CHINA’S bid to limit the consumption of low-quality thermal coal in major cities to help curb pollution will not apply to power plants, traders and utility sources said, exempting a sector responsible for half the country’s coal use.

    The government said Monday that from 2015 it would restrict the production, consumption and import of coal with high impurity levels in a bid to fight smog, much of which is caused by using coal for heating and electricity.

    The government set three new quality thresholds, with the most stringent requirement banning the use of coal with more than 16 percent ash and 1 percent sulphur content in key population centers like Beijing and the Yangtze River Delta region.

    The move led to worries among some Australian producers that deliveries to China — accounting for about a quarter of the country’s total exports — would be affected. But two sources from large power companies said utilities would be exempt from these limits.

    “This regulation doesn’t affect us. It doesn’t apply to power stations so we will continue taking Australian coal if the price is right,” said an executive in charge of coal procurement at one of the country’s top utility firms.

    Industry experts noted the National Development and Reform Commission’s (NDRC’s) policy document set the most stringent requirement for coal known colloquially as “san mei” — a variety typically used to heat hotels or restaurants.

    Coal consumed by large scale power plants and other industrial users is typically referred as “commercial coal.”

    “No one was really sure what the NDRC meant by ‘san mei,’ which is why the market got confused and thought it would include commercial coal,” said a trader from a large international firm. “But we have also received clarifications from our utilities customers that this regulation doesn’t apply to them.”

    With power plants exempt from the restrictions, the impact on imports will be limited.

    The Minerals Council of Australia has already said the regulation will have little impact on the country’s miners.(SD-Agencies)