On 2 October 2024, at the PGI-NRI, a conference entitled ‘Investment climate for the development of the Polish mineral sector’ took place. The event was organised by PGI-NRI in cooperation with the Ministry of Climate and Environment.

During the conference, the current situation of the mineral sector in Poland was assessed and proposals for changes to improve and enhance the investment climate in this sector of the economy were identified.

The conference was attended by more than 200 persons. Its participants included government representatives, key industry experts, including geologists, representatives of companies involved in the mining and processing of mineral resources, lawyers, and scientists. Photo: Katarzyna Zaremba-Majcher (nettg.pl)

The conference was divided into a paper and three panel discussions with the participation of government representatives, entrepreneurs and institutions involved in creating the conditions for investment in the mineral industry.

In the paper part, Prof. Krzysztof Galos, Chief National Geologist, outlined the basic requirements for creating favourable investment conditions for entrepreneurs, emphasising the need to correct the provisions of the National Raw Materials Policy, adopted by the Council of Ministers on 1 March 2022. In his opinion, the document requires many corrections and should be deeply revised. According to Prof. Krzysztof Galos, it is necessary, above all, to redefine priorities, to ensure close correlation with other government policies – energy, environmental and development ones, as well as to cooperate with ministries whose competences include matters related to the National Raw Materials Policy.

In addition, the Chief National Geologist announced major amendments to the Geological and Mining Law. Proposals that have come down from the economic and mining communities are currently being analysed. Presumably, a new act will be created in the future to regulate activities within the rock mass, tentatively called the Code for the Management of the Earth's Interior. 

Prof. Krzysztof Galos gave a presentation entitled ‘Investment climate for the development of the mineral sector in Poland – basic conditions’.

Maciej Młynarczyk, Director of the Department of Geology at the Ministry of Climate and Environment, in his presentation indicated several factors that affect the number of concession applications submitted. The most important, according to him, are the long administrative process, frequent changes in regulations and their changing interpretations, as well as increasingly restrictive European Union legislation. In addition, he pointed to external causes unrelated to legislative issues: the volatile business cycles in the mining sector, fluctuations in the prices of raw materials on global markets and the unsatisfactory results of initial exploration and prospecting work for investors.

Presentation by Maciej Młynarczyk on the state of exploration and exploitation licences in Poland in recent years.

‘In our view, an improvement in the investment climate will translate into the number of exploitation licences issued. We are therefore aware of the need to facilitate access to geological information already at the stage of exploration and prospecting. We are working on this and specifics are expected soon. There is also a need to unify and simplify the licensing system for both exploration and prospecting as well as exploitation activities for all minerals. We recognise that the legal environment can complicate operations. These are changes that can provide the basis for investing in a long-term mining project. We need to promote Polish deposits and persuade investors to do business here. We are also working intensively to improve the efficiency and raise the competence of Geology Department officials,' said Maciej Młynarczyk.

Lawyers with experience in representing entrepreneurs in licence proceedings and disputes related to exploration and prospecting activities also spoke at the conference.

The paper entitled ‘Changes in Polish law affecting the investment climate for the development of the mineral sector’ was presented by Piotr Spaczyński from SSW Pragmatic Solutions. Photo: Michał Zieliński

‘At regular international meetings of mining lawyers, I always try to get them interested in Poland's deposits, and each time it turns out that many lawyers from the world have no idea what our resources are. We are a black hole for them in terms of raw materials. Without advertising internationally, we will not encourage foreign investors. The energy transition is an epochal event in mining, which affects changes in the demand for various raw materials,' said attorney Piotr Spaczyński from SSW Pragmatic Solutions.

He further pointed to the instability of Polish law in the mining sector. In his opinion, investors value the constancy of regulations, yet since 2011, the Geological and Mining Law has been revised every year. This reduces investors' activity. In his opinion, the Polish licence system, which does not provide for a guarantee of the transition from exploration to exploitation, is unique in the world, blocking the entry of foreign investors into the Polish market.

Mining activities in Poland after 1989 were presented by Sławomir Mazurek, PhD, head of the Department of Raw Materials Policy at the PGI-NRI, who in his speech pointed out, among other things, the shortcomings of the Polish raw materials market.

In turn, Karolina Chról from Ernst&Young Poland discussed the consequences of the introduction of CO2 emission charges for Polish industry after 2027.

The paper ‘Consequences of the introduction of CO2 emission charges for industry in Poland after 2027’ presented by Karolina Chról

‘Obligations are imposed on European companies every year as a result of the drive to be as climate-neutral as possible. Companies simply have to keep a low carbon footprint. Third-country businesses do not have these obligations, so their products can have very competitive prices. This can lead to the phenomenon of so-called carbon leakage. Companies may decide that it is not worthwhile for them to operate in the European legal system, which is very complicated, requires a lot of obligations and a lot of money, and they will relocate their activities,’ said Karolina Chról.

