China has now officially come crawling back to Australian coal producers just two years after implementing a shadow ban designed to cause “economic pain”.
On Monday, ASX-listed mining company New Hope Corporation confirmed to news.com.au that several Chinese buyers had approached them in the past month looking to purchase their coal.
It follows years of tension between the two nations as a trade war broke out during the Covid-19 pandemic.
At the beginning of 2020, China imposed a number of bans on Australian products including iron ore, wine, beef, barley and even lobsters after then-prime minister Scott Morrison called for an investigation into the origins of coronavirus.
Although the coal ban was never official, for the last two years China has shadow-banned the Australian resource, putting it on an invisible blacklist.
The move was designed to punish Australia and bring the economy to its knees.
But now, China has lifted the ban.
Unconfirmed reports first emerged in early January that China was relaxing its coal ban.
The Chinese Communist Party reportedly allowed four of its major importers, including the country’s biggest steelmaker, Baowu, to buy up Australian coal in the first week of January.
According to Sydney Morning Herald, several other Australian mining companies, which preferred not to be named, have also been approached by Chinese manufacturers in the last mount, as well as New Hope Corporation, which has its head office in Brisbane.
In a statement to news.com.au, a New Hope Corporation spokesperson said they had “seen a sizeable increase in inquiries from Chinese buyers in the past month”.
But in an embarrassing moment for China, the Australian mining company isn’t willing to supply them with their coal – because their coal is going elsewhere, including to disputed Chinese territory and enemy of the CCP, Taiwan.
“The group’s current production remains fully contracted to existing customers, including long-term international customers in Japan and Taiwan,” the New Hope spokesperson said.
Prior to the trade spat, China’s coal purchases generated $13 billion for the Australian economy, according to 2019 figures. This then dried up in 2020 practically overnight.
However, Australia bounced back quickly after finding alternate markets in India, Japan, Taiwan and South Korea, among others.
Soaring prices saw Australian coal companies enjoy hefty profits, with revenue for the material tripling in the 2021 to 2022 financial year to $68 billion.
China, however, took an economic hit because of the ban.
The official removal of the coal ban comes just months after China experienced rolling blackouts for several months through the middle of 2022 but was unable to buy Aussie coal – which would have been an easy fix.
Even though more than two-thirds of China’s electricity comes from coal-fired plants, the nation was unable to officially buy any Australian coal for the last several years.
However, Chinese buyers still found ways around it.
Reports from September 2021 claimed China was paying $595 a tonne for Australian coal to come through a middle man to avoid directly going through an Australian producer.
That’s more than double what Australian coal mines were selling it for at the time.
The Australian Strategic Policy Institute estimated that China was losing $US2 billion ($A2.9 billion) a week by paying this premium price to receive the product through a third party.
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