China to ban imports of high ash, high sulphur coal from 2015

SHANGHAI (Reuters) - China will ban the import and local sale of coal with high ash and sulphur content starting from 2015 in a bid to tackle air pollution, with tough requirements in major coastal cities set to hit Australian miners the hardest.

China imported about 54 million tonnes of Australian thermal coal and another 13 million tonnes from South Africa in 2013 - most of which would not meet the proposed restrictions on ash and sulphur content.

The policy comes as prices on the GlobalCOAL Newcastle index slump to a five-year low amid a supply glut and slowing demand from China, the world's top importer. Under the new regulations, to come into effect in January, the government has set different level of requirements on coal grades for mining, local sales and imports.

The most stringent requirements are for cities in the southern Pearl River Delta, the eastern Yangtze River Delta and three northern cities including Beijing, Tianjin and Hebei. These will be banned from burning coal that has more than 16 per cent ash and 1 percent sulphur, according to a statement published on the National Development and Reform Commission website.

Since the coastal regions such as Guangdong and Zhejiang province are some of China's top coal importers, the regulations are set to block a sizeable amount of imports.

"Coal that does not meet these requirements must not be imported, sold nor transported for long distances," the NDRC said, adding that the customs authority will check the quality of coal imports.

The government will also implement a blanket ban on domestic mining, sale, transportation and imports of coal with ash and sulphur content exceeding 40 per cent and 3 per cent respectively. For coal that will be transported for more than 600 kilometres from their production site or receiving ports, the minimum energy requirement was set at 3,940 kcal/kg, with a maximum ash and sulphur content of 20 per cent and 1 per cent respectively.

When the regulation is implemented, Australian and South African coal with a heating value of 5,500 kcal/kg will be worst hit, since their ash content hovers around 23-25 per cent and they contain sulphur of 0.8-1.0 per cent, traders have said.

Top steam coal exporter Indonesia, which largely ships fuel with low heating value, sulphur and ash content, will be the least affected.

"This new law will hit Australian exporters the hardest. But the 2015 rollout has offered some relief to miners and traders because it gives them some time to come up with a plan to reduce their ash content," said a Shanghai-based coal trader.