The Australian government has approached China seeking more clarity over potential disruption to its coal shipments, after many large importers were told by the government to stop buying Australian coal.
Coal trade between the two countries has been dragged into political disputes on more than one occasion this year, after Canberra's calls for an independent investigation into the origins of the Covid-19 outbreak drew a strong reaction from Beijing.
But Chinese bids have notably dried up in recent days on buyer concerns over whether Australian coal would be able to clear customs, threatening the biggest impact on trade so far.
Canberra is still unsure whether the halt to buying is related to the China's quota system that limits imports of Australia coal, or whether it is something new linked to trade tensions between the two nations. Australian trade minister Simon Birmingham has been unable to secure a meeting with his counterpart in Beijing, despite seeking one on several occasions this year.
Australian coal producers are also looking for more clarity, with few willing to comment on whether Chinese customers have cancelled shipments or cut buying. Most Australian coal mining firms are struggling to make a profit, although a rebound in prices over the past month has offered some relief for exporters of higher-grade coal.
Coal exports to China have made up proportionally more sales of Australian coal in 2020 than in previous years, as other key customers — such as Japan, South Korea and India — struggle to emerge from Covid-19 lockdowns.
The Minerals Council of Australia, the main industry body, downplayed the threat from a halt to sales to China. "The trade with China changes through the year based on a range of factors, including quotas. Australia will continue to see demand for its high quality of coal and the medium term outlook remains positive," the MCA's chief executive Tania Constable said.
Australia sold A$9.7bn ($7bn) of metallurgical coal and A$3.97bn of thermal coal to China in 2019, accounting for 24pc and 18pc respectively of the total value of these exports.
China's thermal coal imports from Australia totalled 45.77mn t last year, according to data from China's general administration of customs (GAC).
Imports were 38.65mn t in January-August this year, up by 14pc from the same period in 2019. But arrivals have slumped in recent months. July and August intakes registered year-on-year declines of 34pc and 55pc to hit 4.09mn t and 2.97mn t, respectively.
Coal trade is much smaller than China's A$79bn of iron ore purchases from Australia in 2019, which made up 82pc of total sales, but is significant enough to make Canberra pay attention. Coal is a politically charged subject in Australia, given the industry provides employment in key marginal seats in Queensland, where a state election will be held on 31 October.
China's customs authorities are stepping up their supervision of Australian coal imports, a GAC spokesman said today.
Questioned further by reporters about China's attitude to Australian coal, the spokesman emphasised the volume of Australian-China trade that he said totalled almost 860bn yuan (A$177bn or S128bn) in January-September.