to benefit from china tax on low grade coal

China edges closer to tax on low grade coal imports, Australian miners to benefit
Tuesday, September 03, 2013 by Proactive Investors

China has announced a 3 percent tax on imports of thermal coal with low calorific value that could hit Indonesian coal miners and benefit Australian coal exporters and coal explorers.

Indonesia is the biggest seller to China of lignite, a form of low-grade coal, with its shipments accounting for 97 percent of China's total lignite imports in 2013 up to end of July.

Australian companies that could benefit include: Whitehaven Coal (ASX:WHC), New Hope (ASX:NHC), Blackgold International (ASX:BGG) and Bandanna Energy (ASX:BND).

If an import tariff was put on lignite may dent sales of Indonesian miners such as Bumi Resources and Adaro Energy and could spark defaults of existing contracts.

China's State Council, the country's cabinet, last week approved a plan to implement a 3 percent tariff on lignite imported from countries.

China imported 187 million tonnes of coal, including lignite, in the first seven months of 2013. Total lignite shipments stood at 35.97 million tonnes during the period, up about 12 percent from year ago.

With imported lignite currently priced at about $47 a tonne on a landed basis, the newly imposed tariff would add about 8 yuan ($1.31) a tonne to its cost, an analyst said.

Chinese domestic coal, with a heating value of 5,500 kcal/kg, fell 7 yuan from a week ago to 546 yuan ($89.21) per tonne.

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