Continuing the cooperation with LW Bogdanka

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On December 17th, 2014 Grupa Azoty PUŁAWY signed an annex to the long-term agreement concerning the purchasing of coal from Lubelski Węgiel “Bogdanka” S.A. mining company. The annex includes details concerning the price and volume of coal shipments in 2015. Following the signing of the annex, the value of the agreement is 910 million PLN net, or smaller by 13.5% than hitherto.

LW “Bogdanka” S.A. is one of the largest coal mining enterprises in Poland. Its clients include mainly manufacturing companies from the power production and supply sector in the East and North-East Poland. Grupa Azoty PUŁAWY is one of those clients. Lubelski Węgiel “Bogdanka” is planning to increase coal excavation volume and invest in gaining new deposits of the resource, which might help reduce its price, especially for the long-term clients.

Production of electricity and pricing of resources

The cost of electricity depends on the price of coal, CO2 emission quotas, cross-border transmission capacity, and the demand from particular enterprises. The prices of resources have been falling for two years now. This includes the price of coal, whose excessive supply appears to be the main reason of the trend.

Prolonging the natural gas purchasing agreement with PGNiG

On the same day, an agreement was signed concerning the purchasing of gas by Grupa Azoty PUŁAWY from Polskie Górnictwo Naftowe i Gazownictwo (PGNiG). The estimated value of the contract in 2015 is 894 million PLN, which is less than the value of agreements signed annually in the past few years. The value of the contract with PGNiG in 2015 is smaller because Our Company is endeavoring to diversify its natural gas supply sourcing.

Resources constitute the foundation of the production of Grupa Azoty PUŁAWY

Natural gas remains the basic resource used in Our Works. Next come benzene, coal and – to a small extent – sulphur. Reaching synergy between the production cost and the prices of resources is therefore very important.

Andrzej Skolmowski, the Vice Chairman of the Board of Grupa Azoty, has said in one of the interviews that lowering the cost of purchasing the strategic resources was one of the key elements leading to the good financial results of the Capital Group in Q3. This was possible thanks to buying natural gas outside the long-term price tariff, both via the commodity exchange and using individual deals with international corporations. The natural gas prices were lower by 15% than in the previous year. Coal was cheaper by 5-6%, while electricity – by 10-12%.

 

photo: Lubelski Węgiel „Bogdanka” S.A.