Australia wanted to calm investors on Friday about the state of bilateral ties with China subsequent a prohibition on coal imports at the northern port of Dalian, as coal stocks tumbled and the local dollar stayed under pressure.
The Australian currency plunged above 1 percent to a 10-day low of $0.7070 after a news agency reported that customs at the Chinese port had banned imports of Australia’s largest export earner since the beginning of February.
China is the biggest purchaser of Australian coal, taking 89 million tonnes last year, worth a $15 billion ($10.7 billion), according to information from the Australian Bureau of Statistics (ABS).
Ties between the two countries were strained in 2017 when Canberra accused Beijing of interfering in its local affairs, and the relationship suffered another issue a year ago when Australia banned China’s Huawei from its 5G broadband network.
Australia has asked its ambassador to China, Jan Adams, to seek urgent clarification, the government said, while legislators and the central bank said the port move might not be connected to bilateral ties.
“I wouldn’t jump yet to the conclusion that this is something directed to Australia,” Reserve Bank of Australia Governor Philip Lowe told a parliamentary economics committee.
“It may well turn out to be that it’s being driven by concerns about the environment in China and the profitability of the coking coal industry in China,” he said in response to lawmakers’ questions.
Shares in Australian coal miners, however, dropped at the open on Friday in the midst of wide weakness in the resources sector.
Stanmore Coal plunged more than 7 percent at one point as it said was monitoring the situation to determine whether there would be any influence on its coal sales.
New Hope Corp tumbled over 4 percent, while shares in Whitehaven were down more than 4 percent and Yancoal more than 3 percent although both miners said they were not impacted directly.
Major coal producer Glencore ended down 3.2 percent in London overnight, but BHP Group, Australia’s largest metcoal manufacturer, was down just 0.1 percent.
“When decisions like this have been made in the past at local port level, it was related to domestic supply related issues, environmental issues at a local level,” Mathias Cormann, Minister for Finance told Sky News.
“It was unrelated with anything to do with the bilateral relationship between Australia and China.”
A Chinese foreign ministry spokesperson said that customs were inspecting and testing coal imports for security and quality, and the move was “completely normal”.
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