Yancoal production rate drops, CEO not fazed

Yancoal chief executive Reinhold Schmidt has blamed global market conditions for a fall in output at the company’s coal operations during the September quarter.

The company’s run-of-mine (ROM) coal production and saleable coal production for the September quarter dropped significantly by a combined 9 per cent compared with the same period in 2018

However, chief executive Reinhold Schmidt is not fazed by the decrease and said the lower realised average price achieved by Yancoal in the quarter reflected current global market conditions of supply outpacing demand.

“We continued to optimise our product split of coal sales, to meet market demand and maximise price with thermal coal representing 85 per cent and metallurgical coal 15 per cent of attributable sales volume during the quarter,” Schmidt said.

At the end of the 2019 September quarter ROM coal production reached 15.6 million tonnes, dropping by 4 per cent compared with 16.2 million tonnes in 2018.

Saleable coal production also decreased by 5 per cent from 12.2 million tonnes in 2018 to 11.6 million tonnes this year.

Whereas attributable saleable coal production increased by 2 per cent, from 8.2 million tonnes in the 2019 second quarter to 8.4 million tonnes this quarter.

Schmidt said Yancoal’s operational performance remained on track to achieve its targets for 2019, including attributable saleable coal production of approximately 35 million tonnes and flat operating costs.

“Yancoal’s strategy is to pursue production optimisation opportunities across the business,” he said.

“In September 2019, Yancoal received Federal Government approval to increase open cute ROM production at the Moorlaben mine by three million tonnes per annum, although rail capacity constraints will not currently allow production of this additional output.”

Given present market conditions, Schmidt said Yancoal would not add “significant new supply to the seaborne market without considering the impact this could have on the supply-demand balance and market spot price”.

Yancoal also anticipate that a combination of demand recovery, specifically from Japanese power sector, and pressure on coal suppliers with a US dollar cost base, will result in exchange rate movements and bolstering market conditions over the next six months.

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