China’s Embargo on Aussie Coal Causes Inferior Grade Mongolian Imports to Surge

Guest essay by Eric Worrall

Green revolution anyone? Despite China’s aggressive geopolitical games, queues are forming at Australian coal export ports as other countries awaken from their Covid-19 economic slumber.

China’s ban on Australian coal causes surge in imports from Mongolia, but difficulties remain

Beijing’s ban on Australian coal has resulted in increasing imports from Mongolia, meaning the country could retake its position as China’s top supplierBut Chinese users could bear brunt of the Australian ban due to higher costs for alternatives, transport difficulties and a drop in quality

Su-Lin Tan
Published: 6:30am, 28 Oct, 2020

Chinese steel mills and power stations have started buying more coal from Mongolia after Beijing imposed a ban on imports from Australia, but price, quality and logistical difficulties mean it will not be easy for some users to make the switch.

While politics might have played a role in the decision to shut off Australian coking and thermal coal, the practical difficulties in doing without it may force a rethink of the ban over time, analysts said.

Coal from Mongolia, which borders China to the north, is the most obvious replacement for Australian coal, particularly due to the inability of suppliers located further away – such as the United States, Russia and Canada – to meet a short-term increase in demand, S&P Global Platts said in a recent update.

But while users in northern China will largely be able to make the change, those in southern China will find it more difficult to do so because of the logistical difficulty and expense of transporting coal from Mongolia. This is likely to force many to rely on more expensive domestic coal if they can no longer access Australian imports.

Read more: https://www.scmp.com/economy/china-economy/article/3107269/chinas-ban-australian-coal-causes-surge-imports-mongolia

So far the ban does not appear to have impacted Australia, with reports of queues forming at Australian coal export ports.

Australian coal exports hold up despite China ban

Published date: 27 October 2020

Australian coal shipments are holding up in October despite Chinese restrictions on imports and wild weather that has buffeted the east coast of Australia over the past four days.

Queensland coal shipments are tracking in line with September and those from New South Wales (NSW) are ahead of September, according to initial shipping data compiled by Argus. Shipments are being bolstered by increased demand from economies outside of China that are reopening following Covid-19 lockdowns. 

Shipments with confirmed destinations in China fell significantly in September and have remained depressed in October, but all the main ports show over 1mn t of shipments to unconfirmed destinations in both months. This is an increase from previous months and could be shipments that will make their way to China eventually or shipments that will be resold because they cannot get into China, following Beijing’s instructions that key steel producers and power utilities stop importing Australian coal.

Read more: https://www.argusmedia.com/en/news/2153846-australian-coal-exports-hold-up-despite-china-ban

I can understand other countries taking up some of the slack, but doesn’t it seem odd that the Chinese import embargo has barely had an impact? Perhaps some Chinese regional leaders are quietly ignoring the import ban.

56 thoughts on “China’s Embargo on Aussie Coal Causes Inferior Grade Mongolian Imports to Surge

  1. Heading into the Northern hemisphere winter , I dont think Chinese regional party bosses will be worrying too much about restrictions on coal imports they use to run power stations and steel mills and other industrial processes.

      • Ha ha. I had disc-brake rotors that lasted 20+ yrs on my car. Finally had to replace them, and the new ones warped badly after a year. Bet heavily those were made of legendary Chinese steel…..

    • fred250, using Mongolian coal will also sharply raise sulfur and mercury emissions, as well as a variety of other noxious elements. The quality of Mongolian coal is not just due to high ash content, it’s the contaminants, which are amongst the worst in the world. How many of us think China will shoot itself in the foot?

      • I suspect there might be a shift between Indonesian coal and Australian coal.

        China buys from Indonesia instead of from Australia,

        …. and the usual customers for Indonesian coal buy from Australia.

      • Ron, I find your claims about Mongolian coals to be remarkable.

        Generally, Mongolian coals are young; many have a very low sulphur content (0.2%), and the usual range of ash contents which varies with depth. The main reason/value for exports is low the low sulphur content. I don’t know where you would get a lower content coal. Looking at some Shanxi Coals like Shemu and similar, they are not as good as many of the Mongolian sources. The lignites from Baganuur and Nalaikh, for example, and to to 90-100 metres think and have a low ash content.

