The first months of 2023 were challenging for Poland’s largest mining groups. They had to contend with volatile prices, semi-finished product supplies, inflation, and rising operating costs.
The largest Polish group producing mining machinery and equipment is Grenevia, formerly Famur. In the first quarter of 2023, Grenevia Group revenues reached PLN 370 million. This represents a significant increase compared to the first quarter of 2022, when revenues reached PLN 260 million.
Net profit in the first quarter of 2023 was PLN 43 million, compared to PLN 36 million in the same period in 2022.
Grenevia: focusing on photovoltaics and electromobility
The vast majority of revenue, PLN 256 million, came from the mining segment. The order backlog for this segment at the end of March 2023 totaled PLN 827 million. It consists of deliveries of machinery and equipment, as well as leases in accordance with the contract terms.
The power sector generated PLN 24 million in revenue in the first quarter of 2023, including PLN 16 million from external customers of the Grenevia Group.
During this period, contracts were signed with Projekt Solartechnik for the supply of transformer stations for photovoltaic farms, worth approximately PLN 31 million. The total order backlog at the end of March 2023 amounted to PLN 89 million, of which PLN 19 million was for external customers of the Grenevia Group.
The electromobility sector generated PLN 77 million in revenue in the first quarter of 2023. In the first quarter, the investment in the construction of GigaFactoryX was continued: real estate with production and warehouse halls was purchased, and a hall was rebuilt to house a semi-automatic line for the production of battery systems purchased from Team Technik.
Operational steps were also taken to secure new orders, expand its customer portfolio, and ensure stable supplies of key components.
The share of Grenevia Group sales from foreign markets in the first quarter of 2023 decreased to 17%, primarily due to a reduction in sales to Russia and the Commonwealth of Independent States (CIS) from 18% to approximately 5% and the completion of previous contracts, including those for the US and China.
After the outbreak of the war in Ukraine, the company suspended bidding for new machinery and equipment (longwall systems) for the Russian market, and reported revenues are primarily the result of fulfilling service obligations arising from contracts concluded in previous periods.
Simultaneously, the company began the process of divesting its assets in Russia with the aim of completely withdrawing from the Russian market.
In the coming quarters, the group intends to focus on further developing new segments and scaling their operations as quickly as possible.
“In the photovoltaic segment, we will focus primarily on implementing our strategic directions, in particular expanding our project portfolio both in Poland and in selected European markets, expanding internationally, selling ready-made PV farms, and developing our own IPP structure,” Grenevia announced.
In the electromobility segment, the group intends to continue work on the construction of GigafactoryX and improving the efficiency of operational processes, acquiring new customers, expanding our offerings for large-scale energy storage, and diversifying the supply chain for key components.
In the power sector, the group is expected to further expand its order portfolio in the mining sector and continue developing its offerings for renewable energy.
In turn, the Famur segment is expected to consistently secure orders in existing and new markets, strengthen its after-sales service, continue standardizing its shearer fleet, and consistently expand its offerings for wind turbine gearbox repairs and maintenance.
Bumech: new walls in the Silesia mine and its own energy
The Bumech Group’s revenue in the first quarter of 2023 amounted to PLN 218.9 million, compared to PLN 116.7 million in the first quarter of 2022.
Operating profit was very similar: PLN 26.2 million in the first quarter of 2023 compared to PLN 26.0 million in the first quarter of 2022.
Net profit, however, increased from PLN 19.4 million in the first quarter of 2022 to PLN 29.9 million in the first quarter of 2023.
In addition to preparing new longwalls at the Silesia mine, Bumech is also conducting other investments.
The company is completing the construction of a cogeneration plant utilizing methane from the mine, which will be commissioned in the first half of 2023. The cogeneration plant is designed to utilize 100% of the recovered methane for power and heating purposes.
Bumech has also launched a project involving the construction and operation of photovoltaic farms, utilizing existing infrastructure and land. In 2022, a pilot project for three installations with a capacity of 50 kW each was launched. Nearly 60 hectares of land around the mine have already been purchased for the purpose of terraforming partially degraded areas into an ecologically friendly environment. Bumech plans to build a hybrid photovoltaic-wind farm with a capacity of 60 MW.
