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China bans dirty coal

September 16, 2014

China is finally getting serious with pollution and banning highly polluting coal. Australia's coal exports are likely to be hit as that country's miners struggle to emerge from a difficult two years.

A coal plant in China
Image: picture-alliance/dpa

China said Tuesday it would ban the sale and import of sulfurous, or "dirty" coal within four months, a move that could have repercussions for key exporters including Australia.

China's National Development and Reform Commission said coal with sulfur and ash contents exceeding 3 and 40 percent respectively would no longer be permitted as of January 1.

The official Xinhua news agency reported Tuesday that Beijing made the move ''to improve air quality in its major cities."

China shrouded in smog for days

Costs of industrialization

China's rapid industrialization has transformed its economy and boosted prosperity. But that transformation has been blighted by severe environmental pollution, including smog that regularly blankets its cities, much of which is caused by the country's heavy reliance on thermal coal for electricity production.

Beijing officially recognized the problem last year. Chinese Premier Li Keqiang then announced last March plans to shut down 50,000 small coal-fired furnaces by year's end and clean up coal-burning power plants as part of a ''war against pollution."

China is the world's largest consumer of coal, accounting for around half of global consumption.

Australia's miners emerge from two hard years

Australia's economic growth has been partly fuelled by Chinese demand for energy and raw materials. According to the Xinhua news agency, China draws 50 million metric tonnes of thermal coal from Australia.

That is somewhat over a third of Australia's production. At 140 million metric tonnes, Australia is the world's No. 2 exporter of thermal coal, behind Indonesia.

The coal sector in Australia is only just emerging from a difficult two years, beleaguered by a global glut, rising costs and a soaring Australian dollar.

Profits slumped, leading to pit closures and hammering small mining communities. The Chinese ban threatens to excerbate the industry's problems during its still shaky recovery, although some analysts believe the proverbial cloud could have a silver lining.

bew/cjc (AP, Reuters)