Australian has found alternative markets for coal and copper to fill the void left by Chinese trade sanctions, according to a new report by the Lowy Institute.

The mining industry was bracing for a double whammy when China’s trade war with Australia started hitting the headlines just a couple months after the pandemic struck.

Exports of coal, copper, barley, beef, cotton, seafood, sugar, timber and wine to China were worth roughly $25 billion in 2019.

Based on the three months to January 2021, the value of these exports had plummeted to about $5.5 billion a year.

However, an analysis by Lowy Institute chief economist Roland Rajah concluded the trade spat had not cost Australia the $19.5 billion gap between the two figures because producers—excluding wine and beef—had managed to find alternative markets.

Coal represents more than half of the Australian exports affected by value.


“But Australian coal exports to China had already declined substantially prior to the imposition of coercive sanctions starting in October 2020,” Mr Rajah wrote.

“That earlier decline was linked to China’s efforts to prop up its domestic coal industry, rather than singling out Australia for punishment (Australia’s share of China’s coal imports was largely unchanged during that period).

“By the time China started banning Australian coal specifically, these exports were already running about $7.5 billion a year lower than they were in 2019.”

With the ban, Australian coal exports to China then fell another $6 billion from $6.6 billion in September 2020 to $0.6 billion in January 2021.

Thermal coal exports to China from Newcastle Port, Australia’s biggest coal terminal, completely stopped in December 2020.

Yet, Australian coal exporters have managed to divert to other markets, such as India, Taiwan, Vietnam, Japan and Singapore.

Monthly trade figures show 13.91mt of coal was exported from Newcastle Port in January 2021, which was on par with the 13.88mt exporter in January 2020.

By January 2021, Australian coal exports to the rest of the world were running $9.5 billion higher in annualised terms than before the ban.

Australian exports to India have surged, reaching a monthly record in January, at almost seven million tonnes – nearly double the level of a year ago, according to the Department of Industry’s latest Resources and Energy quarterly report.

“In 2020, nations in Southeast and South Asia (excluding India) collectively imported around 150 million tonnes of thermal coal, and are expected to play a substantial and growing role in thermal coal markets into the 2020s,” the report said.

This was up from about 50mt in 2010, with the largest importers of thermal coal in these regions being Malaysia, Vietnam, and the Philippines.