Mongolian coal exports might rise as China halts Australian shipments

The Tavan Tolgoi mine site. (via SteelGuru)

China has given ‘verbal notice’ to state-owned power companies and steel mills to stop importing Australian coal ‘immediately’, according to a report in S&P Global Platts.

The newswire’s sources said that Huaneng Power International, Datang International Power Generation Company, Huadian Power International and Zhejiang Electric Power all received verbal notice to stop buying Australian thermal and coking coal.

Thermal coal is used for electricity generation, whilst coking coal has a higher energy content and is generally used for making steel.

China restricted imports of cheaper Australian thermal coal in May this year but left higher value Australian coking coal untouched. Australian media have cited the resumption of steady coal supplies from Mongolia, which dropped due to pandemic-related border closures in the first half of the year, as one reason for China to now target Australian coking coal.

Relations between Canberra and Beijing have plummeted and other Australian sectors, including barley and wine, have also been hit by Chinese tariffs and investigations.

Australian media also cited an unnamed Chinese source in a state-owned enterprise as saying that Australian coal imports would now face ‘more challenges’ than Mongolian coal.

“If there are discriminative treatment of countries among largest coal exports to China such as Mongolia, Indonesia, and Australia, the Australian coal will certainly be under tighter control," the source told The Age and the Sydney Morning Herald. "Australian coal will face the most challenging difficulty during custom clearance among all foreign countries."

The number of coal trucks crossing the Mongolian border into China has increased in recent months, with over up to 2000 reportedly crossing this week.

S&P Global Platts also reported that offers on Mongolian and Australian coal at Jingtang Port are currently sitting around the same price point.

Do you want to help the world audience understand the dizzying political changes occurring in Mongolia today? Can you look at local news stories from a global perspective? Join the conversation by contributing to Mongolia Weekly - the first-ever weekly newsletter in English offering commentaries and insights into Mongolian politics, elections, policy & regulatory changes, and foreign policy trends.