The grim outlook for Australian coal

The coal industry people are trying to paint a better picture, but the simple fact is that China's new rules (coming into effect Jan 1) on coal quality will likely affect about $3billion a year of coal exports. This is in an industry already struggling as demand for coal worldwide is on the wane, with one person saying the industry is "oversupplied".

Whatever the case, coal is looking more and more like a dying industry.

China says it will ban from January 1 the importing of coal with more than 16 per cent ash and 3 per cent sulphur to the Yangtze River Delta near Shanghai and the Pearl River Delta near Hong Kong. They will join the conurbation of Beijing-Tianjin that already has the tougher restrictions in place. 

This will potentially hit as much as 25 million tonnes of Australian coal sold annually to China, according to the Bureau of Resource Economics. Some of this coal can be washed, or blended, to reduce the level of ash, but it comes with a cost to an industry already axing jobs and slashing costs. 

"They've been tossing these numbers around for a while and only now come to a landing," says Mark Melatos of the School of Economics at Sydney University. "It seems to be interesting timing," he says, since it comes directly ahead of the next round of UN talks. 

 ....................... 

Kendall says the higher ash product some Australian thermal coal exporters are supplying China was developed at the behest of the Chinese buyers. On his reckoning, the new regulations can hit as much as 40 million tonnes of Australian shipments. This is worth close to $US3 billion ($3.35 billion) at present prices. 

Coal miners can wash the coal, but whether the Chinese buyers will pay a premium for cleaner coal is doubtful. Read more  

So why build a bloody great new coal mine at Abbott Point? 

Of course industry spokespeople are saying it's just a "downturn". Oh really?