Poland is to dismantle Europe’s biggest coal producer Kompania Weglowa (KW) by shutting down four of its mines and transferring the remaining nine to state-run coal trader Weglokoks. A Reuters report quoted state-owned KW saying that it was on course for a second year of losses because of low world coal prices and high operating costs, and that it would sell some of its mines to bring the company back from the brink of insolvency.

Wojciech Kowalczyk, Deputy Economy Minister, said that the nine mines would be transferred to a special purpose company owned by Weglokoks, and would be the basis for a “new, strong entity, able to effectively compete on Europe’s coal market.” Kowalczyk said that the restructuring would cost PLN 2.3 billion in 2015-2016, with the bulk to be spent this year. He said that the alternative to this plan “would be an uncontrolled, chaotic bankruptcy.” The government said it was in talks with investors from the Polish energy sector about the new company. It gave no further details.

According to the restructuring plan, KW employs 49,000 people – accounting for around half the total number of employees in the country’s mining sector – and most will be offered jobs in the new company. The rest would be offered severance pay.