For those that don't know, Bogdanka is a large private Polish...

For those that don't know, Bogdanka is a large private Polish hard coal mine that is viewed as the "poster child" of the Polish hard coal industry. It operates near BMB's Sawin exploration concession.

Poland's financial year runs January to December, and Bogdanka released it's 2014 Annual Reports early March 2015. IMO Bogdanka's reports provide an interesting glimpse into the Polish Hard Coal market from the perspective of one of it's more successful participants.

Bogdanaka's 2014 net profit down 17.4% when compared to 2013, ....at least it's still profitable.

Bogdanka is obviously concerned about the Polish government's current initiative regarding the restructuring one of the of the state run coal mining companies, Kompania Weglowa S.A., which is comprised of 14 coal mines in Upper Silesia, the region where Mariola is located. The Polish government wants to transform KW S.A.'s previously hopelessly uncompetitive 14 state run coal mines into a "new, strong entity, able to effectively compete on Europe's coal market". The 4 mines that were originally earmarked for closure because they were the most unprofitable will now be restructured in a separate special purpose vehicle rather than shut down. It looks like they may now be sold off to private investors or the power utilities. The Polish coal mining unions are kicking up a fuss..... IMO the reform situation is still "fluid".
https://uk.finance.yahoo.com/news/poland-restructure-europes-biggest-coal-165502456.html
and a more recent update;
http://uk.reuters.com/article/2015/03/03/poland-mining-restructuring-idUKL5N0VQ1MS20150303


Bogdanka's Directors Report On Operations (1/1/2014 - 31/12/2014)
http://ri.lw.com.pl/pub/files/en_ra...awozdanie_Zarzadu_LWB_11.03.2015_19.00_EN.pdf

See pages 12-20 for a comprehensive summary of the Polish hard coal market for the Polish 2014 FY i.e. (Jan. 2014 to Dec. 2014).

I found the table spanning pages 19 and 20 of particular interest. The power station next to Mariola is called Siersza........

Bogdanka's President's Address (12/03/2015)
http://ri.lw.com.pl/pub/files/en_raporty_okresowe/Y2014/LWB/List_Prezesa_Zarzadu_LW_Bogdanka_EN.pdf

Paragraph 5 and down is of interest as far as the Polish coal market goes.

A couple of  excerpts.

"Although we entered the year 2015 with our production running as intended, we assume, in the light of current market trends, that this will be an extremely difficult year for the entire mining sector. Our expectations are affected by the situation in the Silesian region and by the planned restructuring programme for Kompania Węglowa, which assumes that direct and indirect subventions to unprofitable mines will be continued, thus allowing them to sell coal much below their break-even points. And this situation strongly influences the price and demand levels in Poland’s market and is nothing but a hard hit that will certainly deteriorate the outlooks for other market participants, including Bogdanka. The decision to stop the liquidation of unprofitable mines has considerably elevated the risk that the current coal oversupply in the market will maintain, or may even increase."
and
"Our goal is to enable our Company to get ready for operations in a market that will be undergoing extraordinary changes triggered by external drivers as well as fiercer and fiercer competition."


Bogdanka's Strategic Review In Response To Adverse Market Conditions (12/03/2015).
http://ri.lw.com.pl/read-news?title...spite-difficult-market-conditions&cmn_id=2502

Looks like the state of the Polish coal market has prompted Bogdanka to rein in their planned future CapEx and production increase plans.

An excerpt;

"2014 was a difficult period for the industry due to the decline in demand for coal and a large inventory of power coal in Silesian power plants and mines. As a result, the Company's profit margins throughout the year remained under pressure of falling coal prices to commercial power industry (which at the end of January 2015 were lower by 17.5% than the prices at the beginning of 2013)"

Excerpt From the President's Summary;

"Unfortunately, the current market environment is very difficult. It is significantly impacted by the situation in Silesia and the planned recovery program for KW S.A., whose current form provides for further direct and indirect subsidies for unprofitable coal mines, which translates into their ability to sell the coal significantly below the production cost. This has an impact on the prices and demand in the Polish market, which affects other market players, including Bogdanka. The difficult situation on the Polish market is further complicated by the world market prices of coal and other energy commodities, such as oil and gas, which are currently at the lowest levels in years. Therefore, as announced, we reviewed our strategy. The aim is to prepare the Company to operate in volatile conditions under the influence of external factors and an increasingly competitive market.”


A Good Polish Thermal Coal Market Summary From Bogdanka.
http://ri.lw.com.pl/pub/files/en_pr...BOGDANKA_S.A._Financial_results_for_Y2014.pdf




Polish Coal Miners vs. S&P EURO Index
**NWR is a large Czech company operating on the border of Poland, it has hard coal mines in both the Czech Republic and also in Poland.