In the coming years, the domestic coal sector will face a series of profound structural changes. This is of particular importance in the case of an economy largely based on coal, as reflected, for example, in the high share of this raw material in the national energy mix. Although the restructuring process itself is not historically unprecedented, what appears new is the scale and depth of the announced changes, which in many cases will set the Polish economy on an entirely new course. Their effects will be felt not only by the broadly understood mining industry, but also by numerous mining-related enterprises, industry, cities and — importantly — by a significant proportion of the population whose professional lives have been tied to mining.

The reasons for the forthcoming transformation are numerous. Certainly among them is the impressive expansion of new technologies enabling the relatively low-cost production of energy from renewable sources. Other factors include European Union policies and the resulting obligations imposed on member states, as well as specific political decisions.

Aware of the irreversible nature of these processes, while also recognizing that their pace and character remain negotiable, and feeling a shared responsibility for the future of Polish mining and mining communities, we have decided, within the framework of this series of articles — opened by the cases of France and Belgium — to present to the readers of the Mining Bulletin the history of the complex processes of change, transformation and restructuring of mining industries that have taken place over the past more than half-century in various Western European countries.

We believe that looking into the past and analyzing the experiences of other countries will allow the architects, planners, and implementers of the proposed changes to avoid the mistakes of their predecessors and to limit all associated external costs, including social costs. In the search for a model for Polish restructuring, past experiences should become a lesson that must urgently and necessarily be learned.

Marcin Hylewski

France

Apart from the two main coal basins, Nord-Pas-de-Calais and Lorraine, French coal mining — unlike in many European countries — operated in numerous small coalfields scattered across almost the entire country.

From 1960 onwards, the French government pursued a policy of increasing electricity production from nuclear power, thereby reducing demand for domestic thermal coal. At the same time, the decline of the steel industry reduced demand for coking coal. Coal production, which amounted to 58.2 million tonnes in 1960, fell to 1.5 million tonnes in 2002.

Employment in the mines declined from 350,000 workers at the end of World War II to around 9,000 in 2002.

From 1946, the French coal industry was state-owned, and all operations in the sector were conducted by a single company, Charbonnages de France (CdF).

Between 1986 and 2002, more than 23,000 people left employment in mining.

The severity of social and regional problems prevented the French government from completely terminating coal extraction already in 2002 (as provided for by Decision 3632/93/ECSC of the European Coal and Steel Community), and the deadline was postponed to 2004. At that time, the cost of producing one tonne of coal amounted to 1,267 French francs, while the market selling price was only 335 francs.

The last two deep mines in the Lorraine basin were closed — “Marlebach” in October 2003 and “La Houve” on April 23, 2004.

In 1946, Charbonnages de France (CdF), a state-owned coal mining enterprise, was established.

The reduction of employment in the mines during the 1950s resulted mainly from natural attrition. However, already at the beginning of the 1960s, CdF concluded the first series of agreements with workers who had to leave the industry — either through early retirement or through retraining for other employment.

A formal agreement between CdF and the trade unions concerning measures aimed at helping miners retrain for new professions was signed in 1962. At the same time, the French government confirmed its intention to pursue greater industrial diversification in mining regions by establishing a Regional Development Agency and facilitating financial support for supportive initiatives.

A special industrial development organization, Société Financière pour Favoriser l’Industrialisation des Régions Minières (SOFIREM), wholly owned by CdF, was created. Its mission was to support diversification policies, both internally within CdF and externally. SOFIREM’s initial capital amounted to 622 million French francs (USD 95 million).

In 1984, the French government established the mining regions reindustrialization fund FIBM (Fonds d’Industrialisation des Bassins Miniers), which focused on infrastructure development in coal basins by creating industrial parks, providing training infrastructure, supporting research and development, and offering services to prospective investors.

The FIBM fund, administered by CdF, also granted non-repayable subsidies to companies operating in these areas and could finance up to 50% of land purchase costs and up to 20% of the construction costs of new facilities, within a limit of 50,000 French francs (USD 6,750) for each newly created and maintained job over a three-year period.

From 1967 onward, SOFIREM and FINORPA helped create approximately 100,000 jobs in French coal basins, investing 3.7 billion French francs (USD 500 million).

In 1994, CdF negotiated the Coal Pact (Pacte Charbonnier) with the majority of trade unions, the ultimate objective of which was the liquidation of the industry by 2005.

As part of the social plan accompanying the pact, the following crisis-management instruments were introduced:

1. transfers to other enterprises operating within Charbonnages de France in the same coal basin,
2. transfers to other regions or enterprises within the CdF group, including units operating abroad,
3. miners’ entitlement to end-of-career leave — mining leave until retirement age between 45 and 50 years old, provided they had completed 25 years in mining,
4. guarantees from the company ensuring compensation amounting to 75% of the worker’s previous annual net salary as part of “early retirement.”

The first two commitments applied only to employees who were at least 40 years old and had worked in mining for at least 20 years.

Additionally, provisions included:
5. alternative employment opportunities within or outside the company group,
6. avoidance of layoffs and offering all employees the possibility of re-employment.

