China will ban the import and local sale of coal with high ash and sulfur content starting from 2015 in a bid to tackle air pollution, with tough requirements in major coastal cities set to hit Australian miners.
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 content.
The policy, previously reported by Reuters, comes as prices on the Global Coal Newcastle index slump to a five-year low amid a supply glut and slowing demand from China,the world's top importer.
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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 percent ash and 1 percent sulfur, 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 sizable amount of imports.
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"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 sulfur content exceeding 40 percent and 3 percent respectively.
For coal that will be transported for more than 600 kilometers from their production site or receiving ports, the minimum energy requirement was set at 3,940 kcal/kg, with a maximum ash and sulfur content of 20 percent and 1 percent respectively.
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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 percent and they contain sulphur of 0.8-1.0 percent, traders have said.
Top steam coal exporter Indonesia, which largely ships fuel with low heating value, sulfur 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.