PM faces cold war on coal with China

Queensland’s coal export market to China is facing its darkest hour as the Prime Minister warns the trading partner against a boycott.

Queensland’s $7 billion coal export market to China faced its darkest hour yesterday as officials scrambled to confirm if Beijing was boycotting Australian exports.

Prime Minister Scott Morrison called on the Chinese Government to come clean on state-run media reports that Australian thermal coal exports would be formally blocked.

The nationalistic Global Times reported the black-listing of Australian coal before any official confirmation was received from Beijing.

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Mr Morrison said the Government could only treat the news as media speculation until it was clarified.

“That said, what is important to note here is that if that were the case, then that would obviously be in breach of WTO rules,” he said.

“It would be obviously in breach of our on free trade agreement, and so we would hope that is certainly not the case.”

Prime Minister Scott Morrison Picture: Sam Mooy/Getty Images

China’s most recent escalation in its trade war sent shivers through the resources industry, which has been furiously seeking signals from Beijing about whether it was in fact targeting Australian coal.

Queensland thermal coal exports make up less than $1 billion of the state’s $7 billion trade to China, but there are fears the bigger coking coal sector could get dragged into the growing list of banned products.

The move against coal follows tariffs and restrictions on other Australian exports including wine, beef, barley, lobsters, timber and cotton products.

However the moves against coal could blow up in China’s face, forcing its power generators and steel mills to pay more for inferior products while driving Queensland coal miners into the hands of new customers

Writing exclusively in The Courier-Mail today, Queensland senator Matt Canavan said China’s “illegal trade actions” hurt but could Beijing “more than they cost us” in the long run.

“We have nothing to fear,” the former resources minister writes.

“Our high quality products will find customers, while Chinese businesses will continue to lose buyers if they continue to deny themselves the use of Australian goods.”

Mr Morrison says any such move by China would be in breach of WTO rules.

Queensland Resources Council chief executive Ian Macfarlane said coal export volumes had held up strongly in recent months despite China’s trade tactics with increased shipments to India, Japan and South Korea.

“Queensland coal miners are taking full advantage of the current situation by building new ties with customers outside of China and promoting the fact that Queensland companies are reliable, long-term suppliers of high-quality product,” he said.

Trade Minister Simon Birmingham demanded China speak “government to government” and stop the threats through state-owned media.

Senator Birmingham said without Australia’s high quality coal, China would have to use poorer alternatives, which would put it at risk of failing to meet its own emissions reductions commitments.

“Australian coal is around 1.5 times more efficient in terms of energy production than most other competitor nations, including Chinese domestic coal,” he said.

Minerals Council of Australia chief executive Tania Constable called on Australian and Chinese governments to work together to resolve the issues and restore stability to the long-term trading relationship.

“The success of this relationship has relied on a rules-based trade system, which has supported many years of economic growth and job creation, especially in Australia’s regions,” she said.