(Adds details, market comment)
By Fayen Wong and Rebekah Kebede
SHANGHAI/PERTH Nov 28 China will raise its
threshold for coal imports, tighten approvals for new coal mines
and push industry consolidation in a bid to help its coal
sector, which is struggling with overcapacity and widespread
The move to curb imports of low quality coal by the world's
largest producer and consumer of the fuel comes as China's new
leaders have vowed to tackle a pollution crisis that has stoked
Coal miners have also been lobbying Beijing to block a flood
of cheap imports that has triggered vicious price competition.
Details on the thresholds for sulphur and ash content are
still being worked out, the country's State Council, or cabinet,
said in a document issued late on Wednesday, adding that it
would encourage imports of high-grade coal.
The proposals, if implemented, would benefit Australian
miners who produce low-ash coal of high calorific value, and
threaten the export prospects of Indonesia's low-ranked coal
"Perhaps they recognise that China faces overcapacity of
coal supply," said Serene Lim, an analyst with Standard
Chartered Bank in Singapore.
"That, coupled with awareness and concern about pollution,
means coal demand might not be as strong as what they had
But some traders were sceptical that Beijing was serious
about blocking low-grade imports, after tough talk on import
curbs earlier this year resulted only in a very watered-down
policy that had little market impact.
"People just don't think it will happen," one
Singapore-based market source said. "They haven't given details
on the sulphur category and they also didn't give a timeline.
Who knows whether the government is serious this time?"
A ban was previously drafted by the National Energy
Administration to block coal with calorific value lower than
3,941 kcal/kg, and limit ash and sulphur content to no more than
20 percent and one percent respectively.
But a final ruling on the ban was postponed in the face of
strong opposition from domestic power generators.
Steam coal with high sulphur content causes sulphur dioxide
when burnt, the main cause of acid rain which damages forests,
lakes and building. Coal with high ash content of above 10
percent causes power plants to emit more particulate matter.
China will set differential tariffs on coal grades and step
up quality checks on imports to curb shipments of poor-quality
coal, the cabinet document showed.
Hit by a slowing economy, China's coal sector has been
plagued by overcapacity and falling prices over the past year.
A flood of cheap imports, up roughly a fifth in the first 10
months of 2013, after having jumped by a third in 2012, has also
added to the woes of local miners, forcing them to sell at a
loss just to retain market share.
Coal producers, including China Shenhua Energy Co Ltd
, China Coal Energy Co Ltd
and Yanzhou Coal Mining Co Ltd
have all reported weak earnings this year.
To help cut miners' costs, Beijing has ordered coal-rich
provinces to scrap arbitrary levies on mines by year-end, and
hasten the reform of the value-based resource tax.
Beijing said it would halt the approval of new coal mines
with an annual capacity of less than 300,000 tonnes and hand out
severe punishments to firms that start building before getting
approvals, to curb "disorderly production growth".
It will also phase out mines with output of less than 90,000
tonnes a year and shut those that fall short of safety norms.
(Additional reporting by Beijing newsroom; Editing by Clarence