Australian government aware of reports Chinese companies 'given notice' to stop importing coal

International commodity news outlets reported on Monday that several Chinese power companies had been given an order to stop importing Australian coal, amid ongoing tensions.

Huaneng Power Plant, in Jiangsu Province's Huai 'an City on 13 September. Source: He Jinghua / Costfoto/Sipa USA

The Australian government says it is aware of media reports several Chinese state-owned steel mills and energy providers have been told to stop importing Australian coal.

Global commodities newswire platform S&P Platts on Monday reported that four utilities had received a “verbal notice” to stop using Australian thermal and coking coal imports "with immediate effect" on 9 October.

Shares in Australian energy companies dipped by 1.3 per cent late on Monday on the back of the news.

Australian Trade Minister Simon Birmingham. Source: AAP

Federal Trade Minister Simon Birmingham on Monday said the government was aware of the reports and has had discussions with Australia's resources industry, "who have previously faced occasional disruptions to trade flows with China".

“Australia will continue to highlight our standing as a reliable supplier of high grade resources that provide mutual benefits," Mr Birmingham said in a statement to SBS News.

Thermal coal, used to generate power, is one of Australia's top three exports to China, and the market is worth around $14 billion a year, according to recent Department of Foreign Affairs and Trade figures.

The country is also heavily reliant on Australia's coal, with Australian imports making up 35 per cent of the coal used in electricity generation.

Overall coal is Australia's second largest resource export after iron ore.

According to S&P Global Platts Analytics, Australian thermal coal exports to China have been fairly resilient despite Chinese coal import quotas being hit at some ports as early as April this year.

China's National and Development Reform Commission also told several state-owned utilities to limit imports on 18 May.

The report, citing unnamed sources, said a timeline for the Australian coal ban remains unclear.

If confirmed, the move would be another blow to an already fragile trade relationship between Australia and the emerging superpower.

China has taken a range of actions against Australian exports this year including launching a trade investigation on Australian wine, introducing tariffs on barley and suspending red meat imports from some processing plants.

Despite the tensions, China remains by far Australia's largest trading partner, which many analysts say makes the country vulnerable to retaliation as relations continue to sour.

The trade tensions came after the Australian government began leading international efforts for an independent international investigation into the origins of the COVID-19 outbreak.