Yancoal’s acquisition of Rio Tinto’s Coal & Allied business unit in New South Wales last year has paid off for the company.
The Chinese-controlled company has benefited from an improvement in the global marketplace and demand for high quality semi-soft coking and thermal coal since 2017.
Yancoal recorded profit before tax of $539 million in the June 2018 half year, a $557 million improvement on the $18 million loss it registered in the same period a year earlier.
Its turnaround included contributions from the Hunter Valley Operations (51 per cent ownership) and Mount Thorley Warkworth mines (82.9 per cent), which it acquired from Rio Tinto through the Coal & Allied deal.
Yancoal reported that consistently strong extraction and delivery rates at Moolarben, the Hunter Valley Operations and Mount Thorley Warkworth increased saleable coal production to more than double the previous year.
Its total run-of-mine (ROM) coal produced was 23.29Mt and total share of saleable coal 18.13Mt.
Yancoal chairman Baocai Zhang said the acquisition of Coal & Allied continued to prove the company’s strategic foresight in negotiating a deal capable of strengthening its scale of operations in preparation for the global coal market’s eventual return.
“Yancoal’s financial turnaround is directly attributable to the performance of our tier-one assets and the ability of our management team to streamline and improve established operations,” Zhang said.
“As we build upon our success, we will continue to pursue a robust agenda of development and brownfield exploration. Following preliminary studies, we have commissioned further drilling and technical assessments to consider the feasibility of a potential underground opportunity at Mount Thorley Warkworth.”
Yancoal will continue to focus on sustaining its market growth, while also paying down debt in the year ahead.
Chief executive officer Reinhold Schmidt said Yancoal would maximise new opportunities at a time of global coal market price improvements.
“The addition of a full six months of attributable production from the new Moolarben underground has also positively contributed to the Company’s ability to meet increasing demand for high quality low-cost coal in our key markets of Korea, Japan and China,” Schmidt said.
“By successfully restructuring our operations to implement new fleet efficiencies and revise existing mine plans in the year prior, we are now benefitting from improved extraction and delivery rates across our open cut operations.”
Yancoal declared a maiden interim dividend of $130 million to reflect the strong performance.