Australia's mining industry faces a huge risk after China announces a ban on the sale and import of 'dirty' coal to solve its problem on air pollution.

About $1.5 billion worth of damages can be experienced by the Aussie's coal mining industry after the China decided to prohibit the sale and import of coal in the quest to improve the country's air quality.

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According to reports from the Sydney Morning Herald, the Australian mining industry seeks to clarify changes in coal import regulations in the Asian country.

By January 1, China is set to reduce the use of coal to gradually treat the Asian nation's recurring problem on air pollution especially in its major cities like Beijing and Shanghai.

Coal dirt grade will be determined based on its ash and sulfur content, that of which reaches over 40 percent ash and more than 3 percent sulfur will be banned from sale and import in the country.

Lignite with ash content of over 30 percent ash and 1.5 percent sulfur will also be prohibited soon.

"The regulation is mainly to promote use of cleaner coal and will affect low-quality coal's flow into China," China Coal Transport and Distribution Association Analyst Winston Han explained.

Meanwhile, reports also reveal that the country is discretely aiming to boost its domestic coal providers by cutting down overall imports from foreign countries.

China is considered one of the biggest importers of coal where it accounts for two-thirds of the nation's power source.

Coal import in the country is expected to drop for about 15 percent from the former 300 million tons imported every year.

John Rolfe, a resource economist from Central Queensland University in Australia, forecasts a 40 percent impact on coal imports to China, adding that Australian coal currently does not meet the China's expected coal standards.

The Minerals Council of Australia, however, disagrees claiming that there is "no evidence" of the new regulations' negative effect on Australian coal exports to China.

TagsAustralia, coal mining, industry, dirty coal