She identified four sets of consequences for industry after 2027. The first is a reduction in free _CO2 emission allowances, which will affect companies' liquidity. In addition, a reduction in compensation support for indirect costs, which in Poland will end in 2031. Operating costs and well-considered capital expenditures will also prove important. The final element will be the introduction of the Carbon Border Adjustment Mechanism (CBAM) in the iron and steel, cement, aluminium, fertilisers, electricity and hydrogen sectors.

The paper part ended with a presentation by Prof. Krzysztof Szamałek, Director of the PGI-NRI, on the National Programme for Exploration of Critical Raw Materials. The need to develop this programme stems from a European Commission regulation, which stipulates that each Member State must prepare a programme of activities in the field of critical raw materials, taking into account the current state of knowledge. It will be a summary of the state of knowledge and, on its basis, guidelines for the implementation of further work and geological operations will be prepared, describing, in the individual groups of critical raw materials, known or preliminarily recognised deposit prerequisites.

A paper on the National Programme for the Exploration of Critical Raw Materials presented by Prof. Krzysztof Szamałek. Photo: Katarzyna Zaremba-Majcher (nettg.pl)

Prof. Krzysztof Szamałek presented the benefits of the National Programme for the Exploration of Critical Raw Materials for the Balance of Mineral Deposits in Poland.

The European Union first and foremost wants to know what deposits exist in the various EU countries and what use can be made of them in the production of critical raw materials. We have recently witnessed incredible changes on the raw materials market, such as the disruption of supply chains, increased political pressure on raw material supplies and prices, and growing demand for raw materials for the defence and space industries. That is why the Polish Geological Institute was entrusted with the creation of the National Programme for the Exploration of Critical Raw Materials. We have invited several scientific entities to cooperate, and together we are trying to meet the deadline that has been set. The next assumed stages of activities will probably take place in 2026,' said Prof Krzysztof Szamałek.

 

1. Panel discussion ‘Investment climate for the development of the mineral sector worldwide, in Europe and in Poland’.

The aim of this panel was to find answers to questions concerning the situation in the world (where is the dynamic development of mining investments taking place?), in Europe (what is the EU doing to increase the attractiveness of the investment climate?) and in Poland (what does the national mining sector needs now and will need in the future?).

Fot. Paweł Derkowski (PIG-PIB)

The panellists unanimously stressed that the energy transition, on the one hand, requires changes in the mining industry itself, taking into account the protection of the natural environment and assuming social acceptance of mining projects. Prof. Krzysztof Galos stated that the introduction this year by the European Union of the Critical Raw Materials Act is a milestone in the multifaceted support of the EU countries' economic body for securing their raw material needs. The aim of such measures is to achieve certain critical raw material benchmarks by 2030.

'The perception of mining in European societies is not good. We need to take a sustainable approach to proven resources with respect for the environment and to seek public acceptance and awareness of the importance of the mining industry. In my opinion, this will be impossible over the assumed five-year cycle, but it is important to start doing it. Instead, we have an opportunity to achieve the goals of recycling and import diversification,' said Prof. Krzysztof Galos.

'We should not regret two or three years before the commencement of mining operations to run an information campaign in local communities to attract public opinion leaders who should be involved in the process of creating public understanding of mining investments. These leaders should even be shown places in Europe or the world where mining is carried out with public approval and with limited impact on the environment and people. That is, to show them that meeting the needs of the mining sector brings social benefits at the same time,' said Prof. Krzysztof Szamałek.

The application of modern technologies in the mineral sector was highlighted by Prof. Stanislaw Speczik. He pointed out the possibilities of conducting the exploitation process with minimal impact on the environment.

'Our mine will be a modern, closed-system facility. We have planned it so that the entire technological process will take place underground. The vast majority of the waste created will be managed at the site where the raw materials are exploited. The mine will have a number of improvements for miners and their comfort. We have several specialised expert reports that clearly confirm that such an investment will be profitable. We will achieve the planned goals while respecting the environment and ensuring good conditions for employees,' said Prof. Stanisław Speczik.

In this panel, the situation in the fast-growing mining sector in Africa, South America and Asia was also discussed.

2. Panel discussion ‘Challenges of the Polish economy in terms of raw materials’.

The conference attempted to assess the state of the Polish mineral sector and its chances of meeting the biggest challenges in sustainable mineral resources management.

Fot. Paweł Derkowski, PIG-PIB

According to Maciej Młynarczyk, director of the Department of Geology at the Ministry of Climate and Environment, Poland is a country rich in mineral resources – there are almost 15,000 documented deposits in our state, of which about 14,000 are rock resources and 700 are energy resources.

'The potential that Poland has is big. But the main problem is environmental proceedings and planning. Local spatial development plans block the exploitation of many interesting deposits, even though mining technologies are becoming more and more modern, we cannot obtain access to these deposits. Getting an environmental decision today does not take a few months, as it did when local authorities were dealing with it, but several years. And only when you have this document you can apply for a mining licence. The more difficult the mineral is to access, the longer the process takes. We want to build a good investment climate, but investors must first get to the point where they can start mining,’ said Maciej Młynarczyk.

