Aussie dollar falls over China coal kerfuffle

coal contracts

By Nichola Davies

It has been a bad news week for the Australian coal industry.

A grader driver for a coalmine in Moranbah died in an underground collision. Experts have revealed Adani’s Carmichael Coal mine could take years to get the green light. Global mining giant Glencore announced it would be capping coal output and now there’s chatter over China banning Australian coal imports.

News agency Reuters reported that Dalian Port Group had confirmed customs at China’s northern port of Dalian had banned imports of Australian coal, and will cap imports from all countries to the end of 2019 at 12 million tonnes.

Other major ports are reportedly prolonging clearing times for Australian coal to at least 40 days, nearly doubling the usual clearing time.

The announcement sent the Australian dollar down a percentile, to a 10-day low of $0.7070.

China is the largest buyer of Australian coal, buying 89 million tonnes last year, worth $10.7 billion, according to the Australian Bureau of Statistics.

There is speculation the ban and capping of Australian coal imports is political due to the strained relationship between China and Australia.

Reuters said imports from Indonesia and Russia have not been affected, but China’s Foreign Ministry spokesman Geng Shuang played coy.

“China’s customs assesses the safety and quality of imported coal, analyses possible risks, and conducts corresponding examination and inspection compliant with laws and regulations,” he said.

“By doing so, it can better safeguard the legitimate rights and interests of Chinese importers and protect the environment.”

A notable pinch point in the relationship was last year when Australia banned China’s Huawei from its 5G broadband network.

Although there is speculation the move is politically motivated, treasurer Josh Frydenberg warned against jumping to conclusions.

“It’s based on mutual respect and mutual interest and the relationship, both at a people-to-people link (level) as well as the trade and economic side, is very important to both countries,” he told ABC radio.

“I think that the relationship is strong, that our exports to China will continue to be strong, as they have been in the past.”

Federal Minister for Resources Senator Matt Canavan has been uncharacteristically quiet on Twitter, taking time today to post a meme critical of the Palaszczuk government instead of offering insight into arguably the most important issue of his portfolio this year.