China bans Australian coal imports - report

Australian coal exports to China were worth A$14 billion ($14.8b) in 2019. Photo / 123RF

China has black-listed Australian coal, according to state-owned media, in a crushing new blow in the worsening trade war.

The Morrison Government is now urging Chinese authorities to immediately rule out the coal import ban.

Chinese state-owned media reported on Sunday Australia had been "shut out" of a new coal policy that gave power plants approval to import coal without customs restrictions from every country but ours.

The exports were reportedly black-listed at a high-powered meeting between National Development Reform and Commission and Chinese power companies on Saturday.

The Global Times reported the new policy was designed to stabilise coal prices.

The government mouthpiece also published an opinion piece blasting Australia as an "anti-China pioneer" with a "sense of anxiety" about being invaded.

"Due to its high degree of dependency on the US for security and the growing concern about the rise of China in the region, Canberra is very worried that Washington's strategic contraction will aggravate risks of it being abandoned by Uncle Sam," the op-ed read.

More than 50 vessels containing hundreds of millions of dollars worth of Australian coal were stuck anchored off Chinese ports last month as trade tensions continued between the two partners.

This followed Chinese officials issuing verbal warnings in October to companies to halt buying thermal coal from Australia.

"I urge Chinese authorities to immediately rule out these reports of what, if accurate, would appear to be the use of discriminatory practices against Australian coal," Trade Minister Simon Birmingham said.

"It is certainly unacceptable to see a circumstance where governments and businesses find out about decisions of other businesses or other governments, purely via media outlets.

"We reiterate that all terms of our free trade agreement and world trade obligations between Australia and China should be upheld and respected."

Senator Birmingham said officials had raised concerns with Chinese counterparts and through the World Trade Organisation – where Australia is also considering challenging tariffs on barley and wine.

"We remain willing to engage in dialogue to resolve these issues together," he said.

Australian coal exports to China were worth A$14 billion ($14.8b) in 2019 and the product is 1.5 times more efficient than most other competitors'.

Senator Birmingham said although China was a significant market for coal, Japan, India and Vietnam were also important.

Major coal importers to China include Australia, Indonesia, Russia and Mongolia.

But the Global Times wrote Mongolia and domestic producers could take a large share from Australian coal.

Institute of Energy Economy at the Chinese Academy of Social Sciences director Wang Yongzhong was quoted saying Mongolia had a geographic advantage that allowed for lower transportation costs than other exporters.

"The relationship between China and Australia has been deteriorating and Australia is gradually losing the Chinese market," Wang said in the article.

"Even the US and Canada could be import sources, though they are the last choices as transportation costs would be very high.

"China planned to reduce 100 million tons of coal consumption annually by 2030 to finally accomplish its carbon-neutral goal before 2060, which means fading demand in the coal market.

"An absence of Australian coal in China is actually beneficial to all other market suppliers."

But Scott Morrison said sourcing coal from other countries would be a bad outcome for the environment and had the potential to harm the communist nation's ability to reduce carbon emissions, as well as the trading relationship between Australia and China.

"It really is a lose-lose here," the prime minister said.

"Other countries have 50 per cent higher emissions than Australian coal."

Australian Prime Minister Scott Morrison. Photo / Getty Images

Morrison said there would be opportunities to have a direct conversation about the trade issues with Chinese President Xi Jinping over the next year.

"I hope it happens sooner than that but there is no barrier to that occurring on the Australian side," he said.

He said the development was likely to create a lot of uncertainty for many other trading partners, too.

The move is a further blow in the strained relationship between Australia and its largest trading partner.

China last week slapped a sixth Aussie beef exporter with trade restrictions, on top of sanctions imposed across goods in several industries including wine, seafood and barley.

Senator Birmingham confirmed that China appeared to be using regulatory mechanisms to disrupt trade over a couple of years.

However, he confirmed Australia wanted to continue to work with the superpower in the future.

Labor agriculture spokesman Ed Husic said the government needed a game plan.

"A lot of jobs and a lot of money is riding on this," he said.

"This is not a trade issue, this is a diplomatic one, and our coal mining communities should not be hurt as a result.

"We do need to see definite plans from the government on how to resolve this."

Former opposition leader Bill Shorten told Today he expected the Morrison government to appeal to the World Trade Organisation.

He said Australia must try to improve relations with China but also had to diversify its markets.

"One thing we can do is we can buy a bit more Australian this Christmas when we're in the shopping aisles from wine to seafood," Shorten said.