The price boom on international coal markets, which has been unprecedented for years, and the record level of gas prices, result in a huge increase in the interest in the energy and heating sectors in cheaper, domestic raw materials, say the representatives of Polska Grupa Górnicza. Prices have skyrocketed to unprecedented levels. However, data from the Central Statistical Office indicate that we imported more coal this year than we sold abroad.
- High gas prices mean that even the more expensive CO2 emission rights do not prevent coal from being a much cheaper source of energy than gas.
- The price of steam coal in Dutch ports on Tuesday hit an all-time high of over $ 270. per ton
- The heaps with residual coal in Poland have shrunk by half since last year
- PGG wants to renegotiate contracts with the energy sector, which it sells coal under long-term contracts, which is much cheaper than currently on the global market
- Thanks to these contracts, we currently have one of the cheapest electricity in Europe
- More such stories can be found on the main page of Onet.pl
Six months ago, the coal mining sentence seemed irrevocable. It turns out that with a surge in gas prices coal has returned to favor and before winter it is bought on a stump. Well, at least it was bought until Tuesday, October 5, because in the following days, gas prices began to declineand with them the prices of coal.
Even in spite of the declines in the last few days, the quotation of steam coal in Dutch ARA ports is this month tallest everi. The tonne was valued at nearly $ 233 on Thursday, and as much as $ 274.5 on Tuesday.
For comparison, in the last peak of trading in July 2018, the price went slightly above $ 103., an even earlier peak is $ 130. in January 2011, and comparable with the current prices were only in July 2008 – almost $ 214. per ton. At the same prices as today Silesian mines could operate even though the cost of extraction is high in them.
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The continuing demand enables the largest domestic producer to sell – apart from coal from current production – also most of the stockpiled on dumps near the mine and purchase of several hundred thousand tons of raw material, acquired last year by intervention by the then Material Reserves Agency.
– We have a lot of inquiries about power and heating coal for this and next year – PGG president Tomasz Rogala confirmed in an interview with PAP on Friday. About three-quarters of coal from PGG mines goes to the power industry and heating industry, which this year will produce between 23 and 24 million tons of raw material, compared to less than 24.5 million tons a year ago.
Coal four times cheaper than gas
– ARA coal prices have risen sharply and now stand at around $ 225 per ton. At that time, the prices of natural gas on the Polish Power Exchange reached the level of almost PLN 460 per megawatt hour – per unit of energy, this means a cost approximately four times higher than that of coal – said the president of PGG.
In this situation – said Tomasz Rogala – Polish mines and the largest domestic producer, PGG, “turned out to be a very competitive and desirable source of supplies of cheaper raw material for domestic power plants and combined heat and power plants”.
– This situation shows how critical it is to have your own sources, while others are much more expensive and often unavailable – stressed the president. In his opinion, the market has verified the previous belief that the energy mix of countries with a high share of renewable energy sources and gas provides cheaper energy.
– This is not the case – spot prices of electricity on the European market range from PLN 838 in France, PLN 847 in Germany, to as much as PLN 1140 in Great Britain, while in Poland, they reach the price of PLN 548 per megawatt hour. Thus, energy in many EU countries is much more expensive today than in Poland – the president enumerated.
As he explained, the current record high prices of natural gas meant that despite the high prices of CO2 emission allowances, the production of electricity from coal has become more competitive in relation to gaseous fuel.
Price of emission rights per ton of CO2 it has already reached 64 euros. For comparison, a year ago it was less than 27 euros. Last year the Polish economy emitted 172 million tonnes of carbon dioxide and we (the state and enterprises) received allowances for 173 million tonnes from the ETS. However, this year and the following years, we can expect approximately 160 million tonnes of allowances. However, these 10 million tonnes of difference, with the current value of EUR 640 million, is a burden for Poland.
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Polish power plants buy coal cheaper
The President of PGG assured that the surge in coal prices observed in recent weeks on international markets did not translate directly into correspondingly higher prices in relation to the domestic energy and heating sectors. The details of long-term contracts with the energy sector are currently being negotiated.
– We provide our regular customers with stable supplies of raw material at very favorable prices – assessed Tomasz Rogala.
See also: The lack of coal disabled the German power plant. The energy crisis is accelerating
However, the CEO of PGG did not mention that in the period of low coal prices on global markets, Polish power plants paid more for coal to mines in long-term contracts. In August this year, power plants paid an average of PLN 248.52 per ton (PSCMI1 index), but in the last five years, coal prices for the energy sector have ranged from PLN 189 (August 2016) to PLN 267 (January 2020) per ton, although European prices ARA went even below $ 50. per ton and remained at these levels for a long time.
“In the future, when the European Commission accepts the Polish proposal of the budget mechanism subsidies to reduce the production capacity of mines, it is expected that prices will be adjusted in relations between the mining and energy sectors in relation to the so-called import parity – that is the price at which coal can be imported to Poland from abroad “- writes PAP.
The heaps are shrinking
The coal boom of recent months has resulted in the fact that recipients have also found the stocks accumulated on the dumps near the mine, where at its peak, there were over 4 million tonnes of unsold raw material (PGG stocks – ed.). – Now we are approaching the level of operating inventories, without surpluses – the president of PGG told PAP, confirming that there has not been such an increased demand for coal for years.
As indicated by the ARP data, at the end of August this year, coal inventories in heaps in the entire Polish mining industry (not only PGG) amounted to 4.4 million tonnes. In July, it was 4.9 million tonnes5.34 million tonnes at the end of June, 5.42 million tonnes in May, and 5.6 million tonnes in April. Last year stocks reached up to 8 million tons.
As PAP found out, currently Polska Grupa Górnicza is also completing the buyout of its coal, which it acquired last year by intervention by the then Material Reserves Agency. The current market situation allows the company to buy coal (nearly 600,000 tons in total) from the Agency for cash and deliver it to recipients – mainly from the energy and heating sectors. PGG also concludes long-term contracts with heat plants, securing customers from this area against price fluctuations.
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