Thanks to these investments, by 2024, over 70% of its electricity demand and 100% of its heat demand will be covered by its own production, significantly reducing operating costs for the entire Bumech Group.
The group is facing an unstable environment. According to the management board, the armed conflict in Ukraine and the associated economic sanctions are decisively impacting the macroeconomic situation across Europe. Group companies are primarily impacted by the high prices of fuel and energy, steel, timber, and other materials, raw materials, and semi-finished products used in ongoing production and maintenance operations, as well as labor costs. Some raw material and consumable orders are experiencing extended lead times. The Management Board does not rule out the risk of supply chain disruptions.
Bumech believes that despite the recent decline in hard coal prices, a decline in demand for coal produced at the Silesia mine is not expected in the near future.
Fasing: Export Development in the United States and Australia
The Fasing Group’s revenue in the first quarter of 2023 amounted to PLN 73.5 million, compared to PLN 49.2 million in the first quarter of 2022.
The majority of revenue—PLN 39.5 million—came from the Polish market. The remainder came from China (PLN 12.6 million in revenue), Ukraine (PLN 7.7 million), Sweden (PLN 5.7 million), and Australia (PLN 0.6 million).
Operating profit increased from PLN 1.4 million in the first quarter of 2022 to PLN 3.8 million in the first quarter of 2023.
Net profit in the first quarter of 2023 was PLN 111.3 thousand, compared to PLN 843.6 thousand in the first quarter of 2022.
Fasing announced that as of March 31, 2023, it had recognized a loss of control over the Russian company OOO “Zavody gornowo oborudovaniya i instrumenta Fasing” (Fasing Russia), headquartered in Moscow.
As noted in the report, as a result of the ongoing invasion of Ukraine by the Russian Federation, the European Union is gradually introducing sanctions against Russia aimed at weakening its economic base. The sanctions packages adopted include restrictions on the import and export of goods, transport-related sanctions, and sanctions targeting the financial sector.
“At the same time, the Russian Federation has implemented retaliatory sanctions packages. As a result of the introduced sanctions, the ability to exercise control over the aforementioned entity has been lost,” Fasing reported.
Fasing noted that the group’s results reflect the development of export activities, including in the American and Australian markets. This trend is expected to be maintained in the future. The Group acknowledges, however, that the constantly rising prices of steel on global markets and the shortage of its supply are significantly contributing to a decline in export profitability and longer order fulfillment times.
Fasing also announces marketing activities to promote the products of its group companies, acquire new customers in foreign markets, and diversify its order portfolio.
The Group also pledges to expand its product offering and manufacture products tailored to specific customer needs, which may facilitate the acquisition of customers from industries other than mining and provide opportunities for greater sales diversification.
Patentus: entering the Gulf markets
Patentus Group revenues in the first quarter of 2023 amounted to PLN 25.7 million, compared to PLN 13.2 million in the first quarter of 2022 – a 94.6% increase.
In the first quarter of 2022, Patentus had an operating loss of PLN 1.9 million, and in the first quarter of 2022, it achieved an operating profit of PLN 6.0 million.
The Patentus Group’s net profit in the first quarter of 2023 was PLN 6.0 million, compared to a net loss of PLN 1.2 million in the same period of 2022.
To date, Patentus’s operations have been focused on the Polish market, but this is expected to change. In March 2023, Patentus announced that it had signed an agreement with the Sergas Group of Abu Dhabi, which will represent the group’s interests in the markets of the United Arab Emirates, Saudi Arabia, and other Gulf states.
“We look forward to the benefits this cooperation will bring us and are convinced that our partnership will effectively combine our experience and knowledge with the Sergas Group’s knowledge and understanding of the local market, which will contribute to the development of our businesses in the region,” Patentus stated.
The above-mentioned companies, as well as other Polish mining companies, have several common characteristics. The fundamental one is that, in order to develop and grow economically, they must seek markets other than Polish mining. These other markets may include renewable energy, the transportation sector, or foreign markets. Expanded activity in these areas can be expected in the near future.
