Yancoal eyes more Australian coal acquisitions

Spanish Market: Coal, Coking coal
20/08/24

Chinese-owned Australian coal producer Yancoal is holding on to its cash to take advantage of acquisition opportunities as it looks to grow its market position.

The firm will look to repeat its company-changing 2017 acquisition of Rio Tinto's thermal coal mines, which left it close to the bottom of the cash-cost curve and in a position to maintain strong margins through the pricing cycle, according to Yancoal chief executive David Moult.

"We have a preference for met coal assets but we do look at thermal coal as well. In my opinion, however, we've already got the top three thermal coal mines in Australia," Moult told shareholders. He will look at all opportunities but reiterated the success of the Rio Tinto acquisition that delivered Mount Thorley Warkworth and a stake in the Hunter Valley Operations joint venture with Glencore.

Yancoal operated at a cash margin of A$60/t during January-June, down from A$144/t a year earlier, largely because of lower sales prices.

There are several opportunities open for Yancoal in Australia, including UK-South African firm Anglo American's coking coal mines in Queensland, which are still for sale despite the 5mn t/yr Grosvenor mine remaining closed following a fire in late June.

Yancoal has further switched its sales to China, following the reopening of that market to Australian coal in late 2022, while reducing sales to Japan, Taiwan, Europe and Vietnam (see table). China is the primary destination for Yancoal's high-ash, low-grade thermal coal, which the firm washed to higher grades during Beijing's informal ban on Australian coal imports.

The firm maintained its 2024 saleable production guidance of 35mn-39mn t. This implies the firm would need to produce at least 18mn t in the second half of this year to meet the target.

Argus assessed high-grade 6,000 kcal/kg NAR thermal coal at $145.41/t fob Newcastle on 16 August. It has been in the range of $115-155/t for most of the past year, with Moult expecting it to stay similarly rangebound in the short to medium term. Argus assessed low-grade 5,500 kcal/kg NAR thermal coal at $86.74/t fob Newcastle on 16 August. It has been in a tighter range of $85-105/t over the past year.

By Jo Clarke

Yancoal sales revenue (%)
	Jan-Jun '24	Jan-Jun '23	Jan- Jun '22

Japan	23	32	29
Taiwan	17	20	23
South Korea	15	18	15
China	33	15	0
Thailand	7	5	4
Vietnam	<2	4	8
India	2	2	5
Australia	<2	2	1
Other	<2	2	3
Europe	<2	0	6
Malaysia	<2	0	6
Source: Yancoal

Australian coal price comparisons ($/t)

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