Fears for Australian coal exports as Chinese power plants told to look elsewhere

Power plants in China are reportedly being told to turn their backs on Australia’s second biggest export, fuelling fears of a downturn.

Chinese power stations are reportedly being told to turn their backs on Australian coal, fuelling fears the nation’s government could place devastating restrictions on our second most valuable export.

The Global Times — considered a media voice of the Chinese government — has suggested our iron ore industry, Australia’s largest export, is next in line to take a hit.

The warning comes after China slapped Australian barley with an 80 per cent tariff and banned meat imports from four abattoirs.

Now it appears our coal industry is being targeted too, with the Chinese government telling state-owned power utilities not to buy new cargoes of Australian thermal coal – Australia’s second top commodity export.

Experts say the plants are being told to buy domestic coal instead.

It’s the latest in a tit-for-tat spat between Australia and China that was sparked after Australia led global calls for an inquiry into COVID-19.

The move led to a furious response from China, although the latest trade restrictions are ostensibly not linked to the COVID-19 inquiry.

An industry insider, who was not authorised to speak publicly on the matter, told The Sydney Morning Herald Beijing was also encouraging Russian imports over Australian imports.

“The China-Australia situation is not good, and traders are getting the message very loud and clear from the government,” he said.

Power plants in China are reportedly being told to look elsewhere for coal. Picture: Sean Gallup/Getty Images

Nationals leader Michael McCormack said the government was “very concerned” about restrictions being put on Australian coal. However, he said China “needs” Australia coal.

“Of course we’re very concerned by it,” Mr McCormack told ABC News Breakfast this morning.

“But we have a two-way relationship with China. China needs Australia as much as Australia needs China, and we want to make sure that whatever we do is in a careful and considered way.

“That’s why I know (Trade Minister) Simon Birmingham and our Department of Foreign Affairs and Trade officials are working very closely with our Chinese friends and diplomats in making sure that we work through this in the way that you would expect the Australian Government to operate.

“We want to make sure that our coal exports have a destination. China has long been a customer of ours. They know the quality of our coal, of our iron ore and other resources. For their steel mills, for their energy needs, they’re going to require Australian coal.”

As it appears our trading partnership with China is hitting a major roadblock, politicians in Australia are becoming increasingly vocal about the situation.

Deputy Prime Minister Michael McCormack says the government is ‘very concerned’ about the situation. Picture: AAP Image/Mick Tsikas

And, the language is becoming more bombastic by the day.

One government backbencher has even accused Labor MPs of being China’s “ventriloquist dolls” and another has urged thousands of people to back Australia “in the struggle against authoritarian regimes”.

The changes China’s put in place are widely viewed as retaliation for Australia’s push for an international investigation into the coronavirus.

Senator Birmingham sought to play down the potential impact of new Chinese customs inspections on the iron ore industry, saying it could in fact speed up entry of Australian shipments.

However, Labor frontbencher Joel Fitzgibbon warned ministers to repair the relationship, saying they shouldn’t be demonising our largest trading partner when Australia’s national interest and trading interest were the same thing.

“We were always going to have an inquiry so we didn’t need to be out there in front, offending the Chinese,” he told ABC TV.

Joel Fitzgibbon accused the government of demonising China. Picture: AAP Image/Mick Tsikas

“And if we hadn’t done that, we might not be having some of the diplomatic relationship troubles we’re having at the moment.”

China ultimately backed a resolution for the inquiry brought by the European Union and co-sponsored by more than 100 countries including Australia.

But European Union ambassador Michael Pulch says it was Australia who put the idea for an investigation on the table.

Veteran Liberal senator Eric Abetz said no one was seeking to demonise China.

“But world history teaches us time and time again you’ve got to stand up to bullies because if you don’t at the beginning, by the time you do need to stand up to them, then the consequences are huge,” he told AAP.

“We have Labor people willing to be basically apologists or ventriloquist dolls for the communist regimen in China.”

Fellow Liberal Andrew Hastie, who chairs parliament’s national security committee, has attracted nearly 12,000 signatures to a petition “to safeguard Australia’s sovereignty against authoritarian regimes like the Chinese Communist Party”.

The Communist Party-controlled newspaper Global Times has described the iron ore import change as “another implicit warning to Australia”.

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China imports two-thirds of its iron ore from Australia. Picture: Ian Waldie

The paper quoted academic Yu Lei, a chief research fellow at the Research Centre for Pacific Island Countries from Liaocheng University, as saying: “It is associated with how Australia has acted and a general decline in demand for steel on the global level.”

The newspaper’s report on the change went on to say: “Australia’s iron ore export to China could fall victim to the rising bilateral tensions.

“The announcement comes at a delicate time when the China-Australia relations have ebbed because of Canberra’s incessant efforts to spearhead an independent probe of the COVID-19 outbreak in China in order to stigmatise the country,” it said.

“China said that the virus, like MERS and SARS, was jumped to humans from a host animal, and was not made in a lab.”

In another editorial, the Global Times declared: “China has the power to hurt the Aussie economy.”