China Reportedly Halts Australian Coal Imports

The Chinese government has reportedly told its state-owned companies to stop importing coal from Australia (PickPik).

Several trade publications have reported that China’s custom authorities ordered Chinese state-owned steelmakers and power plants to stop importing Australian coal. In response to the report, Australian mining giant BHP confirmed that its customers requested a deferral of their coal orders.

S&P Global Platts published a report on October 9 that includes several anonymous sources saying that Chinese state-owned utilities and steel mills had received verbal notice from China’s custom authorities to stop importing Australian coal with immediate effect. Argus Media also reported this event, although with only few details.

BHP chairman Ken MacKenzie confirmed that the company’s commercial team had received deferment requests of coal cargoes from the company’s Chinese customers on October 14. “It would be concerning if the rumors are true regarding an import restriction for Australian coal into China,” he said.

China previously tightened its port restrictions for Australian coal in 2019 amid strained relations between the two countries after Australia banned Huawei’s participation in building its national 5G network.

China has taken a range of measures to restrict imports from Australia this year ever since Australia called for an independent investigation into the origin of COVID-19. China imposed tariffs of more than 80 percent on barley imports from Australia in May. Furthermore, China launched two trade investigations into Australian wine. 

In response to the report, Australian Trade Minister Simon Birmingham remarked, “I have had discussions with the Australian industry and we are making approaches to Chinese authorities in relation to that speculation.” He also noted that he had received no official notification from Beijing, and that he does not have any evidence to verify these reports.

Australian Prime Minister Scott Morrison assured that it is “not uncommon” that Chinese government changes its domestic quotas to support local production and local jobs. 

China accounts for 27 percent of Australia’s metallurgical coal exports and 20 percent of its thermal coal exports, making it the country’s largest trading partner in the industry. The restriction on Australian coal would result in a $14 billion loss.

MacKenzie expressed his concerns that these geopolitical tensions and trade wars could have a significant impact on “global growth,” especially in a “post-COVID world.”

Meanwhile, Tania Constable, a chief executive at Minerals Council of Australia, is optimistic: saying “Australia will continue to see demand for its high quality of coal and the medium-term outlook remains positive.”