Yancoal Australia subsidiary Hunter Valley (HV) Operations has struck a supply agreement with Glencore Australia Oil to purchase diesel fuel from next month.
The agreement, which expires in October 2022, is capped at $180 million in payment by HV to Glencore each year, totalling $360 million in maximum payment during the entire agreement period.
The two companies came to the agreement after an open tender process and decision based on reputation, reliability and pricing.
It represents the first diesel supply agreement between the two companies as HV previously sourced its fuel from other suppliers.
“The (Yancoal) directors … are of the view that the terms of the 2019 diesel fuel supply agreement (including the proposed annual caps) are fair and reasonable,” Yancoal stated.
“None of the directors has a material interest in the 2019 diesel fuel supply agreement and the transactions.”
HV Operations is owned by Yancoal (51 per cent) and Anotero (49 per cent), the latter of which is controlled by Glencore. The HV joint venture was established in 2017.
The operation comprises a multi-pit open cut mine in New South Wales and supplies over 13 million tonnes of thermal and semi-soft coking coal to international markets in 2018.
It had JORC run-of-mine coal reserves totalling 796 million tonnes as at December last year.