LAUNCESTON, Australia, April 17 (Reuters) - Australia may become the swing supplier of coal to China after the world's biggest importer of the fuel ended its unofficial ban on imports from the world's second-biggest shipper.
Japan, India and European countries gained at China's expense, boosting imports from Australia. China increased shipments from Indonesia in 2021 and Russia in 2022, data from consultancy Kpler showed. Australia supplied 36.5% of Japan's coal imports in 2022, up from 27.6% in 2019.
The country's manufacturing industries have long relied on Australian coal in their production process, which is considered affordable and reliable. China is the leading consumer and producer of coal and as of last year, it imported more than 290 million tons.
China has removed all remaining curbs on Australian coal imports, putting an end to trade restrictions that have been in place since 2020.
Tokyo | China imported US$42 million ($63 million) worth of Australian coal last month, according to government data, the first confirmation that Beijing has lifted an unofficial ban on the key export.
China is Australia's largest two-way trading partner in goods and services, accounting for nearly one third (32.2 per cent) of our trade with the world.
China is the second largest importer of coking coal at 63.8 mt, up 17 per cent YoY, as against 54.7 mt in 2021.
Export revenue
Australia exported $112.8 billion worth of coal in FY 2022.
Australia is one of the world's largest exporters of coal, iron ore, lead and diamonds, with ores forming around 23.5% of Australian exports. According to the Minerals Council of Australia, iron ore is the country's largest source of export revenue.
Australia's top three coal producers, Glencore, BHP and Yancoal, recorded hefty profits last year from coking and thermal coal. These three companies control well over half of Australian black coal production and all have said they are enjoying great cash margins (reflecting profit after operating costs) of about 45%.
Indonesia remained the world's largest exporter of coal (by weight) with total exports of 455 Mt in 2019. Australia ranked second, at 395 Mt, although it remains at the top of the league table ranked by energy and economic values. China was the largest importer of coal in 2019 at 308 Mt, followed by India at 249 Mt.
Japan is now the destination for 35.1% of Australia's coal exports, with India 15.8%, Korea 14.1%, Taiwan 9.2% and the EU at 7.7%”, the shipbroker concluded.
As a fossil fuel burned for heat, coal supplies about a quarter of the world's primary energy and two-fifths of its electricity. The largest consumer and importer of coal is China. China mines almost half the world's coal, followed by India with about a tenth.
Resources and energy also play an important role in the China-Australia investment relationship. China is an important source of foreign investment in Australia. Foreign investment in Australia means greater infrastructure, more productivity and more jobs for Australians.
From Japan, Australia imports vehicles, refined petroleum, machinery and tyres. More recently, Japanese investment into Australia has been expanding into renewables; financial services; infrastructure; information and communications technology; property; food; and agribusiness.
The worth of financial assets would fall by one fifth on average, and by one quarter in Australia. An end to trade across a bamboo curtain would hit Australia, since we export more resources to China than anywhere else and we import more goods from China than anywhere else.
China is in no rush to buy thermal coal from Australia even after lifting the import ban, as the former still has enough options globally to meet its requirements, particularly for medium calorific value fuel, a senior analyst from the International Energy Agency told S&P Global Commodity Insights.
Beijing imposed an unofficial ban on coal trade with Canberra in 2020.
In 2022, China bought 1.1 billion tonnes of iron ore, 65% of which were from Australia. For Beijing, commodities from Australia are important for its efforts to revive the pandemic-hit economy. Iron ore, for example, is a vital component of its steel industry.
Australia possesses 10% of global recoverable black coal resources, sufficient for around 125 years' production at current rates. About 87% of coal production is exported; of the remaining coal used domestically, 88% is used for power generation nationally.