China announced a tightening of the quality of its coal imports in a move that is likely to hit South African and Australian exports of the commodity.

China imported about 54 million tonnes of Australian thermal coal and another 13 million tonnes from South Africa in 2013 – most of which would not meet the tightest proposed restrictions on ash and sulphur content.

The China National Coal Association has sent a proposal to the government calling for low-quality coal with ash and sulphur content exceeding 15% and 0.6%, respectively, to be halted.

Coal oversupply

Government is responding to calls from Chinese coal miners, who are seeing widespread losses due to oversupply and anaemic demand for coal, reports Reuters.

A recent report from environmental organisation Greenpeace found that China’s coal consumption declined in the first half of this year and new Chinese government data suggests that the country’s coal imports have dropped.

Curbing consumption

Estimates indicate that by the end of the year, China’s coal imports could be 8% below 2013 levels, and this is as much to do with sustaining domestic coal companies as perhaps curbing coal consumption and carbon emissions control.

According to reports, China is specifically targeting low-quality coal imports as it moves to support its struggling domestic coal sector.

Coal calorific value

Under the initial drafts the proposed regulations on coal imports would ban coal with a net calorific value of 4 540 kilocalories per kilogram or less.

The Chinese government will limit the use of imported coal with more than 40% ash and 3% sulphur in from the start of next year, according to reports.

On top of the quality thresholds there is also mention of slashing coal imports themselves by around 50 million tonnes over the coming 12 months.

Curbing local production

In terms of local production, the Chinese government is seeking to cut coal production by 10% because low demand is causing economic losses for 70% of China’s coal companies.

China is considering a permanent limit on the overall consumption of coal. The current five-year plan aims for consumption of 4.1 billion tonnes of coal in 2015, up from 3.7 billion tonnes in 2013.

The structure of the Chinese economy is finally starting to change away from the energy intensive basic industries and investment.

Economic impact

China’s economic growth is slowing and coal consumption growth will resume when the economy picks up, according to Greenpeace.

“However, there are signs that the link between coal consumption and economic growth has changed substantially,” stated the organisation.

According to Greenpeace, a return to the economic growth rates of the previous decade seems unlikely in China, but more fundamentally, the growth pattern of the economy has changed.

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