"Poland Mining Report Q2 2010" is now available at Fast Market Research

April 13, 2010 - PRLog -- The economic crisis has led to rising unemployment in Poland, bringing with it a fall in tax revenues and increased strain on social benefits. The widening budget deficit could have far-reaching implications for the mining industry, as the government is seeking to sell state-owned assets in order to compensate for the shortfall. It is expected that the deficit will ball oon to PLN52.2mn in 2010, almost double the amount in 2009.     President Lech Kaczynski is adamant that tax increases or cuts in public spending should not be used to tackle the problem. As a result privatisation of many state-owned companies, including those within the mining industry, presents an alternative solution. In addition to union opposition to privatisation howeve r, the ambitious plans of raising PLN12bn in 2009 and PLN25bn in 2010 through sales of state-owned comp anies is challenged by current market conditions and the limited choice of companies which can be sold . There is concern that no alternative solution has been offered should the government fail to meet the targets through privatisation. If government debt reaches over 55%, the government will be legally obliged to balance the budget through taxes and cuts in public spending.     In September 2009 a source from the Treasury Ministry stated that the largest coking coal producer Jastrzebska Spolka Weglowa (JSW) could be one of many companies considered for an initial public offering on the Warsaw bourse in 2011. In major corporate news, in September 2009, copper producer KGHM Polska Miedz (KGHM) announced that as part of its over seas acquisition strategy, the company had found a Canadian exploration company and a US copper deposit that it was considering investment in. CEO Herbert Wirth announced that KGHM would be interested in a minority stake of around 12% in the Canadian mining company that currently explores for deposits in Latin America and North America as well as owning a share in a copper deposit in the US. At the time of reporting, KGHM would not name the company and share acquisition is not expected to be achieved until 2010. The company was in the more advanced stages with the US copper deposit, having completed due diligence by September 10 2009.     The purchase is expected to be completed by the end-2009 and is a strategic step for acquiring a stable channel of resources. Environmental concerns remain at the forefront of Polish mining. In September 2009 the largest coal mining company in Poland, Kompania Weglowa , announced it would be selling carbon Emission Reduction Units to Japanese utility company Chugoku Electric Power .     Kompania Weglowa intends to reduce its emissions through the capture and conversion of methane gas into energy. As a result it is anticipating the sale of 944,000 tonnes of offsets for EUR8mn (US$11.71mn) over a period of three years. Safety also remains an issue, as a recent explosion at the Wujek-Slask mine in Ruda Slaska killed 12 miners instantly. The death toll rose to 19 as miners who initially survived the blast later suffered from burns. It brings into question the safety of the mines and whether all security precautions are being taken.

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