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China to prioritise Russian/Indonesian coal - report

China to prioritise Russian/Indonesian coal - report

Photo by Bloomberg

15th December 2020

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – The Australian government on Tuesday said that it would "defend the rights" of Australian exporters after reports emerged that China was restricting imports of Australian coal in favour of coal sourced from Indonesia and Russia.

A report by the Global Times reported that China’s National Development and Reform Commission had met with the ten major power companies over the weekend, and had granted them approval to import coal without clearance restrictions, except for coal from Australia.

It was suggested that coal imports from Mongolia, Indonesia and Russia would be prioritised.

“Our government is very, very concerned that these reports in Chinese State-owned media about alleged meetings of largely Chinese state-owned companies suggesting that they would in some way boycott and discriminate against Australian product going into China could constitute a breach of China's commitments to the globe in terms of their membership of the World Trade Organization, in which they are committed to operating in accordance with good market principles, as well as their commitments to Australia in relation to the agreements signed as part of our free trade pact between one another,” Trade Minister Simon Birmingham said on Tuesday.

“This is yet another instance of accumulative series of events and actions that Australia has faced throughout, particularly the course of this year, but dating back over a couple of years now. This cumulative series of actions has prompted us to call it out and to raise our concerns publicly here in Australia, directly of course with China through all of our diplomatic channels available to us, and ultimately, to already do so at the World Trade Organisation.

“We intend to continue to pursue every avenue, to defend the rights of Australian businesses, to trade in a manner consistent with the undertakings China has made to Australia and to the rest of the world,” Birmingham said.

The Minister noted that these actions, if true, would potentially constitute discriminatory action against Australian producers, and could potentially constitute a breach of the type of undertakings that China has made to Australia and to the world in relation to their trade practices, and potentially harm China's ability to meet the other types of commitments it's given to the world in relation to its emissions profile.

Australia’s thermal coal exports will be worth some A$15-billion in 2020-21, according to the Office of the Chief Economist, with export volumes expected to reach some 208-million tonnes.

During the first half of 2020, China’s thermal coal imports from Australia reached 32-million tonnes.

Birmingham said on Tuesday that while the Australian government would work to ‘defend’ the trade with China, it would also work with the Australian industry to diversify.

“In terms of our coal exports, it's important to recognise that although China is a significant market, it's not our largest market and we do have significant markets in Japan, in the Republic of Korea, with India, strong growth recently in relation to Vietnam, and so we continue to work in a range of other markets where our government has secured trade agreements or continues to deepen trade ties to make sure that all of those exporters can have as many choices available to them as possible in relation to the distribution of their products,” he said.

The Minerals Council of Australia on Tuesday encouraged the Australian and Chinese governments to work together to resolve their issues, and to restore stability to the long-term trading relationship, with CEO Tania Constable stating that a rules-based trade system had ensured a strong, enduring and mutually beneficial economic and trade relationship.

Meanwhile, both the industry and the government have said that a levy on the iron-ore imported into China would not be considered.

Former Resources Minister Matt Canavan earlier this week suggested that the government should impose a levy on Chinese companies importing Australian iron-ore, and to distribute the proceeds to producers being affected by Beijing’s tariffs on Australian produce and products.

“Given that Australia is a clear winner from free trade, the MCA rejects calls for a levy on our iron ore exports which would damage the competitiveness of our world-leading minerals companies and their reputation as low-cost, reliable producers and exporters of quality commodities,” Constable said on Tuesday.

The Chamber of Minerals and Energy of Western Australia also said that such a levy would negatively impact on the competitive of Australian iron-ore miners.

“I understand Senator Canavan made the suggestion at a time when some commodities face uncertainty around exports to China. But to place a levy on iron ore exports from Australia will simply see buyers like China purchase more iron ore from competitor countries like Brazil,” said CEO Paul Everingham.

“This, in turn, would have adverse impacts on both the Western Australian and Australian economies.”

Federal Resources Minister Keith Pitt had maintained that the government would work under the rules based trading system, and would continue to meet its commitments.

Australia is expected to export around 905-million tonnes of iron-ore by 2021-22, earning some A$80-billion in revenues. In 2020, Australia’s iron-ore exports are forecast to reach some 922-million tonnes, while China is expected to import some 1.3-billion tonnes, marking it as the top global importer, and accounting form some 68% of total global imports.

Edited by Creamer Media Reporter

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