Chinese Foreign Minister Wang Yi called his Mongolian counterpart N. Enkhtaivan this week to tell him that China wants to swiftly reopen border crossings with Mongolia following weeks of gridlock.
The call suggests China wants better access to Mongolian coal as a ban on Australian imports takes effect.
Mongolia’s coal exports to China rose dramatically in September after China verbally told its producers to stop buying Australian coal, but nosedived again in November after a local outbreak of Covid-19.
Truck drivers shuttling coal over the border crossing at Gashuunsukhait had to take one Covid-19 test on either side, causing huge delays - videos posted to social media showed long lines of trucks and crowds milling around as sources indicated that up to 3000 trucks were stuck.
On November 23 only 211 trucks crossed the border (down from thousands per day months before), and on November 25, less than 20 trucks crossed.
According to Chinese state media, Yi said that “China is ready to discuss [the] expeditious resumption of normal personnel and cargo flows at border crossings with Mongolia while ensuring good prevention and control of COVID-19.”
Wang Yi also said China wants to ‘speed up’ the resumption of work on ‘key projects’. It is unclear what projects he was referring to.
Whilst coal was not explicitly mentioned in Chinese media reports on the phone call, Enkhtaivan released a statement mentioning the ‘sustainable trade in mining products.’
In addition, Wang Yi’s timing is interesting: his phone call to Enkhtaivan came around the same time as the state-owned Global Times confirmed that Chinese power plants are free to import coal from several countries ‘except Australia’.
China unofficially banned Australian coal months ago, but the Global Times article suggests that the ban is now official. The move prompted Australia to refer China to the World Trade Organisation, as it stands to lose up to $A14 billion per year.
The Times’ article quoted Wang Yongzhong, an energy director at the Chinese Academy of Social Sciences, as saying that China will source coal from Mongolia, Russia and Indonesia as alternatives.
However, there are indications that Indonesia may not be able to make up the shortfall - Mongolia actually became China’s top supplier of coal in October after Indonesian imports fell dramatically (with Russian supplies in second place).
In addition, China’s agreement to buy more coal from Indonesia has been criticised for being ‘light on details’ and ‘a long way for making up for lost volumes from Australia.’
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