Column: Electric dreams turn into a nightmare for battery metals
A sector that was once racing to build new supply has been closing mines and deferring projects as low prices bite into the cost curve.
Coal bulker terminal at the port of Qinhuangdao. (Copyright Greenpeace | Liu Feiyue)
China, the world’s biggest coal consumer, is cutting export tariffs for the fossil fuel beginning Jan. 1 and it will also correct those for a range of other commodities particularly some consumer products and parts to make high-tech devices.
The move, which aims to spur domestic demand and promote industrial upgrading, comes after relentless lobbying by the China National Coal Association, as a sharp drop in the commodity price has left about 70% of the country’s miners in the red and more than 50% to owe wages, Reuters reports.
Other items that will see lower tariffs next year include camera lenses and lasers for fiber-optic communication systems, the Ministry of Finance said in a statement on its website Tuesday.
Last month the Asian giant signed a free trade agreement with Australia that eliminates a 6% import tariff on power-station coal and a 3% levy on steelmaking coal coming from Down Under.
China’s dependence on coal is well known. Annual consumption exceeded 1 billion short tons per year in 1988 and has exploded since then, to about 4 billion tons last year. This means the Asian giant gets about 70% of its energy from the fossil fuel, a number the government hopes to reduce to 65% by 2017.
In the past three years Australia’s coal industry has experienced challenging times with prices for thermal coal, which consumed by power stations to generate electricity, dropping over 40%. More than 30,000 mining jobs have been lost in Australia this year amid a slump in the price of key commodities like coal and iron ore.
2 Comments
Altaf
I dot understand.
China is the biggest importer of coal. Do they really export any coal? When they don’t export, why they lower export tariff??
How lowering export tariff on coal spur domestic demand?
miningguy
All valid points. This year China will likely import 285 million t of coal (all coals) and export 6 million tonnes with production of all coals 3.5 billion t. The thermal coal price in China is 10-15% higher than that in the Asia region. So the removal of export tariff won’t ‘increase demand’ and it probably won’t lead to a flood of exports either. The main problem in China is their own production of thermal coal is too high and the demand for thermal coal is falling YoY. The thermal power sector coal consumption is now down to about 67% and falling each year ahead due to green energy (solar, wind, hydro, nuclear). The major exporters of coal to China are Indonesia and Australia. FYI, for the first 2 years upon implementation of the China/Australia FTA thermal coal import duty of 6% will remain in place but the 3% duty on imported Australian coking coal will be waived immediately.