Australia seeks answers after China rejects coal cargoes

SYDNEY, July 2 (Reuters) - Australia's government is looking into allegations by an industry group that Australian coal cargoes are being unfairly rejected by China.

A powerful mining lobby group in Australia said it was working with trade ministers over instances where China rejected cargoes on the grounds they did not meet quality requirements.

Coal is Australia's second-biggest export after iron ore.

The Minerals Council of Australia, which counts some of the world's biggest coal miners as members, including BHP Billiton (NYSE: BBL - news) , Rio Tinto (LSE: RIO.L - news) and Glencore , said cargoes were being rejected on grounds they failed to meet new quality import restrictions introduced on Jan. 15.

"Australia produces some of the highest quality export coal in the world so producers have confidence in their product," Minerals Council coal division head Greg Evans told Reuters.

"However we have less confidence in the associated testing protocols as they are not universally applied in a transparent manner." Evans said.

A spokeswoman for the federal trade minister, Andrew Robb, said he was aware of concerns raised by the coal industry regarding the potential trade impact of China's new coal quality standards.

"The government is doing everything reasonable to resolve these concerns, and will work together with China to ensure Australia remains a reliable supplier of high quality coal," she said.

China's Ministry of Commerce could not be immediately reached for comment.

China's new rules are not uniform across the country, but for exporters, the most relevant ones are conducted in cities in the southern Pearl River Delta, the eastern Yangtze River Delta and three northern cities including Beijing, Tianjin and Hebei.

The southeastern cities are the biggest users of imported Australian coal, given their distance from the bulk of China's own collieries.

"We have been working with the Commonwealth government though the Trade and Industry ministers and are hopeful we can get a resolution," Evans said, adding this could include testing the coal in Australia before shipment.

China's imports of metallurgical coal declined by 25 percent in the first four months of 2015 from a year ago to around 15 million tonnes, owing to weak growth in steel output and increased use of locally mined coal, according to Australia's Department of Industry and Science.

Chinese steel mills were also reluctant to import coal in early 2015 because of the risk of prices declining rapidly during transit. ($1 = 1.3141 Australian dollars) (Reporting by James Regan; Additional reporting by David Stanway; Editing by Ed Davies)