The Chinese government has reportedly banned Australian coal amid rising political tensions

Chinese officials inspect coal imported from Australia in port of Rizhao, Shandong province, (Jie Zhao, Corbis via Getty Images)
  • The Chinese government has issued a “verbal notice” to steelmakers to stop buying Australian coal, reports claim.
  • Citing unnamed sources, reports have emerged from the commodities sector in recent days claiming state-owned ultilies and mills have received the message.
  • Without written confirmation however, it’s difficult to tell what the impact will be on the market worth $14 billion a year to Australia.
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In what could become a serious threat to the economy, Australia’s largest trading partner has reportedly sworn off its second-biggest export.

Reports circulating from the resource sector suggest the unofficial ban in China has been in place since late last week as tensions between the two nations flare.

“State-owned utilities and steel mills in China received verbal notice from China’s customs to stop importing Australian thermal and coking coal with immediate effect,” commodities reporter S&P Global Platts wrote, citing several unnamed sources.

It noted that while Australian coal has proved “resilient”, exports to China had dropped “markedly” in August with analysts not expecting a bounce this year.

The “verbal notice” did not detail a timeline for how long the ban would be in place. With Australia selling nearly $14 billion worth of the stuff to China last year, the reports are being watched very closely by the Trade Department.

Trade Minister Simon Birmingham said in a statement that the government has “had discussions with Australia’s resources industry, who have previously faced occasional disruptions to trade flows with China.”

“Australia will continue to highlight our standing as a reliable supplier of high-grade resources that provide mutual benefits,” Birmingham said.

Australia can press its case all it wants, however, but as one Shanghai-based trader told Argus Media, the ban doesn’t even have to real for Chinese steelmakers to begin shunning Australian coal.

“Meanwhile, enquiries on U.S. coal are heard to be on the rise,” they said.

Another said they “suspect that this might be a case of tightening import quotas rather than a complete ban”.

Without written guidance from the Chinese Communist Party (CCP) however, the impact of the ban, or restriction, remains unclear.

It may also not be politically motivated. China has moved this year to restrict total coal imports as it looks to prop up its ailing domestic sector.

Coming at the same time that the Chinese government takes potshots at Australia’s other exports, however, including barley, wine, beef, and even education and tourism, it’s certainly possible.

The difference is that selling coal to China is one habit Australia really doesn’t want to quit.