Loading A Chinese coal industry insider confirmed there would “certainly” be moves in this area, but was only willing to speak to potential buyers and not the media. And the director of the US-China Energy Centre in West Virginia, James Wood, said: “It is likely that coal exports are part of the trade talks between the US and China; especially in respect to trade deficit balances.” West Virginia’s Appalachian coking coal is similar to Queensland coal, he said, as it was "high quality and reasonably priced.” But Australia's Minister for Trade, Simon Birmingham said: “Australia is recognised across the world for its high-quality energy resources and we should continue to back the competitiveness and quality of our resources companies to compete on fair terms with any other nation.”

China Energy Investment Corporation, formerly known as China Shenhua, has made multiple visits to West Virginia, looking at investment and exports, and announced a $US83.7 billion ($117 billion) investment in West Virginia last year, without giving further detail. Shenhua has also been seeking to open a controversial coal mine in NSW’s Liverpool Plains. One of America’s largest coal producers, Arch Coal, separately announced last month it would open a new mine in West Virginia producing three million tonnes of premium coking coal annually for the Asian seaborne market, and was “already engaged in discussions with leading steel producers around the world”. West Virginia has the highest approval rating for Trump of any US state after he pledged to revitalise its coal industry. The US Centre for Strategic and International Studies (CSIS) noted China turned to the US to replace Australian coal in 2017, after Cyclone Debbie devastated Queensland coal mines. US coal exports leapt 60 per cent that year, with 3.2 million tonnes shipped to China.

Coal has been used in the past as part of trade negotiations between China and the United States. Last year, the Chinese online industry forum Mysteel reported the Chinese government had “asked several large steel mills to increase the amount of imported coking coal from the United States, with the intention to reduce the trade deficit between China and the United States”. Chinese workers taking samples of imported coal at a port in Rizhao. Credit:AP But Mysteel’s Li Juan said on Thursday the directive wasn’t implemented, after the trade war worsened and China instead imposed a retaliatory 25 per cent tariff on US coal. “Steel mills mostly care whether the price is reasonable or not,” Mr Li said.

Loading US Treasury Secretary Steven Mnuchin has said the US could “easily get about $US40 or $50 billion of energy” exports to China as part of the trade deal. Mei Xinyu, a researcher with the Chinese commerce ministry’s International Trade and Economic Cooperation Institute, said the amount was more likely $US25 billion in energy imports - a lower figure because China “has to think about whether the US will choke our throat” amid a new Cold War climate. Wood, from West Virginia said: “Queensland coal and Appalachian coal are similar. From the Chinese perspective, apart from the politics, the landed cost per tonne would be an important criterion. "Another would be the ability to sign a long-term, uninterruptible supply contract, so plant operations are not affected by disruptions.”

Wood Mackenzie coal analyst in Beijing, Yu Zhai, told The Sydney Morning Herald and The Age that even if the 25 per cent tariff on US coal was dropped as part of a trade deal, the US would not be able to meet China’s entire demand for coking coal. “Australia supplies 3-4 million tonnes a month, for the US it is just 3 million tonnes a year. We can’t see that US coal can replace Australia’s volumes,” he said. “No other country can replace Australia on metallurgical coal quantity and quality.” Diplomats in Beijing from multiple countries allied to the United States are unhappy they may lose trade with China when Mr Trump signs a deal with Chinese president Xi Jinping. They see it as a return to "managed trade", undermining global free trade principles. Instead of encouraging China to further open up its markets to the benefit of all trading nations, the deal may have the effect of locking in supply deals for US companies alone, and it may encourage China to use non-tariff barriers as Beijing looks for ways to guarantee supply for the US.

Last month Canadian canola was blocked for failing pest inspections, but there is concern in diplomatic circles the crop was blocked to make space for US substitutes. Chinese analysts confirmed to The Age and The Sydney Morning Herald that Australian and Mongolian coal was facing slower unloading and customs inspections. The Chinese foreign ministry has given the official reason of environmental and quality inspections. Oil and LNG are the main US energy exports, but Chinese industry journals have said US coal could fill the gap if the major coking coal suppliers, Australia and Mongolia, became unavailable. Last year China accounted for 23 per cent of Australia’s metallurgical coal exports by value and 19 per cent of thermal coal exports. Shanghai Metals Market also reported in February that the US was an alternative source of coking coal if Australian and Mongolian imports were blocked “but the quality is unmatched by Australia’s”.