Poland’s Jastrzębska Spółka Węglowa SA (JSW), the largest producer of high-quality hard (type 35) coking coal and a major producer of coke in the European Union, has cut its production target for this year by about 10% and reduced investment in an effort to regain profitability after steep falls in coal prices and an ongoing corporate restructuring. JSW had already announced at the end of September that the Board had decided to reduce by 10% the salaries of all directors of JSW mines, Zakład Logistyki Materiałowej and directors employed in the Management Office, effective October 1. The announcement comes as Polish authorities work on a plan to group its loss-making mines into a ‘bad’ and ‘good’ units, the latter being the country’s viable mines. The industry employs more than 100,000 people, so any radical change is likely to be met with considerable resistance.

Poland’s vast coal reserves, the second-largest in Europe, were seen as the energy advantage for the country – offsetting reliance on Russian resources and providing enough cheap, domestic fuel to power decades of economic growth. But since the shale boom sent coal prices down, some of the country’s mines’ inefficiencies have become evident.

The Polish coal mining sector is going through a difficult period, with the four biggest, state-owned companies generating lower revenue than in previous years. They are especially vulnerable to low coal prices because they have higher costs than miners in Asia or Australia. And the issue is not a lack of mechanisation – Poland’s mines have some of the most advanced machines operating globally, including Eickhoff, Caterpillar, Joy, Famur and Kopex longwall shearers; some of which have set new production records.

Mining.com reports that Kompania Węglowa, Europe’s largest hard coal producer, made a loss of about $180 million last year.

JSW’s shares have lost nearly half of their value this year and 80% since the company’s stock market debut in 2011. In the first six months of this year the miner lost $102 million.

JSW announced on October 2: “the Executive Board is considering withdrawing from the payment of pensioners coal equivalent in 2015. JSW along with other coal companies asked the Polish government for acquisition by ZUS obligations to pensioners’ free coal, as is the case for retired railroad workers and employees of the liquidated mines. Withdrawal from the payment of the equivalent of the coal to pensioners would save the company in 2015 more than PLN64 million. The Management Board also considers it necessary to implement a rapid adjustment program for Krupiński mine in Suszec that will prevent further deterioration of the economic situation of the plant. Board of JSW addressed the trade unions acting at the mine for permission to change the work time system. It would be based on the introduction of the six-day working week, of course, maintaining a 5-day work week for the crew – with respect for the principles of the Labour Code. These changes are one of the necessary conditions for improving the situation of the mine and ensure its profitability in the coming years.

“Workers and trade unions of Krupiński mine, recognising the importance of the problem, expressed their willingness to make changes in the system of working time, however, Representative Trade Union Organisations working at JSW did not accept the arrangements made between the direction of the mine and trade unionists working within its structures.

JSW’s coking coal is used predominantly in the production of coke. In its coking plants, the JSW Group processes approximately 50% of the coking coal it produces, thus enabling it to offer a final product that is more processed and of a greater value. It is also a producer of steam coal, sold mainly to power plants and CHP plants.

JSW was established in April 1993 as one of seven coal companies founded at that time. It consisted of seven independently operating mining enterprises transformed into a wholly owned company of the State Treasury.

It is today composed of five mines producing coking coal and steam coal: Borynia-Zofiówka-Jastrzębie, Budryk, Knurów-Szczygłowice, Krupiński and Pniówek, and the Material Logistics Center. Major associates of JSW S.A. include: JSW KOKS S.A., Wałbrzyskie Zakłady Koksownicze “Victoria” S.A., Spółka Energetyczna “Jastrzębie” S.A., Jastrzębskie Zakłady Remontowe Sp. z o.o., Jastrzębska Spółka Kolejowa Sp. z o.o., Polski Koks S.A. and JSW Szkolenie i Górnictwo Sp. z o.o.

In 2013, JSW’s mines produced 9.8 Mt of coking coal (including 7.8 Mt of hard coking coal) and 3.8 Mt of steam coal. In the same year, JSW’s coking plants produced 3.9 Mt of coke.

The have a total of about 2,200 Mt of documented coal resources (according to JORC), including some 600 Mt of recoverable reserves. The Group intends to enlarge its recoverable resource base to maintain a strong position in international markets over the next 60 years.

The JSW Group conducts its business in Upper and Lower Silesia. Products are purchased by customers from Poland, Germany, Austria, the Czech Republic, Slovakia, India and Brazil. Major external customers for the Group’s products include ArcelorMittal Poland, Voestalpine Stahl, Moravia Steel, ThyssenKrupp, U.S. Steel and Koksownia Częstochowa Nowa.

The Group is one of the largest employers in Poland with more than 35,000 employees, of whom more than 27,000 work for Jastrzębska Spółka Węglowa S.A.

Poland, in addition, is facing pressure from the EU, which has asked it to reduce its dependence on coal for environmental reasons.