        It should probably be mentioned that Mongolia has so much coal (about 1 trillion tons) customers have lots of choices. The mines near the southern border were the obvious first choice. Mongolia was getting only $11/t as recently as 2015 to truck it to the border.

        As for the “more CO2” argument mentioned by fred250, this is incorrect. Mongolian coals being young, contain a higher hydrogen mass fraction than old coals. Hydrogen has 4 times the energy per kg of carbon. Lignite has lower CO2/MJ of heat released, which explains why Germany is building 26 new coal-fired power plants to burn it, switching away from hard coals. The goal is the same electrical power output with lower CO2.

        Another aspect of this topic is that power stations and industries cannot easily switch coal grades. Burners are created to burn particular coals, usually with a fairly narrow range of ash content. A power station can be built to use 35% ash coal, but cannot use 30% or 40%. Many things have to be just right. The reason users in northern China can use the Mongolian coals is they were built to use them in the first place. The range of coals found in Inner Mongolia (a province) are essentially the same as those in Outer Mongolia (the country). Coking coal from Alag Tolgoi in Mongolia is all shipped to China. The deepest portion of the mine is used for that. It is 20% ash and lass than half (3.2%)the hydrogen content of Baganuur lignite (6.6%). The lignite has more H than wood!

    • > Using Mongolian coal will also significant increase China CO2 emissions.
      Fred, I think you should reconsider this. For the same amount of energy you have to burn approx. the same amount of Carbon. So while other pollution may be greater due to impurities, CO2 should stay roughly the same. Actually, the situation may even be better if we include transportation. From Mongolia (a neighbor) they surely use train. From the far away Australia you have to use ships, and while ships are much more efficient (around the 1/3 of energy used per ton per km), the distance is much longer and they only ship to ports, so you need a subsequent train route anyway to the costumers. Furthermore train’s CO2 footprint can further be reduced if electricity is used, and not just because you have non-fossil means of energy generation. Regenerative braking may reduce overall energy need significantly.

      • No, lower quality coal does not contain the same energy density . You need to burn more of it.

        Hence more CO2.. which is not a problem.. All the extra real pollution IS a problem.

        • > No, lower quality coal does not contain the same energy density
          🙂 They have lower energy density because they have lower CARBON density. Energy comes from burning carbon (and, to a lesser extent, a few impurities, but carbon is dominant). Per output energy, various carbon types are almost the same in terms of CO2 production, the purest (antracyt) being the worse. https://www.eia.gov/coal/production/quarterly/co2_article/co2.html

          Again, you have to burn MORE bad quality coal to get the SAME AMOUNT of carbon burned, so you get more or less the same amount of CO2 emitted per unit energy.

    • Don’t you worry about that. The leftist greenies will be all over them for that. Oh, wait, it’s only Western countries they attack. Meanwhile, they’ll be busy telling everyone that China is ‘leading the world in moving to zero ’emissions”. So what is it that leftist greenies really hate? Is it CO2 or is it Western society?

    • Not quite as simple as first appearances.

      Depends on the difference in emissions required to get the coal from the mines to the power stations

  2. China is abandoning all pretense at soft diplomacy – preferring a harder version.
    This does not bode well for residents in HK, India, and Taiwan.

    Hence the decision by the quad to readmit Australia into the ranks of the Quad (US, India & Japan) to offset Chinese imperialism in the South China seas.

    • “China is abandoning all pretense at soft diplomacy – preferring a harder version.”

      The Chicoms are playing hardball for some reason. The Chicoms recent activities seem to be alienating all their neighbors to the point that the neighbors are forming up into defensive groups. I don’t see how that is in China’s interest. It might be in the interest of a dictator, but not in China’s interest.

      The Chicoms are definitely pushing their envelope. How far and hard they push is the next question to be answered. And then the next question will be how much pushback do the Chicoms get from their aggression?

