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China rises as coal exporter
By Geoff Hiscock
CANBERRA, Australia (CNN) -- China's rapid emergence as a coal exporter is challenging Australia's role as the dominant supplier to Asia, according to a new study. China is now the world's second-largest coal exporter after Australia, having jumped from 32 million tonnes in 1998 to more than 90 million tonnes of exports in 2001. Australia exported 194 million tonnes in 2001, of which 47 percent went to Japan and another 21 percent was split between South Korea and Taiwan. Dr Brian Fisher, executive director of the Australian government's commodity forecaster ABARE, said Monday that a consequence of China's surge is that Australia is losing market share for steaming coal in Japan, South Korea and Taiwan. Power utilities in these three key North Asian markets have been large, long-term buyers of Australian steaming coal. Similarly, big Asian steelmakers such as Nippon Steel and South Korea's Posco are major buyers of Australian coking coal. Fisher said an important factor behind China's rapid growth is government assistance to state-owned coal mines, along with export incentives. Low costsHe said this was aided by China's relatively low costs, proximity to Asian markets, expanded rail and port capacity, and the desire of some Asian coal buyers to diversify their sources of supply. Fisher said the study showed that if government assistance to Chinese coal producers was removed, their production and exports could decline significantly. "Given the central role that government policy plays in influencing export volumes in China, it is very difficult to predict what will happen in the future," he said. "Certainly, China is now an established competitor in many of Australia's traditional coal markets," he said. Australian exporters point to their reputation for high quality coal and reliability of supply in meeting competition from lower-cost suppliers such as China and Indonesia. Australian resources groups BHP Billiton and Rio Tinto, whose output includes both coal and iron ore, have identified China itself as a key market for their mineral exports.
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