LW Bogdanka optimises its activities to finance sustainable transformation
Lubelski Węgiel Bogdanka S.A., one of the leading hard coal producers in Poland, adopted a Development Strategy up to 2030, with an outlook until 2035. The strategy is a response to the accelerating energy transition and increasing regulatory requirements in the industry.
Increasing the efficiency of coal extraction based on the latest technologies and improving the competitiveness and reach of its sales at home and abroad are crucial for the implementation of the Strategy. Such an optimised and profitable core business will enable the Group to finance two new development directions: a sustainable industry based on revenue diversification and an energy transition based on zero and low-emission energy sources.
Bogdanka has been generating good financial results for three decades, despite changing trends in the approach to coal in Poland and in the European Union, maintaining its position as a leader of effectiveness. However, the European Union's stricter approach to coal and changes in the energy sector force us to modify our existing strategy and focus on local initiatives that will secure the future of the mine and its employees. The overarching goal is to maintain Bogdanka's strong market position, based on even more efficient, modern and profitable steam coal production. Optimising the core business in a way that is as consistent as possible with ESG goals will enable us to fund our ambitions related to development directions
– says Zbigniew Stopa, President of the Management Board of LW Bogdanka.
Expansion of the customer base in the country and abroad
By 2030, the Company assumes commercial coal production at an average level of 8.2 million tonnes per year (compared to 7.9 million tonnes in 2024). In the years 2031-2035, the planned production should reach approx. 6.6 million tonnes per year in connection with an expected decline in demand for coal-fired electricity.
In the years 2025-2030, sales to customers outside the Enea Group should increase to an average of 2.1 million tonnes per year, up from 1.2 million tonnes in 2024. In the years 2031-2035, a growth up to 2.4 million tonnes per year is expected, generating approx. 46% share of LW Bogdanka's commercial coal sales (in 2024 it was approximately 15%).
The Group plans to intensify its foreign sales, with a particular focus on Ukraine. The potential of sales to professional, thermal and industrial power industry in Ukraine is estimated at several million tonnes per year. LW Bogdanka's competitive advantage in this direction is its geographic annuity.
Investment expenditure in the Group's core business will reach the average of approximately 679 million per year in the years 2025-2030 and by 2035 the Group's Capex will reach the average of approximately 514 million.
EBITDA margin will remain stable
The Company assumes that EBITDA per tonne of output in the years 2025-2030 will reach approximately PLN 97/ tonne, while in the years 2031-2035 - approximately PLN 104/ tonne. In the years 2025-2035, cumulative EBITDA will reach approximately PLN 8.2 billion and EBIT - PLN 3.9 billion. Bogdanka will strive to achieve the average EBITDA margin ratio of 26% in 2025-2030 and 28.7% in 2031-2035.
A key challenge for LW Bogdanka is to strike a balance between long-term adapting to the energy transition and maximising performance in the short to medium term. The Company intends to build on its strengths - operational efficiency and access to strategic resources - while diversifying its business and mitigating the risks associated with decarbonisation and EU regulations. The updated strategy assumes that optimisation measures will allow to improve cash cost of production and EBITDA per tonne, despite declining mining volumes. Maintaining the profitability of the core business will enable the gradual financing of transformation in line with climate goals, which will be reflected in increased Capex, Opex and Turnover indicators compliant with the so-called EU Taxonomy
– says Artur Wasilewski, Vice-President of the Management Board for Economic and Financial Affairs.
Improved efficiency and increased competitiveness
In order to increase mining efficiency, the Group plans to expand the coal heap to approx. 1 million tonnes and to purchase a new coal stacker and build the infrastructure necessary for it. Energy efficiency improvements and the elimination of inefficient processes are expected to contribute to a 20% reduction in energy consumption. The Group's strategy also assumes an increase in operating efficiency by raising the Overall Equipment Effectiveness to 37% within six years, modernising the material and warehouse management to reduce lead times for material deliveries to mining plants to 20%, and reduce unplanned machine downtime to less than 10%.
The strive to increase operating efficiency, improve competitiveness and reduce environmental impact creates a sound foundation for long-term growth and diversification of business. As a result of the measures implemented, it will be possible to achieve a significant reduction in energy consumption, an increase in process efficiency and higher reliability of the technical infrastructure. Such approach not only promotes operating stability, but also increases flexibility in responding to market changes and customer needs. Moreover, the optimisation of resources and the modernisation of processes promote innovation and enable more effective risk management, resulting in sustainable added value for the Group as a whole
– says Bartosz Rożnawski, Vice-President of the Management Board for production.
Revenue diversification and energy transition
The strategy published assumes linking development projects and initiatives even more strongly to environmental and social objectives, set out, among others, in the EU Taxonomy. Bogdanka is already a strong pillar of sustainable development in the Region through the implementation of a number of initiatives addressed to inhabitants, companies and institutions of the Lublin region. One of the pillars of revenue diversification within the sustainable industry shall be the development of rail transport as an independent operating unit within the Group. It is also planned to launch activities in the scope of thermal processing of medical waste - due to the close proximity of the mine and the hospital in Łęczna - and to develop competence in mining, construction and tunneling services, including in foreign markets. In addition, the project to participate in the creation of an economic zone at the mine aims to support the local economy, mitigate the effects of transition and attract new investors.
LW Bogdanka's strategic energy transition projects include investment in zero- and low-emission installations and sources, as well as the use of heat from the mine's underground waters to produce heat and cooling. The installation of the water turbine in the mine shaft is also planned, which will maximise energy recovery from cooling and fire water discharged into the mine workings. Besides, the partnership with Polesie National Park and environmental organisations will maintain its strategic cooperation status. The Scientific Council for Environmental Protection, consisting of independent experts representing the indigenous scientific community, will remain an advisory body to the Management Board in this respect.
Bogdanka strives to be a leader in sustainable transformation in the industry, allocating the financial surplus generated to diversification initiatives, mitigating the environmental impact, and supporting local communities in its surroundings. An extremely important element of our approach to the transition process is the concern to maintain jobs in the region. We are focused on increasing energy efficiency and reducing greenhouse gas emissions, as well as the implementation of environmental goals, including the protection of biodiversity and valuable natural resources. We focus our activities on the development of the Lublin region and involvement in initiatives promoting local identity and the Company's values
– says Sławomir Krenczyk, Vice-President of the Management Board for development.
Presentation of the Strategy objectives:
https://ri.lw.com.pl/prezentacje
For further information, please contact:
Marcin Kujawiak, Lubelski Węgiel „Bogdanka” S.A.
tel. 667 45 02 94
e-mail: mkujawiak@lw.com.pl
Magda Kołodziejczyk, M+G
tel. 22 416 01 02, 501 16 88 07
e-mail: magda.kolodziejczyk@mplusg.com.pl
Lubelski Węgiel Bogdanka S.A. is a leading hard coal producer in Poland that stands apart from its peers in terms of its modern and efficient mining. It is one of the largest Polish hard coal mines. Lubelski Węgiel Bogdanka S.A. chiefly conducts mining operations in terms of hard coal extraction, enrichment and sales. It supplies this raw material mainly to industrial offtakers. Supply contracts are long-term, and the product is sold to the commercial power sector and the industrial power sector.
The company has been listed on the Warsaw Stock Exchange since June of 2009. In August 2022, Lubelski Węgiel Bogdanka S.A. returned to listing on the WIG-ESG Index.
Since October of 2015 Bogdanka has been a member of the Enea Group, the second largest player on Poland’s electrical power market in terms of the generation of electricity, which manages the entire value chain on the electricity market ranging from fuel to the generation of electricity, distribution, sales (supply) and customer service.