Poland will pay huge compensation to the Australian investor

Tl;dr Poland lost in its own backyard where it creates the rules

Since yesterday, the media have been talking about the PLN 1.3 billion that Poland is to pay to GreenX Metal as a result of the lost arbitration process. It’s just that the information from the so-called mainstream media do not fully reflect the scale of our failure in this matter. Okay, here we go.

In July 2012, Praire Mining (former name GreenX Metal) obtained 4 exploration licenses for various coal deposits in Poland, including the K-6-7 deposit (future Jan Karski mine), which was later the source of the conflict.

A year later, Poles wake up to the fact that it would be better if the Polish Bogdanka mine had a mining license for the K-6-7 deposit.

The fight for the right to exploit the deposit continues. In July 2015, Praire submitted an application to extend the exploration license for another 3 years.

And here we have the first key moment, because according to some mining experts, it would be enough not to extend the exploration license at this stage. However, officials of the then Ministry of Energy did not understand the matter and extended the license. . Then they gave up a second time because they did not establish mining usufruct for Praire within 3 months of submitting a claim to the deposit. If such a deadline were established, Australians could be deceived by not issuing them with the environmental decision necessary to start exploitation. This is how the matter would have been handled in white gloves, but instead it turned out to be a mess…

Over the following years, until 2020, Praire won against the Polish State in our courts several times. At the same time, the Australians said directly that they would submit the case to international arbitration. And it was very likely that they would win, since even Polish courts agreed with them.

More or less parallel to Poland’s lost court cases, Jastrzębska Spółka Węglowa (JSW) started talks with the Australians regarding taking control of the Praire company. Firstly, it would eliminate the risk of Poland losing in arbitration, and secondly, Praire was listed on the stock exchanges in London and Australia, through which additional capital could be obtained from investors. And thirdly, it would be possible to start exploiting the deposits blocked by Praire more quickly, which would allow us to make money from them. And now attention! At that time, the capitalization of the Australian company ranged between PLN 100 and 200 million, so its acquisition certainly would not have cost billions.

The year is 2019. The Praire takeover project was assessed positively by audit companies, and the JSW management board extended it for review by the supervisory board. An agreement with the Australians has already been basically reached – the transaction was to be in such a way that JSW would buy the Praire coal projects, which are subject to disputes in Poland (the K-6-7 deposit and the future Jan Karski and Dębieńsko mines), by establishing a special purpose vehicle, from which Praire will then withdraw. The transaction was to be announced in May 2019, but it is said that it did not take place due to a conflict between the then president of JSW, Daniel Ozon, and minister Krzysztof Tchórzewski. After Ozon left JSW, talks with the Australians broke off and they referred the matter to arbitration.

GreenX Metal / Praire has not built any mine in Poland. Yes, the company incurred work costs that are difficult to estimate precisely, but by 2017 they amounted to approximately PLN 100 million spent on the Jan Karski project and at least PLN 8 million spent on the Dębieńsko project. Let us even multiply it by 2, it will amount to approximately PLN 200 million, although the company probably did not spend that much. In addition, GreenX did not pay anything for legal services in the arbitration case against Poland – the costs were covered by a specialist fund in exchange for a success fee. And now Polish taxpayers will pay PLN 1.3 billion in compensation, which also includes (or perhaps even primarily) lost profits. This gives an excellent rate of return for GreenX shareholders, who are mainly large investment funds. I don’t know if there’s any country in the world that could fuck this up more.

Text copied from the white collars Facebook profile, for a little more clarity.