Low-quality Coal Ban Fights against Global Miner

The world’s miners, already smarting from a steep dro in iron ore prices, are about to be hit by a Chinese ban on low-quality coal that comes into effect next year.

The National Development and Reform Commission, China’s state planner, has banned the burning of coal with ash content of more than 16 per cent or sulphur content of more than 1 per cent from 2015 in populous and prosperous eastern cities that are the focus of national efforts to fight air pollution.

That would in effect bar the import of lower-quality coal from Australia, southern Africa and elsewher, since the cities along the east coast are also the biggest consumers of imported coal.

The move comes as a glut of coal builds in China, placing pressure on prices and buffeting local economies in China’s coal heartlands.

“Eastern China coal demand is peaking this year, sooner than expected due to pollution curbs, long-distance transmission from inland power plants and a flood of new hydropower projects coming online,” said Alex Whitworth, of energy consultancy IHS in Beijing.

The new regulations ban the mining or import of low-grade coal with ash content above 40 per cent or sulphur content above 3 per cent. They restrict the transport of coal with ash content of more than 20 per cent or sulphur content of more than 1 per cent.

Daniel Morgan, analyst at UBS in Sydney, said many Australian exporters that did not meet the new specifications could respond by washing or blending coal. “This would require a massive sampling and compliance regime in China in order to be implemented,” he added. (www.chinainout.com)