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Poland Mining Report Q2 2016

Poland Mining Report Q2 2016

BMI View: Growth in the Polish mining sector will be modest over the coming years. The coal sector willbe overhauled as the government seeks to either restructure or close unprofitable mines. Copper output willstruggle as falling copper ore grades and weak prices are set to hinder growth. Nevertheless, the rate ofgrowth we forecast indicates that the country will remain one of the most significant players in theEuropean coal, silver and copper markets.

Downside Risks

The main downside risks to our forecasts are weak copper and coal prices, cheap coal imports and labourunrest in the sector. Due to our view for a sharp slowdown in Chinese economic growth and expectation forincreased copper supply, we expect lower copper prices over coming years. We forecast copper prices toaverage USD6,450/tonne over 2014-2018, significantly lower than their 2011 average of USD8,826/tonne.

Combined with falling ore grades in Poland, these lower prices will significantly disincentivise investment in the sector. Lower commodity prices will also have the effect of squeezing miners' margins, precipitatingcutbacks and thus heightening the risk of industrial unrest. Poland's mining sector is comprised of strongunions and as such we highlight tense wage negotiations and potential strikes to affect the sector overcoming years.


BMI Industry View
SWOT
Industry Forecast
Coal: Inefficient MInes & Weak Prices Spell Trouble
Table: Coal Production Forecast (Poland 2012-2020)
Copper: Modest Growth As Falling Grades Take Their Toll
Table: Copper Production Forecast (Poland 2012-2020)
Industry Risk/Reward Index
Poland Risk/Reward Index
Rewards
Risks
Table: Mining Industry Forecasts (Poland 2012-2020)
Europe: Majority To Be Low Risk-Reward
Table: Europe - Mining Risk/Reward Index
Regulatory Development
Table: Political Overview
Table: Europe - Mining Regulatory Outlook
Commodities Forecast
Commodities Outlook
Table: BMI Commodities Price Forecasts
Competitive Landscape
Table: Poland - Major Mining & Metals Companies - Financial Data
Company Profile
KGHM
Table: KGHM - Key Financial Data
Jastrzębska Spółka Węglowa (JSW)
Table: JSW - Key Financial Data
Regional Overview
Methodology
Industry Forecast Methodology
Sources
Risk/Reward Index Methodology
Table: Weighting Of Indicators

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