June 30, 2015 / 3:05 PM / 4 years ago

Polish coal miner Bogdanka expects price pressure to limit 2016 sales

* Sets minimum 2016 sales target of 8.5 million tonnes

* CEO expects prices to drop by single-digit percentage this year

WARSAW, June 30 (Reuters) - Polish coal miner Bogdanka expects 2016 sales to remain at similar levels to this year, with prices under pressure as state-run rival Kompania Weglowa floods the market with cheap coal, the company’s CEO said.

Bogdanka, which has complained that Kompania Weglowa is able to sell coal below production costs because of state aid it receives as part of a government restructuring of the business, set a minimum 2016 sales target of 8.5 million tonnes.

Though Bogdanka sells coal under long-term contracts, some of its clients have already bought cheaper supplies from Kompania Weglowa.

“In this situation the talks are very difficult and there is significant pressure on prices,” Zbigniew Stopa told Reuters, referring to negotiations on 2016 contracts.

Stopa said he expects prices to fall by a single-digit percentage this year.

“I do not see a threat to the 8.5 million tonnes level in 2015,” he added. “This is also the minimum we would like to have in 2016.”

The CEO said that recent price rises for coal delivery into Amsterdam, Rotterdam or Antwerp (ARA) is encouraging but he does not expect any imminent gains in Poland.

“If we had a free market then I think we could maintain the sales level and stop the fall in prices next year,” Stopa said.

He added that the worst-case scenario for Bogdanka in the coming years assumes annual production at between 8 million and 8.5 million tonnes.

Stopa’s comments came as Polish competition watchdog UOKiK ruled that Kompania Weglowa is not using its dominant position to offer low prices and curb competition.

UOKiK rejected Bogdanka’s complaints on Monday and argued that Kompania Weglowa operates on a wider European market where its position is not dominant.

“We have a different opinion,” Bogdanka’s Stopa said. “In our view the relevant market in both geographical and product terms is the Polish market.”

Stopa also said that Bogdanka could launch a 200 million zlotys ($53.4 million) bond issue this year after its shareholders asked for a higher dividend than the management planned. ($1 = 3.7474 zlotys)

Reporting by Agnieszka Barteczko and Anna Koper; Editing by David Goodman

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