Beijing’s ban on coal import levels ‘not a new thing’

Scott Morrison has played down concerns over any Chinese move to restrict Australian imports of thermal and coking coal as ‘not a new thing’.

Trade Minister Simon Birmingham. Picture: AAP

Scott Morrison has played down concerns over any Chinese move to restrict Australian imports of thermal and coking coal as “not a new thing”, amid warnings from resources analysts that Beijing ­appeared intent on restricting Australian coal volumes to 2017 levels.

The Prime Minister said he had seen reports China was blocking coal imports and provided an assurance his government was “looking at those reports and ­obviously raising those issues as appropriate with the relevant authorities”.

Trade Minister Simon Birmingham conceded on Tuesday he was unable to speak to his Chinese counterpart to seek clarity on the issue, saying “we spoke last year” and reaffirming his willingness to “engage in ministerial dialogue at any time.”

Mr Morrison said it was “not uncommon for domestic quotas to be in place in China”, arguing that it “often happens, particularly when it comes to coal”.

“They do have their own coal industry,” he said.

“And it is not uncommon that from time to time, the Chinese government will have domestic quotas to support local production and local jobs in China.

“So that is not a new thing. And I’d just seek to condition how ­people look at those reports.”

Senator Birmingham also said there was a “cyclical pattern to the way in which coal exports to China have ebbed and flowed over the last couple of years.”

“There have been a number of occasions where we’ve seen the rate and volume of those exports slowed for a period of time, but only to pick up again,” he said.

While China was an important market, Senator Birmingham said the government was helping to expand access to other markets for exports and identified Japan as the largest destination for Australian coal.

“We’ve seen strong growth not only in the Japanese market for other products, in the Korean market, of course, in other parts of Asia. We see huge possibilities through our new trading relationships with Vietnam and with Indo­nesia. We continue to negotiate with the EU, the UK, in terms of new trade agreements in those markets as well.”

Wood Mackenzie analyst Rory Simington said China appeared to be looking to restrict coal imports to 2017 levels, with the latest round of restrictions likely to hit Australian coking coal as well as energy coal exporters.

“We understand that the previous bans on utility purchases of Australian coal have been extended to steel mills and the bans for utilities reaffirm," Mr Simington said.

“As of yesterday, almost all major steel mills had been ­informed of the ban on Australia coal, including coal waiting to ­offload and sitting on port stockpiles.

“We believe the Chinese government is trying to restrict overall coal imports to 2017 levels.

“This would mean around 270 million tonnes of imports of all coal types and sources.”

The new restrictions on coal comes amid a historic low point in the bilateral relationship between Canberra and Beijing, with Chinese authorities also slapping tariffs on Australian barely earlier this year and targeting meat pro­cessors with suspensions.

Mr Simington said thermal and metallurgical coal prices would take a hit, with Australian producers having to find new buyers for their shipments.

Shares for Australian coal ­exporters were also hit hard on Tuesday amid concern the sector had been drawn into the ongoing trade tensions between both ­nations.