REUTERS SUMMIT-Polish miner JSW may sell non-core assets if cost cuts blocked

(For other news from Reuters Eastern Europe Investment Summit, click on http://www.reuters.com/summit/EasternEuropeInvestment14)

By Anna Koper and Jakub Iglewski

WARSAW, Sept 30 (Reuters) - Poland's JSW, the EU's largest coking coal miner, might have to sell some non-core assets if unions block its efforts to cut costs in response to low global coal prices, its chief executive told Reuters.

JSW made a loss in the first half of this year because of lower coal prices and weak output. It said this week it planned, among other cost savings, to scrap bonus payments to retired miners which cost it around $20 million per year.

"Discussions with the trade unions are not going well at all, there is no sign of any understanding," JSW chief executive Jaroslaw Zagorowski said in an interview at the Reuters Eastern Europe Investment Summit.

"The union pressure is definitely going to be an obstacle. It's going to be a tough issue. But we don't want to allow the firm to go bankrupt," Zagorowski said in the interview, which took place on Monday and was authorised for publication on Tuesday.

"If the company's situation continues to worsen, then we will take the next decisions. We may be forced to sell a part of our assets, not necessarily mining assets."

He said if the firm was able to scrap the bonuses, then that, along with a planned scaling back of investment plans, would allow the firm to more or less balance its books.

Zagorowski said JSW would finish this year with a positive net cash position, despite analysts' predictions that it would turn negative.

He declined to make any other predictions for the company's financial performance for the full year, though he noted that geological problems hurt second quarter results and said an improvement was possible in the second half of the year.

Roman Brudzinski, vice-president of the JSW chapter of the Solidarity trade union, said the bonuses for retired miners and other benefits also under threat were protected by law, a view disputed by JSW management.

"If the JSW CEO plans to implement these changes, he cannot do it without social unrest. Even (Taiwan OTC: 6436.TWO - news) if the unions stood aside, people would react," Brudzinski told Reuters.

ENERGY SECURITY

In common with other eastern European coal producers, such as Poland's state-owned Kompania Weglowa and Czech miner New World Resources, JSW is especially vulnerable to low coal prices because it has higher costs than miners in Asia or Australia.

Demand for coal in Europe is held down by European Union rules limiting emissions of greenhouse gases, and favouring renewable energy sources instead.

Zagorowski said that the standoff between the West and Russia over Ukraine, which could disrupt supplies of Russian gas to Europe this winter, should be a wake-up call to Europe about the importance of home-grown energy sources, including coal.

"The coal we have on Polish territory gives us security. That is why I am convinced that it will continue to have a fundamental importance for the production of energy," Zagorowski said in the interview, at the Reuters office in Warsaw.

"The Ukraine crisis has prompted reflection, not only in Poland but on the EU level. In Poland we have a strong conviction that we shouldn't promote at any cost other sources of energy, but should look to what we have. I hope this will translate into future EU policy," he said.

Follow Reuters Summits on Twitter @Reuters_Summits (For more summit stories, see ) (1 US dollar = 3.3130 Polish zloty) (Writing by Christian Lowe; Editing by Ruth Pitchford)