Scott Morrison has accused China of breaching international trade rules and its agreement with Australia through its reported ban on Australian coal imports.
On Tuesday, the prime minister and the trade minister, Simon Birmingham, responded to a report in the Global Times confirming that China was restricting imports of coal only from Australia and prioritising imports from Mongolia, Indonesia and Russia.
The Global Times report triggered a plunge in shares of Australian coalminers on Tuesday morning, with Whitehaven Coal down 8.36% about 11.15am and Yancoal down 10.44%.
From Tasmania, Morrison said the government was seeking clarification from Beijing about the reported coal ban, but if it was in place “that would obviously be in breach of WTO rules” and “obviously in breach of our own free trade agreement”.
He denied the Coalition was responsible for the souring relationship with China, arguing it was correct to stand up for liberal democratic values, Australia’s sovereignty, and to push for an investigation into the origins of Covid-19.
He challenged detractors to nominate “which one of Australia’s national sovereign interests ... the government should have traded away” to appease China.
Morrison hoped he would have a “direct conversation” with his Chinese counterpart in 2021, saying there was “no barrier to that occurring on the Australian side”.
Earlier Birmingham said that although he tended not to believe everything in Chinese state media, the report on coal restrictions was consistent with “a pattern of disruption in relation to Australian coal” that has seen bulk loaders stranded off China.
If true, the restriction could “potentially constitute discriminatory action against Australian producers [and] potentially constitute a breach of the type of undertakings that China has made to Australia”.
Birmingham said the Morrison government was very concerned by the “cumulative series of events and actions” against Australian producers and continued to raise concerns diplomatically and in the World Trade Organization.
Speaking in Sydney, Birmingham acknowledged that China, which imported $14bn worth of Australian coal in 2019, was a “significant market”, but said Australia also exported significant amounts to Japan, Korea and India, with strong growth also in demand from Vietnam.
Birmingham argued the import restrictions would harm China because Australian coal was “around 1.5 times more efficient in terms of energy production than most other competitor nations, including Chinese domestic coal”.
“That means that to get the same level of energy generation, China will end up having to use more coal from other sources and generate more emissions … which will do anything but help China in terms of meeting some of the commitments it has made to the world around emissions reduction as well.”
On Tuesday, the Australian reported that the China Iron and Steel Association (Cisa) had asked regulators to contact resource exporters Rio Tinto and BHP to demand an explanation for the rising price of iron ore.
Guardian Australia has confirmed BHP met the Cisa, which represents iron ore customers, last week and Rio Tinto will do so in coming days.
Market sources said such meetings were regular but the No 1 topic on the agenda at the BHP talks was the sky-high iron ore price, which has reached close to US$160 a tonne in recent days.
Chinese demand for iron ore is extremely high due to a building boom fuelling the need for steel as it recovers from the coronavirus pandemic.
Demand from other parts of the world has also picked up as construction activity increases.
But supply of the red metal has been curbed because Brazil, the other big producing country, has not recovered from a catastrophic tailings dam collapse last year and has been battling wet weather.
Meanwhile, Australian producers are unlikely to be able to pump out more ore to ease the squeeze because the main producing area, the Pilbara, is already operating at full tilt.
The Minerals Council of Australia’s chief executive, Tania Constable, said the success of Australia and China’s trading relationships relied on a rules-based system and urged both governments to “work together to resolve these issues and restore stability to the long-term trading relationship”.
Constable also rejected former Australian resources minister Matt Canavan’s call for a levy on iron ore to retaliate against China.
She said given Australia was a “clear winner from free trade” the levy would “damage the competitiveness of our world-leading minerals companies and their reputation as low-cost, reliable producers and exporters of quality commodities”.