      Just keep in mind that the United States can destroy both China and Russia several times over, if it comes right down to it. The U.S. has lots of nuclear weapons, which Trump upgraded with some of that $2.5 Trillion that was put into the Defense Department. The U.S. doesn’t want to use the nukes, but we’re not going to stand here and watch ourselves and the world be enslaved by a greedy, megalomaniac Chicom dictator. And the U.S. population will survive a nuclear exchange better than the Chinese. If it’s limited to a conventional battle, the U.S. will beat the Chicoms there, too. Like the last time.

      Russia shouldn’t be feeling too secure about the Chicoms, either. They would like nothing better than to slice off some Russian territory for themselves. Russians, not being stupid, have sent additional troops to the Russian/Chinese border recently.

      I don’t know what China’s leader, XI. thinks he is going to accomplish with his billigerence. Maybe he was hoping Trump would lose the election and then he would have much less fear of pushing ahead with his intimidation campaign. If Trump wins, Xi is going to be on the defensive. Biden won’t do anything to stand in the Chicoms way. He may actually help them along.

      Does Xi intend to go to war with India? He has pushed it to the point that both Chinese and Indian troops have died in clashes recently. What’s the objective?

      Interesting Times, as they say.

  3. Well called, Griff.

    Looks like you predicted this you fortune teller you. Are you by any chance part spider?

    Hang on. I got that wrong. You stated the Australian coal industry was now over based on a combination of China and Japan’s new ‘2050’ vague general promise.

      • Not when those perfessors of climastrology have to frog march out of those cloisters and into the fields with scythes and pitchforks to replace fossil fuels it won’t. They just don’t know it yet with give us this day our daily bread and the real theory of surplus value.

      • China is just beginning to realize how much untapped coal is out there along with a growing over supply of natural gas capacity. Xi wins again.

        Also, China’s backing for Russian oil projects in the Arctic will proceed after short term conditions change.

        • “ResourceGuy November 4, 2020 at 11:32 am”

          China has been looking to source resources from anywhere it can find and secure it. I know Chinese geologists looking for resources in Ethiopia in 2006 when I was there.

      • poor griff , still in his DELUSIONAL slimy green state of mental miasma.

        LOTS of new coal fired power station being built.

        Coal fired power is increasing far faster than wind and solar.

        Just in China, the “planned” coal increase is 5 times the total wind by 2030

        Get some facts , before you continue to make an arrant fool of yourself.

  4. There is a US carrier fleet in the Taiwan straits. China isn’t going to do too much to anything or about anything right now.

    I am on the side of a Trump win, but according to media here in Aus, Biden will win. Trump has Florida and Ohio, I think Biden supporters are on the losing side IMO. Time will tell.

    • It really depends on how many times griff and Pres. Xi vote in Pennsylvania in the next few days. They still have several days to fill out the ballots and mail them in for the dead voters. Nobody’s allowed to check postmarks or signatures.

      I hear that there’s a great deal of enthusiasm for Biden amongst the dead.

      • ………and rightly so….Joey performs like a corpse. It is not wise to trade with commies or the mafia. China is overpopulated….lacks critical raw materials….does it even feed itself? China is developing a MSR however, thanks to USA technology…..while the USA lags…..think about it….if the USA had not abandoned MSR tech 50 years ago, we could have an awesome machine today with 50 years of development behind it….and then China would steal it for free.

  5. Personally, I think this may reflect on problems with the Chinese economy.
    The recent floods were huge affecting a significant amount of China’s most productive regions. Whole cities flooded, factories washed away
    The Chinese response to CV19 in to lock down entire cities. A recent one was is a major coal port – ie its still happening.

    I suspect Australian coal has been restricted because China can’t use it all.

    • “Peter November 4, 2020 at 12:20 am

      I suspect Australian coal has been restricted because China can’t use it all.”

      It’s all political gesturing. Australia talked about restrictions on what the Chinese can do in Aus with regards to owning stuff like ports, farms, mines and water etc. So the Chinese simply said they won’t buy as much of coal or ore. Tit for tat style. Shouty (Morrison) and Pres. Xi are standing at the urinal seeing which has the biggest stream of piss.

      • Maybe not an actual import ban that is intended to ban imports, but an import ban designed to fool idiot waiguoren probably comes with clear instructions on trans-shipment procedures and the officials who need to be “consulted”.

        The PRC also has “strict” trade sanctions on DPRK (LOL).

