Australian coal production hiccup won’t affect China’s energy supply

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Abnormal weather patterns in New South Wales, a key coal-producing state in Australia, are unlikely to have a very negative impact on coal supply to China, industry analysts said, against the backdrop of China’s restrictions on Australian coal amid a quality issue and Beijing’s set goal to achieve carbon neutrality by 2060.

Parts of New South Wales have been declared natural disaster areas because of heavy rainfall in recent days, casting shadows over production by local coal mines. Those mines account for two-thirds of the black coal production in Australia, Futures Daily reported on Monday.

China is also the state’s largest trading partner and the largest export market.

Driven by the disruptions, coal prices have risen in recent days, with steam coal up nearly 8 percent last week.

Although the higher prices could affect global coal supplies, there won’t be much negative impact on China, which has diversified its energy structure to rely more on friendly trade partners such as Russia, Indonesia and Mongolia, several industry insiders told the Global Times on Monday.

China consumes around 4 billion tons of coal a year, and around 200-300 million tons come from Australia, accounting for less than 8 percent of total consumption, Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, told the Global Times on Monday.

However, after quality issues that led to the suspension of coal imports from Australia by Chinese customs, Australian coal exports had suffered greatly.

Data released by the Australian Bureau of Statistics showed that, with no steam coal exports to China for the first time since 2000, Australia’s steam coal exports plunged to 15.77 million tons in January.

The hostile approach of the Morrison government in assaulting China on a wide range of fronts has aggravated frictions between the two countries, bringing bilateral relations to a historic low. Chinese industry insiders told the Global Times that they are hesitating to do business with their Australian counterparts, fearing for their safety if traveling there.

Given the hurdles between the two countries, the recent weather situation has become almost negligible in its impact on the Chinese coal industry chain, which has a strong back-up in domestic production capacity and diversified import sources elsewhere, said Lin.

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