Coal news and updates

Australian Senate passes China-Australia FTA

The Australian Senate has passed the China-Australia Free Trade Agreement (CAFTA), paving the way for implementation from January 1 next year that will help lower the import tariff on coal selling into China.

Australian media reported that the Customs Amendment (China-Australia Free Trade Agreement) Bill 2015 and the complementary Customs Tariff Amendment (China-Australia Free Trade Agreement) Bill 2015 passed the Senate on November 9, after being approved by the House of Representatives on October 22.

The agreement will come into effect after gaining approval from China’s legislative body.

China and Australia are important trade and investment partners. Australia is the second largest destination of Chinese overseas investment after Hong Kong. China is the largest trade partner of Australia, and its largest import and export destination.

If tariffs come down, there would be a 96.45% export tariff cut for Chinese products, totaling $1.6 billion yuan, in force for three years from ratification.

The CAFTA will benefit Australia’s exports of coking coal, thermal coal and aluminium oxide, enhancing Australian miners’ competitiveness in the seaborne market and cutting production cost for coal chemical, steel and aluminium producers of China.

Upon implementation, China would scrap the existing 3% import tariff on coking coal, and lower the current 6% import tariff on thermal coal to 4%, and gradually reduce to zero in 2017.

This will directly improve profitability of Chinese holding companies or subsidiaries in Australia, such as Yancoal Australia.

Half of China’s imported coking coal comes from Australia. Over January-September, China imported 19.59 million tonnes of coking coal from Australia, down 6.1% on year, accounting for 53.8% of China’s total coking coal imports, customs data showed.

During the same period, China’s imports of thermal coal -- including bituminous and sub-bituminous coals -- from Australia fell 25.8% on year to 33.89 million tonnes, taking 53.3% of China’s total thermal coal imports, the data showed.

source: http://en.sxcoal.com