Abstract
European hard coalmining is a declining industry, despite the use of hard coal for energy in several countries. Industry restructuring and public subsidies have failed to stop this industry’s decline. The largest hard coalmining sector, the Polish sector, has faced an obstacle to its survival: How to reduce production costs to compete with less expensive imported hard coal? This article aims to identify and analyze the dependence of the total production costs representing production and infrastructure parameters of the Polish hard coalmining industry. The parameters are divided into three groups: (1) the cost of employees and the production volume; (2) the number of longwalls, the length of a longwall, the daily longwall advance and the preparatory work advance; and (3) the number of levels in exploitation, the number of layers in exploitation and the number of shafts. The findings indicate that, even in well-functioning coalmines, there are many economically irrational relationships, especially regarding employment and infrastructure size. This study shows that employment, which is a significant cost component of the production and infrastructure parameters of the examined Polish hard coalmines, is not economically rational in terms of its proportion to the total production costs. As a result, even a considerable reduction in employment or infrastructure does not influence the unit costs of mining production, which could only be partially explained by the high level of fixed costs. There are also no appropriate relationships between infrastructure parameters and the total production cost. Under these irrational conditions, a reduction in the production costs of hard coalmining enterprises is difficult, but unproductive costly activities could prevent an improvement in production efficiency. Only restoring the proper relationship between economic and infrastructure parameters and the total production costs can ensure a return to price competitiveness. Those actions are crucial for the Polish hard coalmining industry, because the research focused on successful hard coalmines that were not declining indicate it should be able to implement cost improvements.
Highlights
IntroductionUnderground coalmining is a sector with a complex production process, requiring interdisciplinary knowledge and competencies, including, geology, tectonics, geodesy, civil engineering, mining, mechanics, chemistry and environmental protection
The results show that, in the Polish hard coalmining sector, fixed costs make up a higher proportion of total production costs than in other industries
We further examined the relationships between the total production costs and the selected variables using multiple linear regression analyses, which enabled the determination of the relationships between the independent variables and the dependent variable: yt = α0 + α1 x1t + α2 x2t + . . . + αm xmt + ξ t where α0 . . . αm —parameters of the model; x1 . . . xmt —independent variable; and yt —dependent variable
Summary
Underground coalmining is a sector with a complex production process, requiring interdisciplinary knowledge and competencies, including, geology, tectonics, geodesy, civil engineering, mining, mechanics, chemistry and environmental protection. The aforementioned conditions significantly affect the efficiency of hard coalmining production and require efficient cost management, especially regarding long-term cost predictions [2,3]. Management knowledge and experience working in the hard coalmining sector is crucial because production costs depend on current expenditures and on irreversible and cost-intensive decisions concerning investments in hard coalmine infrastructure. Especially in less developed economies, the long-term cost planning of the hard coalmining sector is replaced by a policy of reducing current costs, resulting in the destruction of local societies, economies and the environment
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