Dariusz Ciepiela
The author is a journalist with the WNP.PL portal and Nowy Przemysł magazine.
Market analyses and data are not encouraging. Electricity prices on the stock exchange are currently at astronomical levels. Electricity is more expensive than in Germany and many other Western European countries. If it weren’t for government support, Kowalski could be in serious trouble. Industry too.
On Friday (May 26th), electricity in Germany averaged €70 per megawatt-hour, while in Poland it was €109. And a similar difference has been observed for many days, reports Business Insider.
Falling gas prices and persistently high coal prices are once again challenging the energy sector to determine what will be profitable in the future, not only for the industry but also for consumers. Coal prices for the power sector have skyrocketed by 163 percent in a year. For consumers who plug in their TV, this means one thing: it’s already cheap.
In February, domestic coal for the power sector fell by 1.5 percent compared to January, while coal for heating remained at its January price, according to the Industrial Development Agency’s price indexes.
This represents a 135 percent year-over-year increase in coal prices for the energy sector! However, if we consider the data for March, we’re seeing a 163 percent increase!
According to the Industrial Development Agency (ARP), the coal index for the energy sector in February of this year was PLN 690.74 per tonne (PLN 31.89 per gigajoule of coal-generated energy), compared to PLN 701.11 per tonne in January of this year (PLN 32.21 per gigajoule). Compared to February 2022, this result is 134.9% better.
What does this mean for the market? Unfortunately, electricity prices are rising.
The situation in the electricity market is better than in the second half of 2022. Better does not mean good.
The average price of annual contracts with energy delivery in 2023 is already above PLN 1 per kWh. Residential customers up to 2,000 kWh can rest easy – the government has guaranteed them unchanged prices. But those who use more energy may start to worry…
Especially since the Polish electricity market is based on power plants, which still generate the majority of their electricity from coal.
Meanwhile, according to the Industrial Development Agency (ARP), a downward trend in the price of 1 ton of coal is continuing on global coal markets. On April 3rd, the price was $156 USD, but later in the month, it fell to $143.46 USD per ton.
“The price decline was also fueled by persistently high inventories in European transshipment ports, which were increasing due to strong imports and low sales. This was facilitated by the ending winter period. At the beginning of the month, inventories reached 5.65 million tons, while at the end of April, they had increased slightly to 5.74 million tons. This is the highest level recorded in two months,” the ARP reports.
However, it’s hard to be optimistic – both China and India are showing increased demand for coal, which means that, aside from the war between Russia and Ukraine, which is negatively impacting the natural resources market, cheap coal will be a near-term dream.
Electricity with next year’s delivery, which cost 2,500 PLN/MWh in Poland last year, is now priced just above 700 PLN/MWh. This is a change for the better. However, residential consumers of electricity from the wall socket are not paying as much as they would have without government intervention.
The price of electricity is still negatively impacted by the price of carbon dioxide emission allowances – currently around €90 per ton, compared to €25 before the pandemic.
The result? Electricity in Europe is currently more expensive than that sold in Poland in only a few countries, including Greece and Italy. Although data changes daily, we are ahead of France and Germany, not to mention other countries strongly focused on renewable energy.
Will it get any better? The hard coal and lignite industries currently expect high prices from energy companies. The aforementioned costs associated with CO2 emissions also don’t help – these two factors mean it won’t get much cheaper. But maybe a little? The Energy Regulatory Office is already discussing next year’s tariffs with energy companies.
Jarosław Adamski
The end of mining at the Bełchatów lignite mine in the Łódź Voivodeship does not mean the end of benefits for the entire region. Where coal is mined today, two of Poland’s deepest lakes will be created in the future! This will be a tourist attraction and an example of how industry can benefit nature.
“The Bełchatów Lignite Mine, owned by PGE Górnictwo i Energetyka Konwencjonalna (Conventional Energy Company) of the PGE Group, has begun the next stage of shaping the shoreline of future lakes that will be created on the mine site after mining ceases,” the company announced.
Similar practices, but on a much smaller scale, have been observed for many years. In the Silesian Voivodeship, this is evident, for example, in the former sand mine workings in Dąbrowa Górnicza and the resulting Pogoria III and IV reservoirs.
