By Alfred Bui
January 6, 2023 - Australia may soon be able to export coal to China again after the federal government acknowledged the possibility of resuming coal trade relations with its largest trade partner.
Following the emergence of reports that Beijing allegedly allowed some state-owned companies to import coal from Australia, the Australian Department of Foreign Affairs and Trade said a resumption of normal trade would benefit the two countries.
“It has been the Australian government’s consistent view that the resumption of normal trade across the board between Australia and China would be in both countries’ best interests,” a department spokesperson said in comments obtained by AAP.
“That is true also of coal.”
If the revelation is true, it will mark the first time China has resumed Australian coal imports since it unofficially imposed trade sanctions on Australia in 2020.
The two countries are attempting to repair diplomatic ties after a four-year deep freeze. Foreign Minister Penny Wong visited Beijing to meet with her Chinese counterpart Wang Yi on Dec. 21, 2022.
Among the topics discussed at the meeting were the trade sanctions, the fate of two Australians arbitrarily detained by the Chinese regime and human rights issues.
Senator Wong said the meeting was very constructive but did not elaborate on how the talks might have progressed the above issues.
Reports on China Resuming Australian Coal Imports
On Jan. 5, Reuters reported that three state-owned enterprises and a top Chinese steelmaker were given the green light to import coal from Australia.
According to the report, China’s National Development and Reform Commission summoned China Datang Corp, China Huaneng Group, China Energy Investment Corporation, and China Baowu Steel Group on Jan. 4 to discuss the issue of resuming Australian coal imports.
However, it is alleged the entities will only be allowed to buy Australian coal for their own use.
It is not the first time that reports about a lift of China’s trade blockage have emerged, as similar speculations occurred in July 2022 but did not come to pass.
Australian Coal Mining Industry’s Response
While Australian coal exporters stay hopeful about the news, they appear to be cautious.
The Minerals Council of Australia, which represents large coal exporters across the country, said it was “cautiously optimistic” at reports that Beijing was preparing to lift the trade blockage.
“The normalisation of trade relationships is a positive for the industry,” a Minerals Council spokesman said, reported the Sydney Morning Herald.
“We will wait and see what happens … but we are also committed to the existing customer bases that we have.”
Meanwhile, Australia-China Relations Institute research principal Roc Shi said while the resumption of the coal trade might not generate huge economic benefits for Australia, it would be a step forward in the two countries’ relationship.
“The change is more important politically than economically … This action signals China has made the first step towards mending the relationship,” he said in comments obtained by AAP.
“Technically, it is not difficult for the Chinese government as the ban has never been officially announced … However, the implication is significant as it indicates China’s willingness to improve the bilateral relationship.”
China’s Trade Ban on Australian Coal
In 2020, Beijing unofficially imposed restrictions on a wide range of Australian commodities, including coal, wine and lobsters, after tension escalated between the two countries due to several political and public health matters.
By December 2020, Australia’s fourth-quarter coal exports to China had plummeted by 82 percent, while the country’s largest coal port had stopped all coal shipments to China.
Before the sanctions, Australia was the second-largest coal supplier to China, exporting over 70 million tonnes of coal to the country annually.
While the trade ban significantly impacted Australian coal exporters at the beginning, the coal industry was eventually able to find alternative long-term markets, including India.
This means a resumption of China’s coal imports is unlikely to bring significant gains to Australia’s coal industry.
Meanwhile, China had to import coal from more distant sources following the sanctions, resulting in higher costs for the country’s steel and energy sectors.