Bad News for Australia: China Doesn’t Need Its Coal, Can Maintain Sanctions Indefinitely

For years China had been quietly building up the north-south logistics for its own coal that allow it to eliminate Australia

Bad news everyone – the bad takes are back:

I’ve been working on a larger paper on this issue with some other people and the paper is under review so – regrettably I cannot publish full workings. But here is a broad summary of what is going on and how we got here with regards to China and Australia’s bust up over coal, and more broadly China’s energy policy. I’ll start with a few graphs to orient the discussion.

First graph: China’s coal consumption and balance of imports. As you can see, imports are something of a rounding error – it is a big deal if you are Hunter Valley or Bowen Basin coal miner but to a bureaucrat at China’s NDRC or planning commission it is an unders-and-overs odd lot market to them.

Second graph: Even for thermal coal it is all power, steel, cement. Most power in China is consumed by secondary industries and the vast majority of that is heavy industry. So if you unpack the power demand as “construction and infrastructure related” vs household, households are very small at ~13-14% of power demand.

You will often see people describe themselves as defending against imperialism and supporting developing countries when they push back at international demands for China to cut emissions: in fact they are shilling for China’s real estate market and China’s right to produce a ton of steel and two tons of cement for every man woman and child for so that vacancy rates in real estate can push past 20% to infinity and beyond, Buzz Lightyear style.

Given how much this flavor of Western leftists hate boomers that own multiple apartments in the West, I find it paradoxical to see them so ardently support Chinese boomers that have made similar asset allocation decisions.

Third and Fourth Graph: Global coal shipping volumes with, and without, intra-country flows. Most coal travels from a producing country to an end buyer in another country and that market has been shrinking sharply.

But include intra-country flows and particularly Chinese flows from Northern China where the coal is to Southern China where there is a lot of demand and the show goes on. China to China trade has expanded markedly as China has invested prodigious amounts in ports, rail and the like so that they can better utilize their own resources.

Looking to Australian exports and things have gone flat to down since – not just for China but to a number of other major partners who are gradually seeing their decarbonization plans take effect.

There’s a clear reason how this happened – China ramped up spending on infrastructure in coal production and coal logistics and now they can get more coal from its key production areas of Shanxi and Inner Mongolia to its Southern ports which used to buy more coal from abroad.

So in summary:

  • China has lots of coal
  • China consumes staggering amounts of coal, mostly to build things
  • China can now move its coal to where the demand is after 5-10 years of heavy investment
  • It is now doing this
  • This results in lower imports

It is implausible that China is doing this all of a sudden for diplomatic reasons. They must have been very quietly angry with Australia while breaking ground on all those port and rail projects and just decided to express their feelings once they felt close. Alternately you could not concoct a conspiracy theory to suit your priors and accept that this was like to happen so long as they prioritized energy security.

For Australia the question is, what is the outlook from here? China is more or less where it wants to be today and with more rail to Mongolia, more Russian output and the like the situation can reasonably be expected to get worse. Mongolia and Russia have high quality coal, and are much closer. That’s some ferocious competition we are facing for a dwindling import pool.

The reply from the right is that we can make it up to other customers but with Korea and Japan committing to decarbonization targets and having ample capacity to achieve them I do not like the coal industry’s odds.

Anyone who has followed China’s rail and port build out saw this coming. Japan and Korea are moving away from coal, and India has plenty of its own as well and all are moving towards lower emissions and are eminently capable of doing so. Whether you look at these countries’ capability or intent the future is clear: less coal imports. Australian politicians can cosplay in high visibility vests all they like but any business without customers is not going to stick around long. Similarly, gatekeepers of the China relationship really have little to add here because this has everything to do with domestic policy and international obligations and nothing to do with hurting the feelings of the Chinese people.

Source: Syncretica

  1. Dan says

    It is not due to “domestic policy and international obligations”. Rather it is due to Australia not having an independent foreign policy to look after its own interests. Rather it does whatever Uncle Sam says. The problem is not just coal that China doesn’t want to buy. Moving away from coal isn’t going to for example restore the multi billion dollar education industry of which China was a major customer.

    1. Gi Joe says

      NO wrong Rather it is due to Australia not having an independent foreign policy to look after its own interests. Rather it does whatever its master the racist supremacist global Jewish slave empire dictatorship says.

  2. Alfred says

    Australia won’t allow business to use its coal in Australia. Shutting down coal-fired electricity generators. Subsidising useless wind turbines and PV cells.

    As a result, electricity costs 30 cents per KWh versus 6 cents in places like Russia. Well done chaps!

    1. jm74 says

      Australia privatized the power/electricity sector and China now owns a number of the power stations like those west of Lithgow, NSW and the Chinese are not upgrading. One can’t blame the Chinese for what the Australian government allowed to happen; Chinese also owns a majority of the Toll roads in NSW, Qld and Vic and now the Australian government leased 9 islands to the Chinese who then threw out the residents. Obviously to what one is being told by the media is not what is actually taking place, the Australian government are more corrupt than even the Chinese.

    2. Mr Reynard says

      But…But Sarah Ugly Young said we have to be CARBON Negative …

  3. Jerry Hood says

    Judaised Australia follows zionazi USrael policies of senile , illegal squatter in White House.. It is not idenpendent country! But USrael’ vassal colony…

    1. Gi Joe says

      NO both the USA and Australia are vassal slaves of the racist supremacist global Jewish slave empire dictatorship

  4. Séamus Ó Néill says

    When you become a US vassal, your country become totally subservient, financially, politically, militarily and morally to America’s MIC. Enjoy the race to the bottom of the slag heap, you may even beat America and Israel…..enjoy !!!

  5. kev says

    Would this be Malcolm Turnbulls son Alex? Married to a Chinese lady as well.

    1. Jackson Mark says

      Not actually relevant but you’d think she’d point out his biases causing him to make so may errors based on BS opinions, the buzz light year comment to justify his bs beliefs, and errors in his tables he likely didn’t produce himself.
      Espousing opinions while commenting on others, what a effwit.

  6. Jackson Mark says

    Non evidence based bollocks by the biased boy moron himself, his biases causing him to make errors day in day out “they are shilling for China’s real estate market and China’s right to produce a ton of steel and two tons of cement for every man woman and child for so that vacancy rates in real estate can push past 20% to infinity and beyond, Buzz Lightyear style.”

    How many more errors can you find, there’s several real obvious ones to find, he’s not even aware of his biases and his wife must be staying quiet or tired of pointing them out all the time. He has no evidence as there is none for these opinions.


    yeah but Australia has become a Tyranny Haven
    like I don’t mind seeing either one of these

    1. Zhonghua says

      Let’s start with your Tyranny haven first, most likely the US or UK!

  8. Ron says

    The jacket belongs to an New Zealand company for starters. !!!!!!!!!
    Australians pride themselves in electing idiots. Any monkey in a suite and the bigger the hammer the more votes.
    Not to worry they come and go at a fair clip. When Australians are dead broke and the banks chuck families onto street; the sheep will be carving the Sunday Roast.

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