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China has allowed several large coal importers to resume purchases of Australian coal, easing an unofficial ban that has lasted more than two years, as Beijing looks to strengthen energy security after ditching the ‘zero Covid’ policy.
China enacted an unofficial ban on Australian coal in October 2020 after Australia backed a call for an international inquiry into the way China handled the initial COVID outbreak in early 2020.
China's decision to allow four big importers to restart imports of coal from Australia is a sign of a thawing in relations between the two nations and sparked hope that trade between the two could return to normal.
Last week, China’s National Development and Reform Commission discussed the idea to allow four large Chinese coal importers to make new purchases of Australian coal this year. These are China Baowu Steel Group Corp, China Datang Corporation, China Huaneng Group Co, and China Energy Investment Corporation.
China Energy Investment Corp has already placed an order for purchasing coal from Australia, and the first cargo could load as early as this month, according to Reuters.
Moreover, the surge in Covid cases after the end of the restrictions has resulted in lower coal supply from China’s key coal-producing centers Shanxi and Inner Mongolia, traders told Reuters.
With demand for winter heating rising, China now looks to avoid another coal crunch.
China has put more emphasis on energy security since the autumn of 2021 when power shortages crippled its industry. In 2022, China said it would continue to maximize the use of coal in the coming years as it caters to its energy security, despite pledges to contribute to global efforts to reduce emissions.
In recent months, China has significantly boosted its coal production, following government orders. China’s daily coal production hit a record high in November 2022 as demand for heating jumped, beating the previous record set in September 2022.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.