China's domestic coal sector may lose its competitiveness to imports by 2015, forcing state companies to buy and import increased amounts of foreign coal, UK-based consultancy Wood Mackenzie stated in a new report. It projects it will be cheaper for six provinces and municipalities that account for much of China's manufacturing to source 90% of their coal from overseas by 2015 due to the appreciation of China's currency against the US dollar and rising domestic production costs.
"By 2015, our modeled scenario shows that 857 million [metric] tons of coal could be imported into China below the 90th percentile of domestic Chinese coastal supply costs," it said.
Woodmac estimated that last year, 517 million tons of thermal coal were railed from mines in central China to ports and then sent by sea to Jiangsu, Zhejiang, Guangdong, Fujian, Hainan and Shanghai provinces. However, labor costs in China's coal-mining sector rose 13% last year, compared with an 8% increase in Australia, Woodmac said.