owned coal exporter Węglokoks a not-so-small commotion took place. Everybody is always saying that Poland is a carbon state, coal’s biggest producer in the EU and second in all of Europe and yet its domestic exporter will import coal? And Russian coal at that? Why? According to the company’s spokesperson, Paweł Cyz, the import will apply only to low-sulphur coal whose consumption in our country will be increasing (mostly in the heating sector) and which Poland simply doesn’t have. And in this way import will be under more control, etc. Obviously he did not reveal the importer country, but in case of really low-sulphur coal we are really talking only about Russia and Columbia. Naturally coal from the east is simply cheaper.

After our publications we unofficially learned that, to put it colloquially “everything went down the pan” and for now Węglokoks will not buy the coal abroad. Right… On Wednesday I found out that Węglokoks will import a ship of “black gold” from the USA. Unofficially the company’s representatives assured me it was not true and someone wanted to set them up in import once again. So I sent an official question to the company on 16 August and asked for an answer until 1 pm on Friday. I received the answers at 12:45 am and everything would have been fine if I had not read them a few minutes earlier in a message from the Polish Press Agency. Coincidence? I don’t think so, but I leave the judging to others.

Węglokoks did remember that it ordered a ship of coal abroad. Still, it maintains that it imported it to… export it. “By using the international upturn as well as its experience and business contacts, Węglokoks wants to be actively engaged in international coal trade. The company is currently importing a trial delivery of 75 thousand tons of high-energy coal culm from the United States,” the spokesman assured. “It will be delivered to Ostrów Wielkoposki where it will be mixed with coal from Polish producers to create a product with parameters expected by foreign clients. The mix will be exported. This means it will not compete against Polish producers. On the contrary, it will enrich the Polish product portfolio whose demand abroad is a lot lower, and thanks to that it will enable its sale abroad,” he explained. It they do send it abroad – that’s ok. After all, in Poland nobody will buy coal with sulphur content at 3% – and that is what will be imported from the US. Perhaps then Węglokoks will send to the US a less sulphury coal? The question is for how much. However, if he was talking about importing no-sulphur coal, I honestly do not understand this move. After all, if we take into consideration the costs of the freight, transshipment, railway transport to Ostrów, mixing and reloading, etc. then I guess I don’t want to know how much this black goal will cost the final consumer.

But I am not sure if the 75 thousand tons will be included in the increasing import? I will remind that after five months of the current year, Poland’s coal purchases abroad increased by 600 thousand tons in comparison to the same period of 2016. At the same time deliveries from Russia increased by 300 thousand tons.

But I actually do get Węglokoks. Sice they are a coal exporter, they have to live off of something. And since Polska Grupa Górnicza offered them sluice-gate prices for 2018, about 30% higher than for the energy sector (which wants to guarantee coal supply, but PGG’s production issues show you can’t whip a dead horse), they have to look for a way out. The question is though whether importing coal to export is really the best solution…

While we are talking about PGG let me remind that mathematics reached its highest form there. I am still amused by the declarations on extracting 32 million tons of coal this year. The company is already adding to its results the first quarter of Katowicki Holding Węglowy (KWH) whose companies it had taken over only on 1 April and the total sum still does not add up (PGG reports about its 1H extraction, but includes KWH’s production at 14.5 million tons). But perhaps there will be a miracle where coal will magically multiply, about which I know nothing yet, but on which the mining specialists are most certainly working on.