Yancoal is closely monitoring the condition of international coal markets to best assess how its business will be impacted for the remainder of the year and beyond.
Due to uncertain conditions brought about by the COVID-19 pandemic, the company has decided to defer all non-essential capital expenditure until 2021.
Yancoal stated that the pandemic had negatively affected demand for thermal and metallurgical coal but coal prices stabilised towards the end of the 2020 half-year.
In response to the uncertainties, Yancoal optimised the quality of its product, adjusted its saleable volume and sought sales into new markets.
Yancoal delivered an improved saleable production at Moolarben for the first half of 2020, where it produced 9.2 million tonnes of coal, and at Yarrabee, where it produced 1.5 million tonnes, an increase of 14 per cent and 25 per cent on its prior corresponding period, respectively.
However, saleable production at Mount Thorley dropped by 12 per cent to 4.4 million tonnes, and by 3 per cent at Hunter Valley to 3.2 million tonnes compared with its 2019 half-year results.
Yancoal has flagged coal price risk as something to be addressed for the remainder of the year, stating that the group will not enter commodity contracts other than coal purchases to meet its expected usage and sales requirements.
“Yancoal actively considers the effect its supply can have on specific coal markets and responds appropriately to prevailing market conditions,” the company stated in its annual report.
“Australia is expected to retain a market share of around 26 per cent of the growing world seaborne thermal coal requirement and to play a critical role as a primary source of premium grade coals.
“Ongoing challenges associated with obtaining development approvals for greenfield projects has the potential to support premium coal prices and domestic exporters with brownfield expansion opportunities, such as Yancoal, should benefit from such conditions.”