China’s accidental gift to Australia helps miners

China may have unleashed a series of brutal trade sanctions on Australia, but now Beijing has helped out local miners as one of its actions has had unexpected side effects.

China’s hunger for coal is ironically helping Australian miners, despite Beijing’s ban on product from the nation.

Department figures have said that China has “run down its own stocks” and is seeking to buy up more of the resource around the world.

It has been pushing up the price of coal globally, offsetting the impact of the ban.

The price of metallurgical coal is now $155 a tonne, a 46 per cent increase on the same time last year.

China’s demand for coal has pushed up global prices, helping Australian miners despite trade sanctions.

But companies are still privately concerned about the impact the ban is having on that and other resources, which has left the market volatile.

Beijing ordered a halt on the purchase of Australian coal in November, which saw exports drop from about $1 billion a month to about $30 million according to Department of Foreign Affairs and Trade figures.

While most of the coal found new markets, including Indonesia, Vietnam, Japan and Korea, industry figures had been concerned that the price was below the premium that had previously been paid by China.

An Industry Department spokesman told a Senate estimates hearing recently that while the premium being paid was lower, there had been a recent spike in prices.

“China’s demand for coal has been extremely high. They’ve run down their stocks,” he said.

“So they’re looking for suppliers from all over the world and that’s pushing up prices everywhere.”

But departmental officials accepted there was still a risk to the economy and production due to China’s ban.

Resources Minister Keith Pitt

Resources Minister Keith Pitt said Australia’s resources remained in high demand and forecast continued growth.

“Demand from many of our trading partners in Asia is strong and growing as new coal fired power stations continue to be constructed,” he said.
“While China has been a market that attracted a premium price for non-Australian coal, that premium is rapidly reducing as world prices increase.”

Opposition resources spokesman Murray Watt said the industry department officials accepting there was still a risk to the economy from China’s ban on coal reflected what mining companies had been privately saying for months.

“It’s about time the Government has finally acknowledged that the China trade dispute is a risk to Queensland jobs,” he said.

The Minerals Council Australia’s Commodity Demand Outlook 2030 warned lower steel demand in Japan and South Korea would see metallurgical coal exports to two of Australia’s current biggest buyers fall, but growth in the South-East Asian market and India would continue.

Thermal coal, used for power generation, is expected to suffer from “declining demand in North America and Europe as they transition into natural gas and renewables”.