China is mulling an end to its near two-year ban on Australian coal amid tight global coal supplies in the wake of the Russia–Ukraine war.
There are also fears European-led sanctions on Russian energy will increase competition for coal from China’s main suppliers such as Indonesia.
Bloomberg reported that a proposal will be submitted to senior leaders, with a recommendation Beijing should resume Australian imports.
Australian Foreign Minister Penny Wong and Chinese counterpart Wang Yi met last week for the first talks between top diplomats from the two nations since 2019, with Wang suggesting China is willing to work to get relations back on track.
Removing a ban on Australian shipments will provide China far more flexibility when procuring fuel for power plants or metallurgical coal for steelmaking. Australia makes up approximately 30 per cent of global coal exports, making it the largest supplier behind Indonesia.
Asia’s benchmark Newcastle coal surged to a record last month amid intense competition for a dwindling pool of available cargoes. A brutal heatwave has also turned deadly across large swathes of China, with officials starting to curtail power to factories to ease the strain on the grid and prevent power shortages.
As the decision is left with Chinese leaders, some companies are already preparing to resume imports, according to sources.
When asked about the ban at a regular briefing in Beijing on Thursday, Chinese Foreign Ministry spokesperson Wang Wenbin said Australia had an opportunity to “build up positive energy and create favourable conditions for sound and steady development between China–Australia trade relations”.
China, previously a major consumer of Australia’s coal, implemented an unofficial ban in late 2020 as hostilities between Canberra and Beijing escalated over a decision to bar Huawei Technologies from building a 5G network, and after former Prime Minister Scott Morrison led calls for an independent probe into the origins of COVID-19.
Earlier curbs were imposed on a string of Australian imports – from coal to wine to beef and lobster. The loss of Australian coal, however, was particularly painful for China, which grappled with energy shortages last year.