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UPDATE 4-China says Australian coal imports remain normal, Canberra seeks to calm investors

Colin Packham and Muyu Xu

calm investors@

* Australian coal imports to China continue as normal - ministry

* China has upped safety, environment checks on imports - ministry

* Australian dollar, resource stocks under pressure

* Prime minister seeks to reassure markets

* Policy on Australia coal "very fuzzy" - port official (Re-leads with Chinese official statement, quotes from port officials)

SYDNEY/BEIJING, Feb 22 (Reuters) - China's foreign ministry said on Friday that Australian coal imports to the country continue as normal, although it added customs authorities had stepped up environment and safety checks on foreign cargoes.

The statement came after sources at Chinese ports told Reuters Australian coal imports are facing longer waiting times to clear customs than other supplies, and the northern port of Dalian was halting Australian coal shipments.

"At present, customs throughout the country are accepting as normal customs declarations for imported coal, including from Australia," said Geng Shuang, spokesman for the Ministry of Foreign Affairs in China, during a press briefing.

But Geng added the customs authorities in China have stepped up environment and safety checks on foreign cargoes, to "protect the rights of Chinese importing companies and the environment".

Overseas coal supplies into China, especially from Australia, have slowed for weeks, causing shipping backlogs outside key Chinese ports.

The Australian currency fell more than 1 percent to a 10-day low of $0.7070 on Thursday after Reuters reported that customs at Dalian had banned imports of Australia's biggest export earner since the start of February.

Seeking to ease fears of a further rift in ties with China, Australia's Prime Minister Scott Morrison said on Friday there was nothing to suggest the move was out of the ordinary. The country has asked its ambassador to China to seek urgent clarification.

"People should be careful about leaping to conclusions about this. This is not the first time that on occasion local ports make decisions about these matters," Morrison told reporters in Auckland.

China is the largest buyer of Australian coal, taking 89 million tonnes last year, worth A$15 billion ($10.7 billion), according to data from the Australian Bureau of Statistics.

Dalian's move came after major ports elsewhere in China prolonged clearing times for Australian coal and stoked concerns that Beijing is using trade to punish Australia amid a recent souring of bilateral ties.

Tensions arose in 2017 when Canberra accused Beijing of meddling in its domestic affairs, and the relationship suffered another setback last year when Australia banned China's Huawei from its 5G broadband network.

Australia's Minister for Trade, Simon Birmingham, said delays to exports of coal to China were caused by import quotas.

"We have no basis to believe that there is a ban on Australian coal exports into China, or into any part of China," he told reporters.

POLICY "VERY FUZZY"

The move is not the first time China has restricted coal imports. The country has periodically imposed customs delays and quality controls over the past several years, juggling efforts to curb smog, cut coal use, balance imports against domestic production and protect jobs.

"The potential political nature of this targeted ban after a number of bilateral issues have surfaced ... may be reminiscent of the impediments to Mongolia's coal exports to China after the Dalai Lama visit in 2016," U.S. bank Citi said on Friday in a note.

Dalian will ban imports of all Australian coal indefinitely and limit coal imports from all sources to 12 million tonnes in 2019, a port official told Reuters on Thursday.

A manager at Beibu Gulf Port Group, which operates the port of Fangchenggang and two other harbours in the southern region of Guangxi, said on Friday the port had no ban on Australian coal.

"For now, Australian coal can clear customs," he said, declining to be named because of company policy.

However, Australian coal, which accounts for more than half of the port's 18 million tonnes of imports each year, was taking longer to clear customs, he said, adding that official policy on product from Australia was "very fuzzy".

An trader based in Guangzhou also said customs clearance for Australian coal imports is taking more than 40 days, much longer compared to other countries.

A purchasing manager at a large steel mill in eastern China said his firm was not concerned about their supply of coking coal, a type of coal used in steelmaking, given sufficient inventory at ports, and did not expect the restriction to spread.

The ban at Dalian was due to relatively weak coal demand in northeastern China, but broadening the restriction to eastern and southern China where demand is firmer would affect downstream users like utilities and steel mills, the manager said.

Total imported coking coal inventory at five major Chinese ports stood at 3.02 million tonnes as of Feb. 22, up 180,000 tonnes from last week, according to Mysteel consultancy.

To make up for any shortfall in Australian coal for power generation, known as thermal coal, traders said there was ample domestic supply, and also the option to import from Mongolia and Indonesia.

SHARES FALL

Shares in Australian coal miners fell on Friday amid broad weakness in the resources sector, but losses eased in afternoon trade.

Stanmore Coal slipped more than 7 percent before closing down 2.1 percent. New Hope Corp fell 3.6 percent and Yancoal fell 3 percent, despite saying it was not directly affected.

The Australian dollar steadied, boosted by upbeat central bank comments on the economy and government comments on the ban, but had still not recouped its losses from Thursday.

($1 = 1.4081 Australian dollars) (Reporting by Colin Packham in Sydney and Muyu Xu in Beijing; additional reporting by Ben Blanchard and Meng Meng in BEIJING, Melanie Burton and Sonali Paul in Melbourne, Henning Gloystein in Singapore; editing by Richard Pullin)