Enea terminated the contract Bogdanka mine – Interia

Fig. Lublin Coal Bogdanka SA

Enea Production Bogdanka terminated the contract for the supply of coal to the Kozienice power plant, with two years’ notice. The contract will be terminated at the beginning of 2018 years – said Enea in a statement.

The subject of the contract was the supply of thermal coal from Bogdanka to Enea Preparation of 4 March 2010 to 31 December 2025.

stated in a press release, Enea decided that the Lublin coal is for her too expensive, and the current contract and lack of flexibility in negotiating partner does not provide opportunities for the necessary, taking into account market realities, reduction.

– We can not afford that expensive coal, and the current contract terms and conditions differ significantly from the current situation on the market – he said, quoted in the statement, Paul Orlof, vice president of Enea.

– Termination of the agreement will contribute to the long-term improve the competitiveness of our whole group – said.

Orlof also reminded that Enea still involves other agreement with Bogdanka concerning future deliveries of coal to the emerging block of 1,075 MW, which is to start work in 2017.

In a press Enea reported, Energy group that now is the main recipients of the products of the mine Bogdanka Bogdanka and in turn the largest supplier of fuel for the company.

In March Bogdanka gave the value of the entire long-term contract to supply the Kozienice power plant is approx. 10.6 billion zł net. The estimated contract value for 2015 is 766 million zł. Meanwhile, last year total revenues amounted to 2.01 billion Bogdanka zł.

Commentary for INTERIA.PL

– We will seek a new way to acquire coal, to buy raw materials at optimum cost. This is apparent right from the situation on the coal market. It must be beneficial to our customers because it has a direct impact on the prices of products and services that they offer – told Interia Slawomir Krenczyk, a spokesman for the Enea Group.

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LW Bogdanka SA – The most modern and most efficient coal mine in Poland.

LW Bogdanka generated results in EBITDA, EBIT and net profit both better than those achieved in the second quarter of 2014. and the first quarter of this year. They amounted to, respectively: EBITDA: 147.4 million zł, EBIT: 53.2 million zł, and net profit of 42.8 million zł.

Given the very difficult situation on the market, persisting oversupply of coal and its clearly falling since January. Prices, results achieved in the second quarter and the first half of this year should be assessed as good.

The Company expects sales of coal in 2015. at approx. 8.5 million tons, while securing production capacity for the coming years. The company continues its efforts to adapt the business to the current level of production, for which a key factor is the ability to sell in an increasingly difficult market.

The adjustment program involves optimizing the structure of extraction, further reducing operating costs and lowering capital expenditures. Its implementation in the first half of 2015. Brought the generic cost reduction by 11.1% compared to the same period of 2014., The total costs of production by 6.2% and cost of production sold by 8.8%. At the same time, the Company decreased by 199.4 million zł investment plan anticipated for the current year (a reduction of another 80 million zł to the assumptions of June).

In parallel with the above. actions are continuing work to attract new customers – the company strengthened its sales team and is working on obtaining contracts with small and medium-sized customers. In still ongoing trade talks are also in Ukraine.

The main source of revenue of the Group is the production and sale of steam coal.

This activity generates in each of the comparable periods of more than 95% of the Group achieved sales revenues. About 95% of coal sales (in value terms) in the period under review was carried out under long-term trade agreements concluded between LW Bogdanka SA and its main customers, ie. Elektrownia “Kozienice” SA, GDF Suez Energy Poland SA, Energa power Ostroleka SA, PGNiG Termika SA Zaklady Azotowe Group Azoty Pulawy SA and EDF Fuels Sp. z oo

In connection with forecasts, which assume further pressure on global coal prices and oversupply on the Polish market, the company set itself the primary objective for 2015. securing cash through significant cost savings and investment plans . In order to optimize the Company’s operations in the first half of 2015. Made the following activities:

• LW Bogdanka SA – The most modern and most efficient coal mine in Poland, generated in the first half of 2015. Revenues from sales of 843.6 million zł (less by 10.8% than in the same period last year). more »

Reduced the preparatory work for the 10.2 kilometers of workings in 1H2015 to 16.4 km in 1H2014 based on the production plan of approx. 8.5 million tons. At the same time it maintained the productive potential in the coming years. Achieved a decrease in employment of 210 people to 30 June 2015. And 300 at the end of July 2015 (4630 employees compared to 4930 at the beginning of the year).