China’s coal industry lashes Australia for ‘irresponsible comments’
A Chinese coal industry official has criticised Australia for biting the hand that feeds it at a coal conference in Beijing, a rare public acknowledgement that diplomatic tensions could be the cause of slowing trade.
“You can’t earn Chinese money and then politically make irresponsible comments about China and become unfriendly,” said Cui Pijiang, director of the China Coking Industry Association.
“I’m afraid … this is something the Chinese government can’t tolerate.”
The unloading of Australian coal at Chinese ports has slowed since January, hitting prices, but the Chinese government has denied any ban on Australian coal.
Instead, China’s foreign ministry has pointed to tougher environmental inspections as the cause.
But Mr Cui’s comments in a speech at the Global Coking Coal Summit in Beijing, to an audience that included Australian embassy officials, and representatives from BHP, was a rare public articulation that political factors are at least partly behind Australian coal facing extended inspections.
“Although businesses can conduct effective, friendly and reasonable cooperation between the two countries, the political factors have to be considered,” he said.
Politics and the economy are always indispensable to each other, he said.
Immediately before his comments, Mr Cui pointed out the Australian embassy was in the audience, saying Australia was the largest coking coal exporter to China.
Analysts in the audience were surprised by the political attack in a business forum.
One audience member said: “We’ve all been chasing this phantom of what’s driving this behaviour and this was a much clearer articulation – in an inappropriate forum.”
The China Coking Industry Association is a powerful lobby group trying to keep the domestic coal industry alive as it came under pressure from environmental policies, others said.
Chinese steel mills had preferred Australia’s higher quality imported coal as the government introduced tougher emissions policies. Cui said China consumes 600 million tonnes of coking coal each year and imports 69 million tonnes, but argued China should meet its domestic needs.
Australian diplomats have attended a spate of coal industry conferences across Beijing and Shanghai in the past fortnight to try to understand why Australian coal was facing a slowdown and try to determine how long it will last.
Australian coal appears to have been singled out among foreign suppliers.
The conference heard that a restriction policy on overall imported coking coal levels would become tougher in 2019.
Fenwei Energy Information vice-general manager Sarah Liu said China’s coal imports were 280 million tonnes last year, but the policy would restrict annual imports to 200 million tonnes by 2020. This target was “quite challenging”, she said.
As imports of coal fell in 2019, domestic coking coal production would increase, she forecast.
Australia was the top coking coal importer in 2018 at 28 million tonnes, but Mongolia was catching up at 27 million. Russia saw coal imports fall 4.2 per cent last year, but would increase this year, she predicted.
Imports from Canada had halved. US coal imports had been suspended since August because of the trade war. She didn’t make a 2019 prediction for Australian coking coal imports.
The Chinese government had initially aimed to encourage high-quality imports and discourage low quality imported coal, but the restriction policy had been implemented with no differentiation, she said.
Director of coal for analysis firm HIS Markit, Marian Hookham, said: “Producers on the ground in Australia are not articulating concerns from the supply side, and those with contractual obligations continue to feel assured that those will be fulfilled.”
She said the impact would be more apparent on lower quality imported coal, which formed part of a blend that can be more easily replaced Chinese coal.
The deputy director of the China Iron and Steel Association, Shi Hongwei, told the conference reform to the steel industry and upgrading furnaces would drive demand for high quality coking coal, even though overall demand for coal would fall.
On Thursday, China’s foreign ministry separately criticised Australia’s telecommunications legislation that allows “backdoors” to be installed.
Australia had barred Huawei from participating in the 5G network because of fears China installed backdoors on Huawei.
“It is baffling how the country concerned could whip up ‘seurity threats’ posed by other countries or companies … while engaging in acts that endanger cyber security themselves,” said Chinese foreign ministry spokesman Lu Kang.
Source: Sydney Morning Herald