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09-10-2014, 11:52 PM
Re-introduced Chinese import tariffs to hit our coal miners
THE AUSTRALIAN OCTOBER 10, 2014 12:00AM
Sarah-Jane Tasker
Reporter
Sydney
AUSTRALIA’S struggling coal sector faces further pain after China announced it would reintroduce import tariffs on the bulk commodity.
The economic powerhouse scrapped import taxes for coking coal in 2005 and for other coals in 2007, but the Ministry of Finance yesterday announced the tariffs would return from next Wednesday.
Australia’s coal producers, which will be the most affected, are already struggling with low prices and many local mines are barely turning a profit.
More than 10,000 jobs have been cut from Australia’s coal industry as mines close and expansion plans are shelved, and any move to add more costs will probably renew calls for further consolidation in the sector.
China announced that import tariffs for anthracite coal and coking coal would return to 3 per cent.
Non-coking coal would have an import tax of 6 per cent.
“This is obviously another move to shore up the local coal industry,” Deng Shun, an analyst at ICIS-C1 Energy in Shanghai, told Bloomberg last night.
“Australian coal will probably be worst hit, as it was China’s top coal import source this year.”
Australian producers have been aggressively reducing costs and any new tax will be tough to accommodate.
The price of thermal coal is down about 22 per cent on the past year and is sitting at its lowest level since the second half of 2009.
At its peak, thermal coal was priced at about $US120 a tonne, but it has fallen to about $US66 a tonne for coal shipped through Newcastle.
The price of metallurgical coal, used in steelmaking, has fallen dramatically from its high of $US330 a tonne in 2011 and now sits around $US113 a tonne.
In its latest quarterly report, the Bureau of Resources and Energy Economics said that although coal consumption in key Asia-Pacific markets was increasing, coal prices were expected to remain subdued throughout the rest of the year in response to a continued abundance of supply.
BHP Billiton last month announced 700 job cuts from its Queensland coal operations and its global coal boss, Dean Dalla Valle, warned that further changes were ahead for the struggling sector.
Australia’s coal industry was also hit last month with news that China was introducing a ban on lower-quality coal.
Analysts were sceptical that the proposed ban on high-ash, high-sulphur material would be enacted but warned that in the worst case scenario, it was Australia’s miners that would suffer the most.
The ban was proposed by the China National Coal Association, which has been lobbying to regulate imports because domestic producers are suffering.
Based on industry data, almost half of all Australian exportable thermal coal would not meet a 15 per cent ash and 0.6 per cent sulphur cut-off, which was the suggested quality level for the ban.
Trade Minister Andrew Robb last night said Australia’s embassy in Beijing was “seeking full clarity” from China about the move, which comes as the government is trying to negotiate a free trade deal to abolish tariffs on Australian coal exports.
Mr Robb, who was visiting resources projects in the Pilbara, said: “We are aware of the reports and we are seeking full clarity via our post in China and from Chinese authorities.”
He said Australia last year provided 25 per cent of China’s imported coal, worth $9.1 billion.
THE AUSTRALIAN OCTOBER 10, 2014 12:00AM
Sarah-Jane Tasker
Reporter
Sydney
AUSTRALIA’S struggling coal sector faces further pain after China announced it would reintroduce import tariffs on the bulk commodity.
The economic powerhouse scrapped import taxes for coking coal in 2005 and for other coals in 2007, but the Ministry of Finance yesterday announced the tariffs would return from next Wednesday.
Australia’s coal producers, which will be the most affected, are already struggling with low prices and many local mines are barely turning a profit.
More than 10,000 jobs have been cut from Australia’s coal industry as mines close and expansion plans are shelved, and any move to add more costs will probably renew calls for further consolidation in the sector.
China announced that import tariffs for anthracite coal and coking coal would return to 3 per cent.
Non-coking coal would have an import tax of 6 per cent.
“This is obviously another move to shore up the local coal industry,” Deng Shun, an analyst at ICIS-C1 Energy in Shanghai, told Bloomberg last night.
“Australian coal will probably be worst hit, as it was China’s top coal import source this year.”
Australian producers have been aggressively reducing costs and any new tax will be tough to accommodate.
The price of thermal coal is down about 22 per cent on the past year and is sitting at its lowest level since the second half of 2009.
At its peak, thermal coal was priced at about $US120 a tonne, but it has fallen to about $US66 a tonne for coal shipped through Newcastle.
The price of metallurgical coal, used in steelmaking, has fallen dramatically from its high of $US330 a tonne in 2011 and now sits around $US113 a tonne.
In its latest quarterly report, the Bureau of Resources and Energy Economics said that although coal consumption in key Asia-Pacific markets was increasing, coal prices were expected to remain subdued throughout the rest of the year in response to a continued abundance of supply.
BHP Billiton last month announced 700 job cuts from its Queensland coal operations and its global coal boss, Dean Dalla Valle, warned that further changes were ahead for the struggling sector.
Australia’s coal industry was also hit last month with news that China was introducing a ban on lower-quality coal.
Analysts were sceptical that the proposed ban on high-ash, high-sulphur material would be enacted but warned that in the worst case scenario, it was Australia’s miners that would suffer the most.
The ban was proposed by the China National Coal Association, which has been lobbying to regulate imports because domestic producers are suffering.
Based on industry data, almost half of all Australian exportable thermal coal would not meet a 15 per cent ash and 0.6 per cent sulphur cut-off, which was the suggested quality level for the ban.
Trade Minister Andrew Robb last night said Australia’s embassy in Beijing was “seeking full clarity” from China about the move, which comes as the government is trying to negotiate a free trade deal to abolish tariffs on Australian coal exports.
Mr Robb, who was visiting resources projects in the Pilbara, said: “We are aware of the reports and we are seeking full clarity via our post in China and from Chinese authorities.”
He said Australia last year provided 25 per cent of China’s imported coal, worth $9.1 billion.