State’s coal comfort from China under threat
In grim news for Queensland's economy, there are warnings over China restricting coal imports, as prices and demand continue to fall.
If restrictions are put in place it will have a devastating effect, with a new report showing China's resilience in the face of the coronavirus pandemic was helping to prop up coal.
The price and supply of both thermal and metallurgical coal have dropped, caused by the global economy and industry shutting down during the pandemic.
Relations between Australian and China have been increasingly rocky, with various trade restrictions already imposed on beef, barley and wine.
Queensland's annual coal trade with China is more than $9 billion.
The Chief Economist's Resources and Energy Quarterly report, to be released today, reveals much of Australia's thermal coal production would be making a loss at current prices, while exports are expected to fall by a quarter to $15 billion this financial year.
It noted China was the only international buyer to keep strong demand, but warned there remained a risk of Chinese Government intervention to restrict coal imports.
Australia's next biggest coal buyer, India, has been hard hit by the pandemic and is encouraging more use of its local coal supplies.
Resources Minister Keith Pitt confirmed there was a challenging environment for coal and LNG exports.
"There's competition in all the markets, there's always other countries looking to pinch our market share," he said.
"We maintain a strong relationship with China, as we do with all our trading partners, and that will continue into the future."
Mr Pitt said Australia had been able to keep its supply chains open during the pandemic, only some competitors like Brazil, which had kept its relationship with trading partners strong.
"The quality of Australia's product, the fact that we have remained reliable, has meant they continues to come to us," he said.
There was better news for the resources sector generally, with exports expected to reach $256 billion in 2020-21, the third highest on record.
It was driven by high iron ore prices, and booming gold exports.
"The resources sector has underpinned Australia's economy throughout 2020 and will continue to play a crucial role for the nation as the global economy recovers from the COVID-19 pandemic," Mr Pitt said.