Madrid (Platts)--14Jan2013/822 am EST/1322 GMT

Spanish coal mining companies are struggling to make ends meet as they wait for the government to pay subsidies owed them from last year and issue a resolution establishing 2013 quantities and prices for sales to the country's power generators, a sector source said Monday.

Miners have yet to receive state-aid subsidies owed from last year, a source at coal lobby group Carbunion said. In addition, the companies have also been unable to receive income from selling coal for power generation because a new resolution setting out quantities and prices has not been published, he said.

Spanish mining companies are entitled to state-aid each year. The unpaid amount corresponding to 2012 is about Eur111 million ($148 million), according to Spanish press reports. Also last year, the companies were entitled to sell an aggregate 10 million mt for power generation for between Eur63.60/MWh to 98.68/MWh.

But the outstanding payment has not been received, while domestic coal sales have had to be halted, sources said.

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The state-aid payment is pending approval by the country's Cabinet, which was expected to approve it late last year. Meanwhile, the homegrown coal payment, which is valid until 2014, is awaiting a resolution from the country's new Energy Secretary setting out the new quantities and payment scale.

"This is causing a lot of problems. All the companies are sinking," the source said.

Indeed, one of Spain's largest coal miners, Sociedad Anonima Hullera Vasco-Leonesa, said in a regulatory filing Friday that it would have to suspend payments to its employees for December because of the lack of movement on both issues.

Other, smaller players are reported to have prepared a number of temporary layoffs, according to La Nueva Espana newspaper.

SAHVL said its state-aid payment for 2012 of Eur15.5 million had not been received, making it impossible to pay salaries to its workers on Saturday.

It said that, like other coal companies, it also had stopped making coal sales since the start of the year given that it has no way to price them. Generators were also reported to have stopped making purchases because of the same uncertainty.

An Industry Ministry spokesman was unavailable Monday to comment.

The government last year said it would cut the state-aid to coal mining companies by 63%. The cut was part of a wider national effort to remove the subsidies altogether before a 2019 European Union deadline after which subsidized operations must end.

Spain, which saw its energy secretary replaced last week, had drawn up one plan for 2013-2018 which it submitted to Brussels, but then withdrew for revision by the new secretary, according to press reports.

--Gianluca Baratti, newsdesk@platts.com
--Edited by Jeff Barber, jeff_barber@platts.com

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