Coal news and updates

Australia must hold urgent talks with China to exempt coal producers from new tariffs in a free trade agreement due to be completed this year, an industry body said, following Beijing's move to reintroduce coal tariffs after nearly a decade.

 

China, the world's top coal importer, said on Thursday it would impose import tariffs on the commodity in its latest effort to prop up ailing domestic miners who have been hit by rising costs and plunging prices.

 

The tariffs would hit Australian producers hardest as its main coal export rival, Indonesia, is exempt from the tariffs through the Association of Southeast Asian Nations' free trade agreement with China.

 

China took nearly a quarter of Australia's metallurgical coal exports in the year to June 2014, buying A$5.5 billion of the coal used in steel mills. It also took A$3.5 billion worth of thermal coal, accounting for about a fifth of Australia's exports of coal used in power stations.

 

The Minerals Council of Australia called the new tariffs a poor decision and pressed the Australian government to ask Beijing to reverse the decision, saying it would ultimately hurt Chinese consumers by raising coal costs.

 

"This decision raises the stakes on the outcome of talks on a free trade agreement with China due to conclude next month. In those negotiations, the Australian coal industry has sought the immediate abolition of tariffs on Australian coal exports," Brendan Pearson, chief executive of the Minerals Council of Australia, said in an emailed statement.

 

MINERS HIT

 

If the tariffs are not addressed in an Australia-China trade agreement, exports from BHP Billiton , Glencore Plc, Rio Tinto , Anglo American and smaller producers, including China's own Yancoal Australia Ltd, will be heavily impacted.

 

"This news is more bearish than we had anticipated for thermal coal, as we had expected coal import tariffs to lift but at a lower 3 percent," UBS analysts said in a note.

 

BHP, Glencore and Rio Tinto had no immediate comment on the Chinese tariffs. Anglo American declined to comment.

 

Trade Minister Andrew Robb said he did not expect the tariff announcement to hold up talks for concluding a free trade pact with China and said he expected the impact on Australia's second-largest export would be limited.

 

"We have got a timeline that should take us to conclusion before the end of the year," he told Australian Broacasting Corp radio.

 

He said Australia has among the highest quality coal in the world and China is likely to consume 1 billion tonnes more coal over the next five years, and he expected Australia would be a competitive source to fill that demand.

 

"So it's not a good thing for our coal industry, but it's not the end of the world," he said.

 

China's Ministry of Finance said in a statement on Thursday that import tariffs for anthracite coal and coking coal will return to 3 percent, while non-coking coal will attract a 6 percent import tariff.

 

The tariffs come on top of measures that China announced in September to curb pollution, banning the import and local sale of coal with high ash and sulphur content starting in 2015. Those limits were not imposed on coal burned in power stations.

 

Some 70 percent of China's coal miners are producing at a loss due to a flood of new supply from Indonesia and Australia, which has sent local prices down to a six-year low.

 

The lower prices have left a more than a third of Australian producers also operating in the red, which has led to some mine closures and thousands of job cuts.

 

Shares in Whitehaven Coal slumped 7 percent in early trade on Friday, while BHP and Rio Tinto both fell more than 2.5 percent.

 

 

Source: Reuters