    • An old rule of thumb, the farther away from Beijing, the greater the autonomy.

      Not sure to what extent that still applies because during the past 25 years, China has built infrastructure such as energy, transportation and communications on a scale unsurpassed in world history. No other nation has ever come close to what China has done in recent decades.

      Remote Xinjiang Autonomous Region is an example of great social change. In the 1990s, 100,000 people were commanded to go to Turpan area, build a city and produce oil and gas. Some of the educated professionals were not excited to do this because of the remote location, etc. but the people are owned by the government and have little choice.

  6. Perhaps demand for Australian coal remains good because China is buying other coal and the countries that did buy the other coal are switching to Australia.

    • I do not know what coal reserves in Africa are being exported to China at this time, the playing field is somewhat limited.

      Nearly all of the coal is in southern Africa – South Africa, Botswana, Zimbabwe and Mozambique. Historically, South Africa has mined 90% of the coal production in Africa and uses most of it internally.

      Mozambique, not much of a coal producer in the past, but where where coal is closer to a coastline might be what you are thinking about but it will be relatively limited compared to the magnitude of coal utilization in China. Transportation from Zimbabwe is likely difficult and Botswana, a very promising nation, will have to export through South Africa and needs infrastructure to connect to Richards Bay export terminal. Most of the coal exported from South Africa goes to India, approximately 50 million metric tons.

    • Xi is trying to intimidate Australia.

      I think the biggest thing Xi didn’t like was when Australia called for a formal investigation into the Wuhan virus, its origins and spread.

      Xi is now trying to bully anyone who he thinks is getting in his way, and Australia is high on that list.

    • suppose you didnt hear about barley, beef, wine, lobster issues either. Australia has not being bowing down enough. They will keep coming , chinas role as the petulant bully is confirmed. I am sure all nations take note in their future dealings. The ones that are watching at least.

  7. Australia Hits Citizens of Chinese Descent with McCarthyite ‘Loyalty Oath’.
    Tasmanian Liberal Sen. Eric Abetz, of German decent who considers the CCP to be as evil as the German Na-zi Party, demanded, “Can I ask each of the three witnesses to very briefly tell me whether they are willing to unconditionally condemn the Chinese Communist Party dictatorship?”
    The Sydney Morning Herald reported on this on Oct 17.

    US Sec. of State Mad Mike Armageddon Pompeo, en-Raptured, wants to turn the QUAD into an Asian NATO.

    Looks like Australia has gone full McCarthy.

      • Curious how the Anglo-Dutch show their imperial nose.
        Still it is hilarious that WaPo is praised by Australian wannabees.

        I see what the actual head of State Queen Elizabeth II did to Whitlam’s duly elected government.

        I do believe they got a call.

  8. Vietnam imports Australian coal.

    Stealing from China’s playbook, SE China can easily order Australian coal from Vietnam and call it ‘Vietnam’ coal.

    Indonesia exports coal.
    Philippines exports coal.
    And they are just the local coal suppliers.

    “PM Modi highlighted that despite India being the second-largest producer of coal, it still does not export it.”

    “Prime Minister Narendra Modi on Thursday launched the auction process for 41 coal blocks for commercial mining, a move that opens India’s coal sector for private players.”

    Pakistan is also trying to increase coal mining and export.

    “Pakistan primary coal exports was at level of 1 thousand short tons in 2018, unchanged from
    the previous year.”

    Even Bangladesh has significant reserves of coal they can mine and export.

    China’s embargo against Australian coal and preference for Mongolian coal may be a based on costs. China’s central authority controls labor and costs of their mined products. It takes hard cash to buy coal from Australia.

  9. “I can understand other countries taking up some of the slack, but doesn’t it seem odd that the Chinese import embargo has barely had an impact? Perhaps some Chinese regional leaders are quietly ignoring the import ban.”

    No. China hasn’t stopped buying coal, only whose coal they buy, and the article implies Mongolia could supply the necessary amounts of coal quickly, unlike other coal exporters, which implies Mongolia was already exporting coal to somebody. Thus worldwide demand is unchanged. Countries which used to buy coal from Mongolia now buy it from Australia.

    No different from any other fungible good.

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