Since we’re not focused much on the retail coal market, we only briefly commented the buzz connected with Anti-Smog Act, signed in October by Polish president Andrzej Duda. Hard coal sector took it as a punch in the face and shouted, that this will surely immerse the crisis in the industry. Would it really?
Quick reminder: in 2013 local authorities in Lesser Poland Voivodeship decided to ban household coal burning in Kraków from 2018, which in their opinion would help the city covered in smog. Its difficult to assess effectiveness of this solution because of Kraków’s urban planning issues and lack of natural wind corridors. Anyway, the ban was lifted by Supreme Administrative Court due to lack of proper laws on the subject on the national level, which was later fulfilled by president Duda right before the election in October.
Hard coal miners were discontent, since development in production of sized coal used by retail customers was in their opinion a salvation for the problems in Silesian coal sector (larger profit margin). But thinking more of the future of Polish coal industry and taking into consideration the mismatch in production of certain coal sizes in Poland suggests, that this law can actually be the exact opposite of what miners believe.
What are the possible scenarios for Polish household heating sector after this ban? One: investments in household gas-fired furnaces. Two: development of district heating in all cities that will introduce such laws. District heating, which in Poland use mainly steam coal 0-31.5mm could create an opportunity for the domestic coal industry to dispose of their overproduction. On the other hand today’s shortage of sized coal (covered by import) would vanish, also thanks to domestic investments in sized coal production (e.g. KWK Wieczorek from Katowicki Holding Węglowy).
Without any further analysis, it can surely be said now that anti-smog law opens new possibilities for domestic hard coal mining, but only if all sides gather forces and compose a consistent strategy on the subject.