Chris Bowen says ban on Australian coal imports by China was ‘concerning’

Chris Bowen raises alarm at any China ban on coal imports, days after a colleague said it would be “good” if the thermal market collapsed.

Workers at a Chinese port. Pic: AFP

Labor says an apparent ban on Australian coal imports by China through at five ports is “a very concerning development”, just days after an opposition frontbencher said it would be “a good thing” if the thermal coal market collapsed.

Opposition treasury spokesman Chris Bowen said he was seeking urgent advice from the government on the situation.

“This would be, if it came to pass, in relation to other ports in China, a very significant and negative economic development for Australia,” Mr Bowen said.

“(The government) would have of course our support on any sensible measures to remedy this situation because this is very important to our economy.”

The statement of support for the industry came just two days after frontbencher Richard Marles was accused of wrongly talking down the industry, amid a split within the party over the Adani coal mine.

“The global market for thermal coal has collapsed, and at one level that’s a good thing, because what that implies is the world is acting in relation to climate change,” the defence spokesman told Sky News on Wednesday.

Resources Minister Matt Canavan told The Australian the ban had starkly demonstrated the need to lift coal exports to India, where coal from the Adani mine would be sold.

“This is another reason why we must progress the Adani project. The lesson here is don’t tie yourself in to too much reliance on only one or two markets. We need to diversify,” he said.

Australia has only 4.5 per cent of the Indian coal market. The US has 7.5 per cent, despite the longer distances involved.

Morrison: ban could have serious consequences

Scott Morrison says people should not be “leaping to conclusions” about the ban of Australian coal in five Chinese ports but he says any weakening in the coal market will have a “very serious impact.”

The Prime Minister’s note of calm over the coal ban comes as Reserve Bank governor Phil Lowe this morning said it would be a “concerning” development if Chinese bans on Australian coking coal exports are a sign of a deteriorating political relationship between the two countries.

Mr Morrison said the ban in five harbours overseen by Dalian customs — Dalian, Bayuquan, Panjin, Dandong and Bei­liang — was similar to other regulatory exercises by Chinese authorities and he had “no evidence” it was a sign of deteriorating relations with China.

“I think people should be careful about leaping to conclusions about this, this is not the first time that on occasion local ports make decisions about these matters,” he said in Wellington today.

“And so there is no evidence before me or us that would suggest it has the connotations that it has anything to do with anything more broadly than that.

“This happens from time to time, and we will just work constructively with our partners in China about those issues.”

Mr Morrison said Australian authorities would continue engaging with China but he would “concerned” about anything which could upset coal markets.

“Our government, is certainly in favour of being able to continue to engage in our minerals resource industry, to ensure it flourishes and we would certainly think that if there was any weakening in that market, I certainly wouldn’t think it was wonderful,” he said.

“I would think it would have a very serious impact on the Australian economy, and I would be concerned about it, and I would act upon it.”

Federal Shadow Treasurer Chris Bowen.

RBA governor’s words of caution

Reserve Bank governor Phil Lowe this morning said it would be a “concerning” development if Chinese bans on Australian coking coal exports are a sign of a deteriorating political relationship between the two countries.

Appearing before the House of Representatives Standing Committee on Economics, Dr Lowe said the restriction on Australian coking coal exports from entering five ports in China would not have “a dramatic effect” on the economy, but it was important to “wait and see” what the underlying cause of the ban was.

While security experts warned that the indefinite halt on Australian coal exports at the large northern port of Dalian and four nearby ports could be linked to recent diplomatic tensions over the ban on Chinese technology company Huawei and investigations into cyber hacking, Dr Lowe said there were other key reasons why China would look to block the imports.

“The background is really developments in the Chinese steel industry,” Dr Lowe said. “The authorities have been trying to contain production of steel for environmental reasons and they’ve had difficulty in doing that.

“One way they can control the amount of production is to try and control the amount of inputs, and coking coal is an important input into steel production. So, one interoperation of what is going on is this is a way of trying to control steel production,” he said.

“Another possible interpretation is that the Chinese coal industry is not particularly profitable at the moment so constraining imports might boost domestic prices and support the coal industry. So that would be another interpretation of what’s going on,” he said.

Dr Lowe said the move may not be specific to Australia, but conceded the RBA was not sure of the reason. “I wouldn’t jump yet to the conclusion that this is something that is directed at Australia,” he said.

The amount of coal currently blocked by China was largely insignificant and would find other markets, according to Dr Lowe.

“My understanding is that the amount of coal that is being blocked is the total of two months exports from Australia to China.

“It’s entirely possible that if that cannot go to China then it can go to other markets. There are other markets in the world for Australia’s coking coal. A lot of other countries in the world are making steel. We’ll find another market, perhaps at a lower price,” Dr Lowe said.

“If that’s all we’re talking about, the blocking of a couple of months coal exports, then that’s not going to derail the Australian economy.

“If it were to be the sign of a deterioration in the underlying political relationship between Australia and China then that would be more concerning,” he said.

“I wouldn’t jump yet to the conclusion that this is something that is directed at Australia. We have to wait and see.”

The dollar tumbled as news of the ban emerged yesterday, falling more than 1 per cent yesterday to a low of US70.86c, but recovered ground this morning after government reassurances.

Dr Lowe appears before the parliamentary committee. Pic: AAP

It came as Dr Lowe pinned the next move in interest rates on an unexpected increase in the jobless rate, warning that household consumption — the biggest driver of economic activity – is weaker than previously thought.

Dr Lowe said the central bank was concerned by the “accumulation of downside risks” in the local and global economy, such as falling house prices in major Australian capital cities, a trade spat between the US and China and strains in European economies amid Brexit.

The comments come after Westpac brushed aside a spurt in jobs growth, as shown in official figures released yesterday, arguing a weakening economy including a dollar potentially below US68c will compel the Reserve Bank to slash the official interest rate to a new historic low of 1 per cent before the end of the year.

Dr Lowe said while the RBA “does not see a strong case for a near-term change in the cash rate” it was highly dependent on “what happens in our labour market”.

Many economists have projected the unemployment rate will likely rise as the economy slows over the next two years. Official forecasts from the RBA downwardly revised economic growth after a summer period rife with downbeat economic data.

“If there were to be a sustained increase in the unemployment rate and a lack of further progress towards the inflation objective, lower interest rates might be appropriate at some point,” he said.

Dr Lowe said it was important to wait and see how global political and economic tensions played out.

“It is conceivable that one or more of these risks crystallises in a way that damages confidence and the global economy. It is, of course, also conceivable that political leaders respond to the mounting economic risks in a way that restores confidence. Time will tell,” he said.