Korean restrictions on coal sulphur impacting Hunter exports

As the Newcastle Herald reported in June, environmentalists were welcoming new Korean regulations that meant the nation’s government-owned power stations were restricted to burning coal with an average sulphur content of 0.4 per cent or less over a 12-month period.

Sulphur content varies from mine to mine and seam to seam but while Hunter coal for power stations is generally regarded as low sulphur, it is still usually 0.5 per cent to 1 per cent sulphur.

In its latest, August 21, edition, ACR quotes traders saying that Indonesian coal will benefit ahead of Australian coal under the policy, although Korean power companies could still blend higher sulphur Australian coal with lower sulphur coal from Indonesia to meet the 0.4 per limit.

Read more: Korean coal tax could hit Korean-owned Bylong mine proposal

It says the sulphur limit is being trialled in October, with cargoes being assembled now that will be used during that period.

Low sulphur coal is favoured because when burned, the sulphur creates sulphur dioxide, which acidifies the environment and contributes to air pollution.

South Korea has traditionally been the Hunter’s third largest customer after Japan, which takes more than half of its coal, followed by Taiwan, with about 15 per cent, followed closely by South Korea and then China.

The latest Australian Bureau of Statistics figures show that the average price of thermal coal to Korea has risen from $108 a tonne in January to $113 a tonne in June.

Hunter Valley Coal Chain Coordinator figures show that Newcastle coal exports are down by about 2 per cent in volume so far this year.