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Chinese Free Trade Agreement includes major tariff reductions for Australian mineral exports, including coal, alumina and nickel

The Australian resources sector also appears to have had some material gains from the Free Trade Agreement with China.

Tariffs will be removed from aluminium oxide, nickel, titanium, copper, uranium and zinc, either in the short term or phased out over a few years.

Tariffs on coal that shook the industry when they were introduced almost overnight by China last month will also be removed or phased out.

Thermal coal, used for energy generation, was hit with a 6 per cent import tariff. Coking coal, used in stainless steel production, was given a 3 per cent tariff.

That will be removed immediately the FTA is signed, but the 6 per cent tariff on thermal coal will remain for another two years.

China isn't cutting back on coal consumption, it's cutting down its emission by (amongst other measures) building efficient generators for coal power

China is the largest buyer of Australian coal, but structural problems within its own coal sector have seen a major slowdown in the global coal industry.

The price for thermal coal has almost halved to $US65 tonne and a number of Australian mines have closed or been mothballed and workers laid off.

Despite this, in its annual report on the global energy outlook, the International Energy Agency says the use of coal as an energy source will continue to grow before it reaches a plateau by 2040, due to differing trends across different countries and economies.

"A large share of the increased coal generation in China, India and developing Asia will be modern 'supercritical and ultra-supercritical' coal generation, which slash CO2 emissions by up to 40 per cent and achieve near-zero emissions of other pollutants," the IEA said in a summary of the report.
 

Energy analyst Alan Oxley, of ITS Global, says in keeping with that report Australian coal exports will continue to grow for decades, with demand from both China and India.

He also points to the environmental pact between China and the USA last week as another example of the continued use of coal, and says it's important to note China only made a commitment to try to reach peak emissions by 2030.

"That doesn't mean cutting back coal consumption, that means reducing carbon emissions, and they will do that because they're going to put in more efficient generators for coal power.

"We all knew that would be an improvement. What it does not mean is the consumption of coal imported from Australia will be reduced."

The FTA effectively means the full removal of all tariffs on mineral commodities within four years.

Source: ABC Rural