China is considering lifting the ban on the supply of coal from Australia due to concerns about supplies from Russia
Chinese energy bureaucrats are proposing lifting a nearly two-year ban on Australian coal as tensions begin to ease and supplies could tighten as Western sanctions on Russian energy take effect.
The proposal will be presented to senior management recommending that Beijing resume Australian imports. This is due to fears that European restrictions on Russian energy will increase competition for coal from China’s main suppliers such as Indonesia, according to people familiar with the plan. Officials are racing to increase fuel supplies to avoid a repeat of last year’s power outages, especially ahead of the Communist Party convention.
The plan will be handed over to the leaders, who are in a position to authorize any policy changes, so they can make the final decision, people say. Some companies are already preparing to resume imports, two other sources said.
China’s chief economic planner, the National Development and Reform Commission, did not immediately respond to a request for comment.
The global energy crisis has pushed Australian coal futures to an all-time high
China, once a major consumer of Australian coal, imposed an unofficial ban in late 2020 as the standoff between Canberra and Beijing escalated over the decision to ban Huawei Technologies Co. build a 5G network, and after then-Prime Minister Scott Morrison led calls for an independent inquiry into the origins of the coronavirus.
Australian Foreign Minister Penny Wong and Chinese counterpart Wang Yi met on Friday for the first talks between the two countries’ top diplomats since 2019. China is ready to work to get relations back on track, Wang said in a statement.
Beijing’s plans are also a response to decisions by coal consumers including the European Union, G7 countries and Japan to ban Russian imports as early as this year. The moves are adding pressure to global markets as demand for the dirtiest fossil fuels soars and supply is tight in the energy complex. Although Beijing has not imposed sanctions, the ban will increase competition between China and other buyers of Indonesian coal, China’s main supplier, officials said.
Benchmark Asian coal Newcastle rose to a record level last month amid fierce competition for a shrinking pool of available cargo. The heatwave is savage in most parts of China, and officials have begun to cut power to factories to ease grid strain and prevent power shortages.