For the region, this future is based on tourism.
Thanks to newly constructed conveyor belts, it will be possible to shape the permanent slopes and the bottom of the future reservoir.
Ultimately, two of the deepest lakes in Poland will be created in the two mining fields of the Bełchatów mine, which will merge into one during the final phase of filling with water.
Sandra Apanasionek, spokeswoman for PGE Górnictwo i Energetyka Konwencjonalna (PGE GiEK), which owns the Bełchatów mine, explains the next stage of reclamation work at the Bełchatów open-pit mine:
“The formation of lakes won’t happen quickly – the planned end of mining from both pits is scheduled for 2050. This means many years remain, but work is already underway.
“The water surface of Bełchatów Lake will have an area of approximately 4,000 hectares, and its maximum depth will be approximately 170 meters, which is approximately 70 meters deeper than Lake Hańcza,” said Sławomir Podkówka, acting president of PGE GiEK.
In the Bełchatów Field – one of the two mining fields of the Bełchatów Mine – work has been underway for several years to prepare the mine site for its eventual water reclamation. In the Bełchatów Complex, the post-mining areas are being landscaped with the goal of creating the two deepest lakes in Poland in the future, which will be combined into one large reservoir during the final stage of reclamation.
The Bełchatów Mine has launched a new belt conveyor system on its premises, which will shorten the transport time of overburden masses from the Szczerców Field to the Bełchatów Field and enable the stacker to properly shape the western slope of the Bełchatów Field mine pit and the bed of the future reservoir. To date, the Bełchatów Mine, as part of its preparations for water-side reclamation, has already completed shaping levels II, III, and IV of the Bełchatów Field’s internal dump, and the work has enabled the formation of the eastern part of the target shoreline of the future lakes.
“The current work on the Bełchatów Field’s internal dump involves moving large quantities of overburden masses to shape the bottom and slopes of the target reservoirs. The filling of the pits with water will be carried out in a fully controlled manner, and the slope stability will be continuously monitored.” The water table in the rock mass will be raised to the appropriate level until the second pit (Szczerców Field) is ready for water filling,” explained Krzysztof Rośniak, director of the Bełchatów mine.
Full water filling of the reservoirs will be completed after 2050, when all mining work in Szczerców Field preparing the pit for water filling is completed.
The water table will be gradually raised in both the Bełchatów Field and the Szczerców Field, and filling with deep and surface water will take approximately 20 years.
Apanasionek reminds us that the lake in Bełchatów will not be the first of its kind. Since 2010, Lake Tarnobrzeg, created on the site of a former sulfur open-pit mine, has been in operation, while in Germany, near Goerlitz, you can visit Lake Berzdorfer See, created after the flooding of a lignite mine.
Also in the Konin Basin, you can enjoy lakes created after filling former lignite open-pit mines with water: Morzysław, Gosławice, Pątnów, Kazimierz, Lubstów, Jóźwin II B, Drzewce, and Tomisławice, with a total area exceeding 2,650 hectares.
The concept of creating a lake on the Bełchatów open-pit mine is consistent with ongoing reclamation efforts. It is environmentally friendly.
Reclamation work at the Bełchatów energy complex is underway on a massive scale. Over 2,400 hectares of post-mining land have already been reclaimed, of which over 1,700 hectares of forested land have been transferred to the State Forests by the mine. An example? Mount Kamieńsk.
The former external dumping ground of the Bełchatów open-pit mine is now the highest elevation in central Poland, reaching a maximum elevation of 407 meters above sea level.
Reclamation work included initiating soil formation and planting a forest, which today serves as a refuge for numerous animal species. In winter, the area becomes a center for skiing, and during the warmer months, the forested hillside is a popular destination for cycling and hiking.
In 2019, the formation of the second external dumping ground of the Bełchatów Mine was completed – a twin mountain for Kamieńsk Mountain, which will be fully biologically restored in the future as part of reclamation works and will offer many interesting attractions for tourists. To date, approximately 25 million trees have been planted on the Bełchatów Mine grounds.
Jarosław Adamski
