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Poland to adopt new law to limit Russian coal imports

Highlights

A draft law that will introduce quality control checks on coal and may reduce Russian imports to Poland will have its first reading in Parliament on Wednesday, deputy Economy Minister Tomasz Tomczykiewicz said late Tuesday.

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"There will be the first reading tomorrow of one of the fuel quality laws, which extends these regulations to include coal, which earlier was not covered by any quality checks," Tomczykiewicz told Polish Radio.

Asked if the law was directed primarily towards Russian coal imports because they are the cheapest and account for the bulk of all imports, the minister replied: "That is true. Of course these rules will apply to all coal, even those supplied by Polish companies."

Reducing coal imports from Russia was one of the demands of Polish miners who stopped trains carrying Russian coal from entering Poland by blocking the tracks last week. Tomczykiewicz said the draft law, which has the support of opposition parties, could be adopted as soon as next week.


"I am convinced we will see the first effects by the end of the year. Of course we cannot say what they will look like because the coal importers will also react, but surely there will be a transitional period in which there will be less coal on our market. It will be an opportunity for Polish coal to expand to recover those lost markets," Tomczykiewicz said.

Poland's main opposition, the conservative Law and Justice party, has called for a total ban on Russian coal imports but Tomczykiewicz said the European Commission would not agree to such a unilateral decision by a member state.

Poland's state thermal coal miners Kompania Weglowa (KW) and Katowicki Holding Weglowy (KHW) are facing severe liquidity problems thanks to falling coal prices and demand as well as rising production costs. Both companies posted significant losses in the first half of this year.

Polish thermal coal is also facing pressure from imports because declining production in Poland has driven heating coal prices upwards -- it's the only part of the coal market in Poland which is growing, thanks to increased housing supply -- which has led coal distributors to seek more imports, particularly from Russia. Of the coal imported from Russia, typically about 30% is suitable for the heating market, so the rest is dumped at low prices, normally to small district heating plants.

Poland imported about 11 million mt last year and imports in January-May reached 4.1 million mt, of which 70% came from Russia.

The draft law will also allow the state coal mining restructuring company SRK to acquire failing mines and operate them until they are closed down. Miners at KHW's Kazimierz-Juliusz mine staged a four-day underground protest last week over plans to close down its operations. The protest ended after an agreement was reached between labor unions, management and the government to let SRK acquire the mine from KHW and continue production for a short period before the colliery is closed.

--Adam Easton, newsdesk@platts.com
--Edited by Jonathan Fox, jonathan.fox@platts.com

Similar stories appear in Coal Trader International See more information at http://www.platts.com/products/coal-trader-international