Chinese customs has stopped importing Australian coal with the Chinese foreign ministry stating this is a “completely normal” practice. While China has always portrayed itself as playing by the rules, its surprising that it did not provide a guidance or even a hint that such an inspection of Australian coal would take place, if at all that is the case. China had adopted the same strategy towards South Korea for the car market. Its time countries stop depending on China for their revenues.
On Friday, following China banning the import of coal from Australian, Canberra sought to calm investors on the state of bilateral ties with Beijing.
Coal stocks are treading downwards while the Australian dollar continues to remain under pressure.
The Australian dollar had dipped by more than 1% to its 10-day low of $0.7070 on Thursday after a report that Chinese customs had banned imports of Australian coal.
According to data from the Australian Bureau of Statistics (ABS), China is the largest buyer of Australian coal and imported 89 million tonnes worth $10.7 billion (A$15 billion) in 2018.
Ties between the two countries have become strained with Beijing trying to exert its influence and meddling in Australia’s domestic affairs. The relationship took another beating following Australia decision to ban China’s Huawei from building its 5G broadband network.
Intelligence agencies from several countries in the world, including the U.S., see Huawei as a front and a trojan horse for Chinese intelligence, an allegation that the Chinese company has denied.
Regarding the current issue of the coal ban, Australia has asked Jan Adams, its ambassador to China, to seek urgent clarification, said the Australian government. Australia’s central bank and lawmakers have said the move by the port may not be related to bilateral ties.
“I wouldn’t jump yet to the conclusion that this is something directed to Australia,” said Philip Lowe, Governor of the Reserve Bank of Australia to a parliamentary economics committee. “It may well turn out to be that it’s being driven by concerns about the environment in China and the profitability of the coking coal industry in China”.
Shares of Stanmore Coal fell by more than 7% at one point. Shares of New Hope Corp fell by more than 4%, while shares of Whitehaven were also down by 4% and that of Yancoal by more than 3% even though both miners said they were not impacted directly.
Shares of Glencore were down by 3.2% in London overnight. However shares of the BHP Group, Australia’s biggest metcoal producer, was down by just 0.1%.
“When decisions like this have been made in the past at local port level, it was related to domestic supply related issues, environmental issues at a local level,” said Mathias Cormann, Minister for Finance told Sky News. “It was unrelated with anything to do with the bilateral relationship between Australia and China.”
A spokesman for China’s foreign ministry said, Chinese customs were inspecting and testing coal imports for safety and quality issues and that move was “completely normal”.