Russia, Ukraine selling cheaper coal in Poland

Although coal mining is one of Poland’s major industries, Russia and Ukraine have begun selling coal in this country.
Coal from those countries is cheaper, and it also has lower sulfur content, so it burns cleaner. The price break that Polish coal consumers are getting now is likely to dry up, however, some Polish coal operators predict.

The Russians and Ukrainians plan to make an all-out marketing assault on Poland’s coal-burning power plants soon.
Russian and Ukrainian coal is extracted at a lower depth than in Poland, making it less expensive.

The daily newspaper Rzeczpospolita said many Polish clients are signing up for coal from the east because of the lower price.
“For me, price is the most important thing, so I would prefer Russian coal,” said Janina Garbowska, who uses coal to heat her house in Podkarpacie in southeast Poland. “However, in the area where I live, we have access only to Polish coal.”
Andrzej Pawlaszek, director of the government-owned coal mining operation in Silesia, said he doesn’t believe Polish power plants will use Russian coal. With 16 mines, the Silesia operation is Europe’s largest.

Although Russian coal companies’ extraction costs are lower than Polish companies, the Russians will have to add transportation and safety costs, Pawleszek said. That means that “soon their costs will rise,” he said.

But the Russians are sure to try to grab the lucrative power-plant business. In September, the Siberian Coal Energy Company set up a subsidiary in Poland. It is Russia’s largest producer and one of the 10 biggest in the world.
The company plans to deliver about one million tons of coal in Poland over the next year.

So far, it has used Polish agents for its sales. But in the beginning of 2008, it plans to sell the coal directly.
The company has affiliates or subsidiaries in Krasnoyarsk, Primorsky, Khabarovsk, Irkutsk, Chita, Kemerovo, Buryatia and Khakassia.

In 2005, its stock value made the company worth $1.9 bln.