During the adjustment period, workers were given the opportunity to choose among various options:

• employment with the energy group Électricité de France (EdF),
• starting their own business,
• retraining,
• repatriation of immigrants to their countries of origin,
• transfer to other enterprises, including relocation if necessary.

Employees who were dissatisfied with the alternative job offers or wished to independently explore the labor market could receive an “adaptation leave” for a maximum period of one year.

During this period, the employee was exempt from work obligations toward the parent company while retaining all rights arising from the continuity of the employment contract. The leave ended on the day the worker accepted alternative employment. During this period, the monthly remuneration amounted to 65% of the previous annual net salary.

French coal basins also received financial support from three major EU sources: the ECSC, the EU Regional and Social Development Funds, and RECHAR programs.

The restructuring program for the French coal industry was implemented on the basis of the Coal Pact (Pacte Charbonnier) concluded between the state-owned mining company Charbonnages de France and the trade unions operating in the hard coal mining sector.

In conclusion, it should be noted that all mines in France receiving aid were ultimately intended for closure.

The Nord-Pas-de-Calais and Lorraine basins benefited from significant investments directed to these areas by French and foreign investors such as Viessmann (heating equipment), Continental (tires), Interpane-Pilkington (glass), Grundfos (pumps), Delphi (automation equipment), and the Smart automobile factory.

According to a report by the French state audit commission, the costs involved in ending coal mining operations in France included:

• between 1999 and 2005, 18.9 billion French francs (USD 3.375 billion) allocated for pensions and disability benefits for former miners and their families,
• between 1995 and 2005, 51 billion French francs (USD 9.1 billion) allocated to support the coal industry, including 34 billion francs covering operating losses; the annual public finance cost per CdF employee amounted to 350,000 francs (USD 62,500),
• 331 billion French francs allocated for pensions and benefits administered by CANSSM (the National Autonomous Social Security Fund for Mines).

Summarizing the restructuring of the French hard coal mining industry, the following conclusions can be drawn:

• entrusting restructuring tasks to Charbonnages de France as a state industrial and commercial organization enabled support through state budget subsidies, allowing CdF to continue operating as the principal institution responsible for reducing production capacity and implementing revitalization programs in affected regions,
• adopting a long-term strategy for mine closures alongside significant employment reduction made it possible to realistically plan specific solutions (such as attracting new employers) as well as obligations, including training costs and long-term pension liabilities,
• establishing SOFIREM as a leading organization responsible for attracting investment and ensuring workforce qualifications proved highly beneficial for employment continuity and long-term strategy in restructuring coal basins,
• the possibility of transferring workers from closing mines to another state-owned enterprise, EdF, provided miners with psychological security,
• the creation of 24,000 jobs in former coal basins between 1984 and 1989 was more than sufficient to employ former miners remaining in the labor market; during this period, 13,200 miners completed full training programs, another 12,200 left the industry naturally, and 19,400 former miners benefited from some form of retirement scheme.

Belgium

Coal production in Belgium was concentrated in two regions: Wallonia and the Limburg basin in north-western Flanders. Production reached its peak of 30 million tonnes annually at the beginning of the 1950s and subsequently declined due to worsening geological and mining conditions. The decrease in hard coal production was also caused by increasing electricity generation in nuclear power plants.

Belgian underground coal mining was characterized by a high dependence on foreign labor. When the last mine, “Roton,” in the southern basin closed in 1984, 85% of employees came from Turkey, Morocco, or Italy. At the same time, among workers in the Limburg mines, Belgians accounted for 55%, Turks 25%, and the remainder came from various other countries.

Until the early 1960s, all coal and steel production in Belgium was controlled by the private holding Société Générale. In 1967, the Belgian government nationalized the coal industry. The process of mine closures began in 1964 and triggered serious social tensions, including demonstrations that were even dispersed using the military.

The production costs of Belgian coal were extremely high, comparable to the costs of coal production in German mines in the mid-1980s. Belgian coal could not compete with imported coal.

Between 1967 and 1980, coal production costs amounted to approximately USD 250 per tonne. Production subsidies during that period reached USD 100 per tonne. At the beginning of the 1980s, subsidies for coal mining in Limburg cost the national government USD 200 million annually. In 1984, the Belgian government transferred responsibility for coal mining subsidies to the regional authorities of Flanders.

The key issues arising from restructuring included:

• mitigating the socio-economic consequences of mine closure programs and reducing high structural unemployment,
• restructuring the Kempen Steenkoolmijnen (KS) company and finding new employment opportunities for its 17,000 workers,
• diversifying the regional economy, previously dominated by mining, toward a multi-sector economy.

These objectives were pursued simultaneously with programs aimed at improving the integration of large immigrant communities in Limburg.

Many miners had been attracted from abroad in several waves: from Eastern Europe before World War II, from Southern Europe after the war, and later from Turkey and Morocco.

Between 1960 and 1984, employment in Belgian mining was halved from 38,000 to 19,000 workers. In 1984, the KS company still employed 17,000 people, including 7,700 in eastern mines designated for closure first and 9,300 in western mines.

