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Slow Growth Spoiling China’s Appetite For Coal

China’s slowdown has hit coal miners the hardest with the country, the top consumer of the fossil fuel, importing less than a year ago and dramatically far from the double-digit percentages from a decade ago.

In the first half of 2014, China’s coal imports grew just 0.9%, compared with 13.3% a year earlier. Inventories also tell the story, as they have remained at around 300 million tonnes since last year, up from the traditional rate of 200 million tonnes.

Related Article: Coal: The World’s Deadliest Source Of Energy

The nation, which produces and consumes nearly as much coal as the rest of the world combined, has recently seen some of its local miners go out of business, while a few majors, such as Shenhua Energy, China Coal Energy and Yanzhou Coal, reported losses for their 2013 results.

China’s appetite for coal has also been affected by its self-imposed clean coal diet, with increasing efforts from the government to cut smog and promote cleaner energy sources like gas and renewables.

Aussie casualties

Australian miners, which have in China a major buyer, have already begun suffering the consequences of a slow demand, combined with coal’s tumbling prices.

Coal in China.
Sources:  IndexMundi | World Bank.

Prices for the commodity have fallen by at least 30% in the past two years, forcing miners to take drastic measures.

In March, mining and commodity trader giant Glencore Xstrata (LON:GLEN) said it will close its Ravensworth underground coal mine, located in Australia’s Hunter Valley, in September this year, citing falling prices and stock surplus as main reasons.

BHP Billiton, which through its partnership with Mitsubishi Corp. is the world's largest coking-coal exporter, has also closed several mines recently, including its Norwich Park and Gregory operations in eastern Australia because of weak prices.

By Cecilia Jamasmie of Mining.com



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  • Kie on July 16 2014 said:
    I think the price of coal will be decimated by cheap solar energy flooding the grids with excess power. With the price of panels so low now, the energy ecosystem needs to start looking at massively increasing large scale energy storage R&D.

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