CHINA may soon implement new quality-based restrictions on thermal coal imports in an effort to reduce pollution across the country.
The restrictions, proposed by the China National Coal Association, would see coal containing high levels of sulphur and ash prohibited from use in China, which is currently recognised as the world’s largest coal consumer.
Consumption across the country would be restricted in line with pollution levels, with imposts on coal containing more than 16% ash and 1% sulphur across heavily-populated coastal cities including Beijing, Shanghai, Guangzhou and Tianjin.
In other areas, coal with more than 40% ash and 3% sulphur would be prohibited from burning.
Initial reports cited concerns among Australia’s coal producers that the ban would lead to further financial strain across the industry, with Macquarie estimating that 48% of all Australian thermal coal exports could be affected.
Institute for Energy Economics and Financial Analysis (IEEFA) director Tim Buckley said the ban posed a risk for Australian miners.
“The Eastern coastal areas of China are where global seaborne thermal coal imports, including those from Australia, compete – the western inland coal markets of China are not contestable,” he said.
“This proposal will particularly hit Adani and GVK’s plans to develop the Galilee, given the raw ash content from much of the Galilee thermal coal basin is generally 25-30% ash.
“NSW projects will also be affected, with Hunter Valley coal developments particularly impacted.”
However, other reactions are more optimistic.
“There is no evidence to suggest that Australian coal exports to China would be significantly affected by the proposed regulations,” Minerals Council of Australia executive director Greg Evans said in a recent statement.
“Almost all Australian black thermal coal will be well within the threshold for ash, sulphur and energy applying to imported coal or coal transported more than 600km, and in the unusual circumstance an Australian coal product might have higher ash or sulphur content it can be blended with other Australian coal to meet the target.
“Fossil fuels – coal, oil and natural gas – will be required for a long time yet to meet rapidly growing world energy demand. Renewables may have a growing role, but they will continue to account for a relatively modest proportion of the global energy mix for the foreseeable future.”
The proposed regulations are currently under review by the National Development and Reform Commission.