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Resources giant watching China restrictions after coal orders delayed

Goonyella Riverside Coal Mine
Goonyella Riverside Coal Mine

A multinational mining company is monitoring a potential Mainland Chinese ban on Australian coal after multiple orders to the country were deferred.

BHP is closely watching how the Chinese Communist Party (CCP) chooses to respond to mounting reports that the regime is ordering state-controlled entities to stop ordering coal from Australia.

Coal exports deferred

The proponent confirmed it has already received requests to postpone a number of coal exports to the communist country.

“Our commercial team has recently received deferment requests from some of our Chinese customers,” BHP chairman Ken MacKenzie said according to News Limited.

“I do not think we are as concerned about the trade barrier implications for our product, notwithstanding the energy coal imports in China right now. Our concern around some of these geopolitical tensions and trade wars that are going on is the impact it could have on global growth and in a post-COVID world – that probably has even more concern.”

Wait and see

In the three months ending on September 30, metallurgical coal production jumped by 4 per cent to 10 million tonnes (Mt). The company expects to produce between 40 Mt and 44 Mt of product in the 2021 financial year.

“We are monitoring for any potential impacts from restrictions on coal imports into China,” the company said in its September 2020 quarterly report.

Production drops

BHP reduced production at a number of Queensland operations due to maintenance work and unforeseen weather conditions across the Sunshine State.

“At Queensland Coal, strong underlying operational performance, including record truck and shovel stripping, was partially offset by planned major wash plant shutdowns at Blackwater, Goonyella, Saraji and Caval Ridge,” the company said.

“Blackwater, Queensland Coal’s largest mine, was back at full capacity by the end of September 2020, following recovery from significant wet weather impacts in the March 2020 quarter.”

‘Scenario planning’ underway

MacKenzie is confident his employer will be able to attract new customers, even if the CCP decides to announce an official ban on Australian coal.

“The good thing about our portfolio is we have got fantastic products – iron ore, metallurgical coal, copper, oil and gas – that are well positioned geographically; that are well positioned on the cost curve; that are at the higher end of the quality spectrum and not easily displaceable [or] not readily available around the world,” he said according to News Limited.

“That is what helps us, we do a lot of scenario planning around this.”

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