ELEANOR HALL: The Australian coal industry is insisting that its
exports won't be affected by new pollution regulations in China.
The Chinese government is planning to impose restrictions on imports of dirty coal.
And some analysts here say that up to half of Australian thermal coal exports could be hit.
Here's resources reporter, Sue Lannin.
SUE LANNIN: China is trying to clean up its big cities by cracking down on dirty coal - coal which has high levels of chemicals like ash and sulphur.
The country's National Development and Reform Commission has released draft restrictions on coal imports which have already hit the price of thermal coal used for power.
The bans would take place from January next year and there are fears the anti-pollution measures in China's coastal cities could hurt Australian miners.
But Greg Evans from the Minerals Council of Australia says he doesn't think Australian producers will be affected.
GREG EVANS: The industry is confident that it can meet the requirements as specified in the information from China.
Australia's very fortunate to have some of the highest quality coal in the world and we're confident that we can supply coal.
We are a long term supplier of high quality coal and we will continue to do that with respect to China.
SUE LANNIN: Federal Industry Minister Ian Macfarlane says the Chinese restrictions could help Australian producers.
IAN MACFARLANE: Firstly it won't have a significant impact on Australia.
We have some of the best coal in the world in terms of low ash, particularly low sulphur.
So in the longer term, I think the value of Australian coal compared to some of our competitors will actually see Australian coal reap a premium.
SUE LANNIN: In a statement, BHP Billiton says it expects to be able to meet the Chinese regulations and it doesn't expect a hit to its bottom line.
But not everyone agrees that Australian producers won't be affected.
Tim Buckley from the Institute for Energy Economics and Financial Analysis thinks mines in the Hunter Valley in New South Wales and Queensland's Galilee Basin could be caught in the restrictions.
TIM BUCKLEY: I think the change is very significant and the impact is not 100 per cent clear but Australian exports of thermal coal to China are definitely going to be materially affected and far more so than many of our international competitors such as Indonesia.
SUE LANNIN: Why is that?
TIM BUCKLEY: Part of the issue is that China is introducing new measures that are going to significantly restrict the importation of thermal coal that has either/or both high ash content and high sulphur content.
And most of Australia's thermal coal exports has relatively high ash content, whereas Indonesia, even though it might have a lower energy content, has a low ash and sulphur content.
SUE LANNIN: Can you say which producers in particular will be affected?
TIM BUCKLEY: The region that is most affected is the Hunter Valley because 80 per cent of the exports for the Hunter Valley are thermal coal rather than coking coal.
So the Queensland coal industry is 80 per cent coking coal. So it's largely unaffected by this measure, although I would add that the Galilee Coal Basin in Queensland is 100 per cent thermal coal and it is all high ash content thermal coal.
SUE LANNIN: BHP Billiton has put out a statement saying it's not going to be affected materially, and one of its mines is in the Hunter Valley, and the Minerals Council says it doesn't believe Australian producers will be affected.
TIM BUCKLEY: Individual mines can address this issue by putting in a wash plant, a coal handling wash plant. That requires significant capital expenditure.
If the mine has already done that, if they're already washing the coal, by definition the mine is prepared for this change, but if the coal mine doesn't currently wash their coal, then that will be a serious impediment.
ELEANOR HALL: That's energy analyst Tim Buckley with Sue Lannin.