The discussion was dominated by the question of the future of energy sources during the energy transition. All agreed that natural gas is a fuel whose importance will increase in the coming years.

'Hard coal will be replaced by another fuel primarily for economic and environmental reasons. Lignite will face the same fate, but mainly due to the lack of social consent for the development of this type of mining activity. On the other hand, I have no doubt that natural gas will not be replaced by another energy carrier for the next few decades. The most important thing now, therefore, is exploration of new deposits,' said Piotr Litwa, PhD.

'There is a great number of boreholes in Poland, but there are still places that can be better documented and those deposits whose resources are explored can begin to be exploited. In the United States, shale gas exploration began in the 1970s. Two decades later, as many as 100,000 new boreholes were drilled until the early 2000s. The USA would not have become the biggest producer of natural gas if it had not been explored there. Since the trend is to withdraw from fossil fuels, this means that right now is the best time to produce natural gas in order to reduce imports,' said Wiesław Podraza.

Wiesław Prugar, PhD (Member of the Management Board for Upstream, ORLEN S.A.), looking for weaknesses in the mining sector in Poland, pointed to formal and legal conditions, adding that it is necessary to open up to the entire environment ready to invest in the country's mining industry. About the good points, he said:

'I believe that hydrocarbons have a brilliant future for all of civilization. Even if we wanted to move away from the use of liquid fuels in transportation or change heating systems completely to ones that use other sources, natural gas as an energy fuel and a source for obtaining hydrogen will be needed for a long time.'

3. Panel discussion 'Legislative changes necessary to improve the investment climate for the development of the mineral sector in Poland'

PGI-NRI prepared a special survey, addressed to all entities involved in the mining sector. A tabulation of the results significantly showed which factors have the greatest impact on doing business in this area. The top five worst-rated factors included four related to legislation: the amount of legislation, its clarity and transparency, fixity and predictability, and the impact of new EU regulations. The debate on legislative changes sought reasons for this.

'Polish geology and mining law acts reactively to EU regulations, which we must implement into domestic legislation. An additional lack of a well-thought-out strategy for proceeding has led to the Geological and Mining Law losing its coherence. The regulations governing these areas should be systemic, and at the moment we have led to an unsealing of the system, because there are regulations that contradict each other,' said Piotr Wojtulek.

According to Robert Leszczyński, Director of the National Resource Base Development Department at the KGHM Polska Miedź S.A., grappling with regulations is a long and costly process.

Krzysztof Filusz, a board member of the Polish Aggregates Producers Association, pointed out the problems faced by aggregate mining companies. According to him, a major obstacle in the operation of open-pit aggregate mines is obtaining permission for mining in places where deposits are located under soils of protected classes. A similar situation applies to deposits located on State Forest land.

Attorney Ewelina Anna Kostka from the Juris law firm, who chairs the legal group at the Ministerial Council for the Management of Earth Resources, explained the idea behind the work on amending the Geological and Mining Law.

'The changes made to the Law so far have been directional regulations to fill in the gaps that have appeared as a result of external factors. This time the goal of the work is to revise the Law itself, a kind of cross-sectional look. The very comments that have been made show that entrepreneurs and the scientific community, miners and those representing the geological supervisory authorities see problems in various aspects. Some of these comments overlap, and this constitutes a kind of diagnosis of the Law. They also confirm many of the criticisms that were made at this conference,' said attorney Ewelina Anna Kostka.

Prof. Krzysztof Szamałek also expressed his opinion on the legislative process, saying:

'Excessive detail in the law should be avoided. Such a tendency appears periodically and is usually political in nature. Then there are demands to treat the resources of deposits as a particularly guarded good, inaccessible to others. And yet both the Constitution and a special law specify that mineral resources are a national asset. This resembles a situation in which we stop taking advantage of the world's experience and try to build a 'Polish wheel' with which we want to protect Polish deposits from foreigners. There is no symmetry here: if a Polish company exploits deposits in Chile, it is good, and if a foreign company exploits deposits in Poland, it is already not good..... And yet we can all agree that it is impossible to use deposits located in Poland in any way without the consent of the State. I am in favour of the new Geological and Mining Law being distinguished by general introductory provisions that everyone will understand.’

At the end of the conference, Prof. Krzysztof Galos, Chief National Geologist, took the floor and said:

'It should not be forgotten that streamlining activities in the mineral sector requires agreement not so much from the institutions associated with it, but an agreement at a higher level than the Ministry of Climate and Environment. This is a matter for the government as a whole to understand the importance of this sector. I can promise you that we will return to all topics related to the mineral sector, involving all political and substantive communities.'

Conference participants stressed that measures to improve investment conditions require prompt actions and regular summaries of their progress. There was also consensus on the most important directions in which this work should go.

Text: Artur Baranowski, Anna Bagińska