CHARTS: The coming critical minerals trade war is BRICS short of a load
"While a large number of countries around the world continue to talk about securing raw material supply, China is actually doing something about it."
China bombshell decision to impose tariffs on coal imports could prove to be the tipping point for Australian miners already struggling to stay afloat.
The move by the economic powerhouse to introduce the new duty of between 3% and 6% beginning Wednesday shocked and angered Aussie producers, responsible for a quarter of Chinese coal imports.
The Minerals Council of Australia’s Brendan Pearson said the decision was a poor one.
“The MCA urges the Australian government to initiate urgent discussions with Chinese counterparts to seek the reversal of the decision,” he said in a statement.
He said applying tariffs would ultimately prove “counterproductive” for the struggling Chinese economy anyway because it would “raise energy costs for China’s industrial sector and households.”
The move comes barely a week after Beijing announced a major overhaul of its current resource tax, adding that the new and simpler levy would be effective Dec. 1.
This week’s sudden announcement represents a second major blow for countries exporting coal to China, after last month Beijing imposed a ban on selling or transporting low-grade or “dirty” coal, putting further pressure on the global coal market.
Alarm over that policy – announced last month – faded after Beijing appeared to exempt power plants, the largest consumers of fossil fuel.
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 10,000 coal jobs have been lost in Australia since 2011 as companies slash costs and idle mines amid a global supply glut.
Sources: IndexMundi | World Bank
7 Comments
John Law
the biggest losers are the tax collectors and middle class welfare recipients.
pawpawdog
It seems most media reporting on this news forgot just a few days ago Abbott was threatening with FTA if China does not give better deal on farm products. Well, looks like Abbott just got his answer from China!! Before MCA complaining about China, they should question what Abbott was doing first!
Charlie
So much for the level playing field!
klgmac
China has to protect their mines, upon which much of their unpayable debt rests But the problem with trade wars is that they are still wars. And protectionism is one of the ways the Great depression was made worse.
PaoloUSA
Interesting, BHP wants to force Chinese iron ore producers out of business and that’s fine (not dumping), but when it comes to China protecting their own coal industry it’s a big scandal, give me a break.
Brian Slater
Play the same game: Put an import tax on all the stuff made in China.
Kim Henley
While the whole world moves towards renewable energy (including a vast number of Australians), the Australian government and coal industry are steadfastly looking in the opposite direction. The Australian government and coal industry is p*****g into the wind of change, which is strengthening from ‘light and variable’ towards ‘light breeze’, and it will only get stronger. This will happen, irrespective of government policy, investment decisions, and what fools like Tony Abbott might hope. Australia has to get ready for the inevitable.