Workers were offered a specified period within which they had to accept one of the following conditions:

• retirement for eligible workers,
• leaving the coal sector with a one-time severance payment of 800,000 Belgian francs net for those seeking alternative employment,
• transfer to western mines while remaining within KS.

The plan assumed that at least 8,500 miners had to leave in the first phase for the program to succeed. In practice, more than 10,000 workers decided to leave, including over 1,500 from western mines.

The closure of the three eastern mines took place between 1987 and 1988. By 1989, employment at KS had declined to 6,000 workers.

The second stage of mine closures was completed in October 1992.

Regarding the Limburg closure program, two fundamental principles were adopted:

1. closures would be carried out under the supervision of a designated manager,
2. no miner would be forced to accept dismissal against their will.

The Flemish government’s commitment to providing substantial subsidies amounting to 100 billion Belgian francs (USD 2.5 billion at the time) over a ten-year period was crucial for launching the program. These funds were intended to cover mine closure costs, with any remaining resources promised for industrial revitalization in Limburg.

The Limburg initiatives were accepted by all interested parties — national and regional governments, provincial authorities, the European Commission, trade unions, and other stakeholder groups — at the beginning of 1987, while the official signing took place in April 1988.

Funding provided by the Flemish government covered a two-stage process of closing the remaining mines. Financial resources were allocated to:

• covering future operating losses,
• providing severance payments and other social costs,
• implementing revitalization initiatives for post-mining areas.

Funds from Belgium’s central government were allocated to a regional development fund, while additional central budget resources supported the vocational retraining of miners leaving the Flemish mines.

In the first phase of restructuring, workers from the eastern KS mines were offered eight exit options, including early retirement, severance with the possibility of new employment, and transfer to western KS mines.

In the second and final phase, which affected more than 5,500 KS mine workers, 3,100 miners took early retirement while 2,300 received severance payments.

The rapid closure of KS operations generated considerable savings compared to the Flemish government’s initial budget estimates. Nevertheless, of the 50 billion Belgian francs that had not been spent on keeping the mines open for the full ten years originally foreseen, the Belgian government withdrew approximately 35 billion francs, leaving only 15 billion francs available for economic and social revitalization projects in Limburg.

This approach was sharply criticized because the original agreement stipulated that all funds saved through earlier mine closures — not merely part of them — would be allocated to reconversion programs.

After the completion of the mine closure process, the so-called Future Contract was implemented, with the following main objectives:

• stimulating employment in Limburg to reduce unemployment to the average level across Flanders,
• improving educational attainment in Limburg to a level comparable with the rest of Flanders,
• launching special economic initiatives in former mining towns.

During the 1980s, the European Communities became an extremely important factor in managing social crises. In the case of coal and steel, this role had always been significant thanks to the ECSC, but it was further strengthened through Structural Funds and the Regional and Social Funds.

Structural funds, now supplemented by the Cohesion Fund, became the most important social and structural redistribution mechanism at the European level.

Without support for structural change through the European Regional Development Fund and programs tailored to regions affected by industrial crises, many structural innovations that today constitute a promising basis for further development would not have been possible.

Within the framework of the Future Contract, EU financial sources played a major role in implementing the integrated action plan for Limburg in mid-1988, including resources from the ECSC, the European Regional Development Fund, the European Social Fund, the European Agricultural Fund, the RECHAR Program, the coal basin transformation fund, and the European Investment Bank.

Overall, the cost of the Limburg revitalization program between 1987 and 1991 reached 52 billion Belgian francs (USD 1.3 billion), with an additional 7.4 billion francs made available in loans. Of this amount, 50.7 billion francs came from public sources and 1.3 billion francs from the private sector. European Union funds totaled 6.8 billion francs plus an additional 3 billion francs in loans.

To carry out regional development tasks, new organizations were established, including Limburg Economic Activation (Limburgse Economische Activering) and the Strategic Plan for Limburg (Strategische Plan Limburg). Both organizations focused on addressing the province’s problems resulting from mining restructuring.

Administrative management under the Future Contract was entrusted to the Limburg investment company Limburgse Investeringsmaatschappij (LIM), established with capital of 5 billion Belgian francs (USD 125 million). LIM’s role was to provide seed capital for new employment opportunities in Limburg.

Social issues became the responsibility of the Social Investment Company for Limburg (SIM), established by the central government as a catalyst for social revitalization in the province. These organizations responsible for implementing the Future Contract did not operate in isolation but cooperated with national, regional, and provincial organizations as well as with the European Commission.

The restructuring of Belgian coal mining between 1980 and 1992 leads to the following conclusions:

• effective coordination is essential in projects of such scale because they affect numerous stakeholders,
• of the 17,000 miners employed by KS, 9,700 (58%) re-entered the labor market; the best-qualified miners (e.g., mechanics and electricians) left the industry first and experienced the fewest difficulties finding new employment,
• by 2000 — eight years after the closure of Belgium’s last mine — fewer than 300 former miners in Limburg remained unemployed,
• most investments in new jobs in Limburg focused on creating small and medium-sized enterprises; the arrival of larger employers, such as Ford in the city of Genk, also helped re-employ former miners.

Zygmunt Borkowski