WARSAW: Poland plans to merge its two troubled coal mining companies - PGG and KHW in the first quarter of 2017, as part of its restructuring plan for the industry, deputy energy minister Grzegorz Tobiszowski said on Tuesday.
"All KHW mines will be transferred to PGG. We assume that the merger should take place in the first quarter," Tobiszowski told reporters adding that only after that will the merged entity raise capital.
PGG, the biggest coal mining firm in Poland, owns five mines with coal output at around 30 million tonnes annually, while KHW produces around 10 million tonnes of coal per year from four coal mines.
PGG and KHW employ 32,000 and 13,000 people respectively.
PGG, previously known as Kompania Weglowa, and KHW are already undergoing restructuring. As part of the plan for PGG, state-run utilities Energa, PGE, and PGNiG agreed to invest 500 million zlotys ($129 million) each in PGG.
PGG's smaller rival KHW needs around 700 million zlotys to survive as it will have to buy back bonds it issued in 2012. Another state-run utility, Enea, has said it was interested in investing in KHW.
The energy ministry said details of the planned merger will be known by the end of January. * Restructuring the ailing coal industry is one of the conservative and pro-coal government's priorities.
The ruling Law and Justice party (PiS) won an election last year also on promises it would not shut down any coal mines.
But it has already merged some of the mines and decided to close others, to cut production costs and coal surpluses.
Earlier this year the European Commission said it cleared Poland's plan to provide 7.95 billion Polish zlotys of support to close uncompetitive coal mines by 2018.
Under the plan further mines will be closed, including one owned by PGG and one by coking coal producer JSW.
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