Plans to close mines in Poland dropped in face of union threats

January 21, 2015

1 minute read

Plans to close a host of coal mines in Poland that were not profitable were scrapped in January in the face of threats from unions.

The Financial Times reported that the decision not to close the mines will hurt the credibility of prime minister Ewa Kopacz. It will also hurt his chances to fix the mining troubles in the country.

Shares in Polish power companies earmarked to provide financial support for the industry fell on the news as opposition politicians and unions cheered the capitulation, which is set to cost the government up to $740 million.

Poland has Europe’s second-largest coal deposits and employs more than 100,000 people but many of its deep, outdated mines lose as much as €15 on every tonne of coal they extract because of falling energy prices, inefficiency and environmental concerns.

Kopacz, who became prime minister in September after the resignation of Donald Tusk, had trumpeted a January 7 plan to close four of the most inefficient mines owned by state-run Kompania Weglowa and restructure others, axing about 5,000 jobs.

Ten days later, after miners organized strikes below ground and protests on the streets, the prime minister was forced to announce a new proposal that involves neither pit closures nor involuntary redundancies.

The deal, which government officials stress has forced an acceptance from unions that restructuring is necessary, represents a political misstep by Kopacz in handling her first significant test as leader of the EU’s sixth-largest economy.

“Thanks to the determination of both sides, we can tell over 47,000 miners who are employed by Kompania Weglowa that this stressful time is over,” said Kopacz, who had warned earlier that without closures, the miner would be bankrupt by the end of February.

Wlodzimierz Karpinski, minister of Poland’s treasury, which oversees the state’s ownership of kW, hailed the deal as a “historic agreement.” But Piotr Duda, chairman of the Solidarity trade union, said it was “a lesson in humility for the prime minister.”