Lobbying by coal miners

Plans to raise the bar for overseas coal came after major miners lobbied with the government to curb imports earlier this year, sources said, after a near 30 percent spike in imports last year, combined with slower consumption growth, prompted a steady fall in domestic prices.

Many Chinese coal companies, already battling rising costs, climbing debt and a surge in overdue payments, have also begun to suffer financial losses.

"This is a clear move to protect the coal industry. If the authorities were genuinely concerned about pollution, they could force all coal-fired power stations to be fitted with or upgrade their desulfurization units," said a Beijing-based trader.

"Also, sulfur and ash are the main culprits for air pollution. It has nothing to do with calorific value."

Shenhua, China's top coal producer which invested millions to develop massive coal mines in Inner Mongolia, produces vast amounts of lower calorific value thermal coal which is between 4,500-5,500 kcal/kg.

"The utilities and local trading firms are going to get hurt since many of them have been blending low-grade Indonesian coal with high quality ones to lower their costs," said a Shenzhen-based trader.