Polish coal mining giant Kompania Weglowa will be restructured in an attempt to cut costs and rescue the company from a second year of losses.
The largest coal miner in Europe has been flagging due to low world coal prices and high operating costs, and will close four of its mines for liquidation, in order to steer away from a near inevitable insolvency.
The remaining nine mines in its portfolio will be transferred to a state-controlled, special purpose company owned by Weglokoks.
Polish Prime Minister EWA Kopacz said the radical restructuring was the only alternative to bankruptcy, although the company stands to lose $US260 million even with the restructure.
Kompania Weglowa is Polish government owned and not publically traded, and made a loss of approximately $US110 million between January and November last year.
Polish government officials said the company was making a loss of $US18 per tonne of coal.
Hundreds of coal miners stayed underground after their shifts last week to protest the plans to close mines, and trade unionists have threatened a general strike if the government goes ahead with the plan.
Kompania Weglowa employs around 49,000 people, which accounts for half the employees in Poland’s mining sector.
The government will spend a reported PLN2.3 billion on restructuring costs, approximately $US633 million.