China is looking to set quality standards for both imported and domestic traded thermal and coking coal and bar the import and domestic delivery of coal that do not meet the new standards, according to a draft regulation from the National Energy Administration obtained by Platts.

The NEA is preparing the new regulation with the aim to reduce air pollution, and is now in the process of seeking feedback from the coal industry, market sources said.

Proposed quality standards for imported thermal coal, or thermal coal to be "delivered in long distance," are: maximum 25% ash on dry basis, maximum total sulfur content of 1% on dry basis and net calorific value of no less than 19 mega joule/kg (4,540 Kcal/kg), according to the draft.

The draft however, did not give a definition on "long distance."

As for domestic traded coal, the proposed specifications for domestic traded thermal coal are: maximum 40% ash on dry basis, a maximum total sulfur content of 3% on dry basis, no more than 20% total moisture, and net calorific value no less than 15 MJ/kg (3,584 Kcal/kg).

This means domestically produced thermal coal that do not meet the proposed quality standards for coal imports will need to be traded and consumed locally within its region of production, through the use of clean technology such as desulfurization.

For coking coal, the draft has set the quality standards for all coking coal traded in China at a maximum 12% ash content, no more than 1.75% of total sulfur and maximum 12% total moisture content.

The proposed standards are applicable to both domestic and imported coking coal and is seen as a move to stop Chinese traders from importing un-washed or high-sulfur coking coal, market sources said.

"The draft is generally targeting at thermal coal, so at this early stage, the central government officials are asking for feedback from miners and power plants," a source at large state-owned mining company told Platts.

A purchasing manager at a large state-owned mill and two sources with large international coking coal trading companies said they had not been invited for discussions yet.

An industry analyst who had taken part in the discussion with government officials told Platts that he thought the rules need to be further modified, as "people can just import coking coal under the name of thermal coal," he said, adding that some thermal coal importing companies and power plants were resisting strongly.

"But the government is determined," the mining source said, adding that "the industry can only fight for a lower standard."

The mill purchasing manager said he was not worried about the new proposed standards as they are already buying high-quality coking coal. The two coking coal trade sources however, said they would wait for the new standards to be officially announced and implemented before they can assess the impact.