Australia’s coal industry is in a flap after an announcement from the Chinese government it would ban the import of certain types of coal.
According to the Wall Street Journal, the directive is primarily aimed at low-grade coal mainly coming from Indonesia and Australia.
“Effective Jan. 1, the government no longer will allow sales or import of coal with 40% or more of ash content and 3% or more of sulfur content, the National Development and Reform Commission said late Monday. Specifically, it will ban lignite – a low-grade coal burned by power plants – if it contains 30% or more of ash content and 1.5% or more of sulfur content, the agency said. Heavily populated areas will have even tougher standards.”
Victoria is the only State in which lignite (brown coal) is mined, but as it’s largely unsuitable for export due to its filthy, low-grade nature; most of it is burned here for power generation.
However, the Sydney Morning Herald reports China is also moving to force power utilities to slash coal import volumes. Up to a quarter of all coal shipped through Newcastle goes to China currently.
“Australia exports an estimated 49 million tonnes of thermal coal a year to China, and a large part of this could be at risk with the ban,” states the SMH report.
It’s not just China clamping down on coal – and even the future of high grade coal exports is looking a little shaky as countries move to rein in emissions by turning to renewables.
Earlier this year a study warned international coal projects, including Australia’s Galilee Basin project, that rely on new export markets such as India face major financial risks.
The coal industry is facing multiple threats, including some investors bailing on the industry.
HESTA, one of Australia’s largest superannuation funds, announced last week it is progressively implementing a restriction on investments in thermal coal across its portfolio. Aside from demonstrating good environmental stewardship, the move may have been influenced or accelerated by the recent launch of Australia’s first fossil-fuel free superannuation fund, Future Super. The new fund, founded by Simon Sheikh, says it will focus its energy related investments on renewable energy and energy efficiency.
