Mining stocks have dropped in the wake of the Chinese government’s decision to end coal subsidies, as global coal demand continues to decline.
The Australian dollar has weakened to its lowest level since August last year.
Gold and silver miners have also dropped in value.
Investors have reacted to the announcement by mining companies, who are also concerned about the health of coal mines in Australia.
The mining industry has been the focus of a series of reports by the Federal Government and the Australian Securities and Investments Commission (ASIC), which have accused the Chinese authorities of engaging in a massive and complex scam to drive down prices for coal.
The ASIC and Federal Government have released several reports accusing Chinese mining companies of using fraudulent practices to extract vast amounts of coal from Australia’s coal seams.
But mining stocks have declined over the past few months, with the Australian dollar dropping to a record low of $US4.60.
The market has rallied from that low, but the Australian stock market is down 2.6 per cent in the past two weeks.
The US dollar index of major currencies is up 1.4 per cent this week.
The decline has been linked to the global economic slowdown and the weakening of the dollar as a currency, which has boosted foreign exchange markets.
The Chinese government announced it was ending coal subsidies on Friday, cutting a $US3.8 billion ($5.8bn) cut in 2016-17 to help the country meet its greenhouse gas emissions targets.
The move has hit coal mining companies hard.
The International Energy Agency (IEA) has predicted the coal industry will lose more than one million jobs by 2030 if the scheme continues.
Its chief economist, John Anderson, said that had forced some companies to consider leaving the sector.
“This is a significant blow to Australia’s large and active coal sector,” he said.
The dollar has also weakened against other major currencies since the Chinese announcement.