Warsaw (Platts)--23Apr2008

Poland's largest hard coal companies said Wednesday they produced 1.8
million metric tonnes less in this year's first quarter compared to the same
period last year, raising concerns about supplies to the country's power
plants. Poland produces almost 95% of its electricity from coal-fired plants.
Poland's largest coal producer, Kompania Weglowa, produced 11.4 million
mt in the first quarter, close to 0.9 million mt less than in the same period
in 2007, company spokesman Zbigniew Madej told Platts.

"But in relation to the company's first quarter production forecast we
produced only around 100,000-150,000 mt less than expected. The main reason
for this was that the geological conditions caused some difficulties," Madej
said.

Kompania Weglowa, which operates 17 hard coal mines and produces around
47 million mt/year, expects to supply 20.5 million mt hard coal to the
country's power plants this year.

First quarter production at the country's second largest company,
Katowicka Grupa Kapitalowa, which comprises five mines owned by Katowicki
Holding Weglowy and the KWK Kazimierz Juliusz mine, was 3.6 million mt,
900,000 mt less than in 2007.

"The reasons for the fall are purely of a mining and geological nature.
Some coal seams are close to exhaustion and we have been preparing to exploit
new ones. We had planned for this. But by the end of this year we expect to
produce 900,000 mt more coal than in 2007," company spokesman Ryszard
Fedorowski told Platts.

Fedorowski said the company had fallen short of its first quarter
production forecast by 47,000 mt. Poland's grid operator, PSE Operator, said
at the beginning of this year that part of the production from the country's
generators was unavailable due to a lack of coal supplies.

Production at Vattenfall Poland's hard coal-fired CHP plants has not been
affected but it's feeling the shortfall. The company has bought around 300,000
mt of Russian coal already this year.

"Our analysis shows that we lack around 470,000 mt of coal in 2008. We
need more coal than the Polish coal mines can supply. Now we are preparing for
winter and we are looking for a supplier, maybe in Denmark, the Netherlands or
Russia. But buying coal on the spot market is about twice as expensive as
buying from Polish coal mines," company spokesman, Lukasz Zimnoch, told
Platts.

Vattenfall Poland's three CHP plants and two heating plants in Warsaw
consume around 3 million mt/year of hard coal. Zimnoch pointed out that Polish
coal producers failed to honor their supply contracts in 2007 and delivered
less than the contracted amount.

Industry experts say that the decision to close down several mines at the
beginning of the decade has contributed to the current problem. Last year,
coal companies produced about 7 million mt of hard coal less than assumed and
this year's production could be down by 9 million mt, some experts have
warned.