Qld mine on the brink as China coal ban delivers $6b blow

 

A central Queensland coalmine is facing potential closure, while China's economic coercion has caused the "largest ever fall" in thermal coal exports in a blow to the state's economy and jobs.

While the resources sector kept the country going during the COVID-19 shutdown, the industry has been dealt a $6 billion body blow by China's "informal restrictions" on Aussie coal.

A Federal Government report, Resources and Energy Quarterly, to be released today warns of difficult conditions with China's actions creating "the largest ever fall in (coal) exports" in the September quarter and the "its largest fall for more than 30 years in 2020".

There are difficult times ahead for Australian coal, following China’s restrictions, fall in demand for thermal coal and competition from gas.
There are difficult times ahead for Australian coal, following China’s restrictions, fall in demand for thermal coal and competition from gas.

It warns the "potential closure" of the Newlands coal mine in the Bowen Basin as it approaches the end of its life will contribute to the difficult conditions in coming years.

Department of Foreign Affairs and Trade data shows Queensland exported $9.7 billion worth of coal, thermal and metallurgical, in 2019-20 prior to the informal restrictions.

The restrictions included ships carrying Australian coal being prevented from docking and steel mills in China being told not to buy the product.

The report also warned a reduction in coal being used in energy production globally was also taking a toll and increasing competition from gas.

National thermal coal exports and now expected to drop from $21 billion to $15 billion in 2020-21.

"Signs are more positive in early 2021, with earnings recovering and volumes picking up, as coal previously destined for China's ports was successfully diverted," the reported stated.

While metallurgical coal, typically used for making steel, is expected to see an increase in export values by up to $7 billion there were difficult headwinds predicted as China seeks to buy more of the resource from Russia and Canada.

"Metallurgical coal prices lifted sharply in January, effectively reversing the fall which followed China's informal restrictions on Australian metallurgical coal imports in October 2020," the report stated.

China’s restrictions on Australia coal have had an impact on thermal coal exports.
China’s restrictions on Australia coal have had an impact on thermal coal exports.

"The most significant upside risk to prices is likely to be potential for extreme weather events over autumn, which has potential to disrupt shipping from Queensland."

As tensions grow between the two countries, China has targeted Australia with a variety of sanctions or trade restrictions over the past 12 months including on beef, barley, wine, coal, seafood and timber.

Acting US ambassador Michael Goldman has said the US will "absolutely have Australia's back".

"I'd say just keep on doing what you're doing but with confidence that the United States and other like minded democracies see an interest in having Australia succeed," he said.

Originally published as Qld mine on the brink as China coal ban delivers $6b blow

 



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