From strength to strength: Yancoal celebrates 20 years in 2024

The Year of the Wood Dragon is particularly auspicious for Yancoal (ASX: YAL) as it celebrates 20 years of operation in Australia in 2024.

What started as a single mine operation in 2004 has now grown into one of country’s largest coal producers and exporters in the country.

Its majority shareholder, China-based Yankuang Energy Group, is pleased with what the company has achieved in two decades.

Yancoal Australia chairman Gang Ru says the company has established itself as a world-class coal mining business in Australia.

“[We have] transformed challenges into opportunities and achieved extraordinary results.”

The coal miner turned things around in the few short years since COVID-19 lockdowns began in early 2020.

By the end of 2023, Yancoal was achieving production levels not experienced since 2020.

Run of mine (ROM) production achieved was 60.2mt on a 100% basis.

Yancoal Australia chief executive David Moult says the company survived several challenging years.

“In many ways, 2023 represented a return to ‘business as usual’ for Yancoal, having ably navigated unprecedented wet weather, the COVID-19 pandemic, supply chain interruptions and labour availability over the past few years,” he said.

“Over the course of 2023, our workforce worked together in the relentless pursuit of our goals to increase production and control costs – objectives we successfully achieved.

“While our mines across NSW and Queensland again started the year with high water storage levels, our previous investments in dewatering equipment and additional water storage dams allowed us to implement recovery plans and to focus on rebuilding mining inventory.

“We prioritised recovery works in the early part of the year on pre-strip and overburden removal, as well as rebuilding of overburden blasted inventory, in order to expose in-pit coal and ROM coal inventories.

“This allowed us to build operational momentum, and a gradual and sustained improvement in productivity was experienced over each quarter during the year.”
Yancoal Australia knows how to get on with the job of being a reliable source of energy and resources.

Its overwhelming drive to power communities around the world has seen the company establish itself as a world-class mining enterprise, providing a mix of high-quality thermal and metallurgical coal to its global customers.

According to latest figures from 2023, the lion’s share of Yancoal Australia’s customers are based in East Asia, with Japan and China taking up a good chunk at 50%, followed by Taiwan at 19% and South Korea at 15%.

Yancoal Australia’s diversified international customer base broadened in 2023 with the company selling coal into 14 markets, including a notable uplift in sales to China that year.

Across NSW, Queensland and WA, the company employs around 6000 people in what Mr Ru calls “a unique workforce with mix of Chinese and Australian cultures”.

“This has benefited both our shareholders and the communities in which we operate,” he said.

The resilience that the company builds in local communities is mirrored in the way it works with regulators for expansion and extension approvals of its operations.

In September 2024, the Federal Government made an announcement in favour of Yancoal’s Ashton underground coal mine extension.

Ashton currently employs a total of 366 staff, including contractors, and directly engages 467 suppliers and service businesses.

The mine also supports a further 1,850 indirect jobs, generating wages and salaries of $133m.

All are set to benefit from this announcement, with the extension allowing Ashton to continue contributing to local communities, especially in the Hunter Valley, and the NSW economy more broadly.

The approval notice said it would “conduct underground longwall mining of coal seams at the Ravensworth mine complex, develop associated infrastructure and transfer coal, water and gas to the Ashton coal project, in Ravensworth”.

Yancoal issued a statement saying it welcomed the decision following the company’s acquisition of adjacent and approved underground coal resources at Glencore’s Ravensworth underground mine in 2021.

“Under Glencore’s ownership, the Ravensworth underground mine had been in care and maintenance since 2014,” a Yancoal spokesperson said.

“Around 20mt of ROM semi-soft coking coal are approved for extraction at the Ravensworth underground mine but have remained unmined.”

“Accessing these unmined metallurgical (steel-making) coal resources could extend the life of Ashton by around seven years.”

“The Ashton and Ravensworth underground mines are located next to each other, and this extension to Asthon’s underground operations is a practical solution given proximity to the resource, and available equipment and infrastructure.”

“This is also an efficient and beneficial use of NSW resources and ensures continued employment and economic benefits for local and regional communities.”

“Key components of the existing approved underground operations at Ashton will remain unchanged, including: product type (metallurgical coal), the annual maximum coal production rate; coal processing limits; hours of operation; off-site transport; management of reject material; and general infrastructure.”

“In 2023, the Ashton underground mine, which has been in operation for 20 years, generated direct and indirect economic contributions of around $420m to state and regional economies.”

When asked about other development plans in the works, a Yancoal spokesperson says the company is focusing on organic growth over the long-term, particularly brownfield expansion and extension projects.

“The Group will continue to focus on exploration and potential expansion works across the tier one assets of Moolarben, Mount Thorley Warkworth (MTW) and the Hunter Valley Operations (HVO),” the company spokesperson said.

“At Moolarben, modifications to increase the coal wash plant production capacity to 16mtpa were completed and commissioned during 2023.”

“Also at Moolarben, the OC3 Extension Project proposes to extend open cut operations to the south and east of the existing OC3 mining area.”

“The extension project is an important growth project for Moolarben, which commenced operations in 2010 and has approval to mine until 2038.”

“The OC3 extension project is a logical extension of mining operations within existing mining tenements and company-owned freehold land, as well as having the benefit of using existing coal handling, processing and transport infrastructure.”

“The project would allow access to 30mt of ROM coal, with capital expenditure anticipated to be approximately $130m.”

“An Environmental Impact Statement (EIS) for the OC3 extension project was lodged with the NSW Department of Planning in November 2022.”

“An Amendment Report and Submissions Report were submitted in March 2024 and the project is currently being assessed by the Department of Planning.”

The Yancoal spokesperson says the MTW underground mine concept remains subject to study and assessments, with the company continuing to progress its proposed HVO Continuation Project despite regulatory delays.

“The Continuation Project has now entered the fifth year of the approval process,” the company spokesperson said.”

“Unfortunately, the regulatory assessment process is taking longer than expected and there remains some uncertainty around the NSW Government approach on issues such as greenhouse gas emissions assessments and proper consideration of the Federal Safeguard Mechanism.”

“We will consider making amendments to our HVO Continuation Project application in response to feedback from the NSW Government, this may further push out the approval timeframe.”

“HVO is seeking a short-term extension of time from the NSW Government to allow ongoing mining within the currently approved area.”

“This will safeguard the jobs of our workforce and provide certainty to our contractors, local businesses and community partners across the region.”

Yancoal Australia has invested over $10b into Australian assets and developed a safe, profitable and sustainable business, but the company could not have reached its momentous 20-year pinnacle without first looking after its people and communities in which it operates.

“Supporting local communities in the regions where we operate is an important activity that Yancoal takes seriously,” the company spokesperson said.

“Yancoal’s Community Support Program (CSP) [includes] continued corporate-level sponsorships of the Clontarf Foundation, Westpac Helicopter Rescue Service and the Cancer and Ageing Project at the Queensland University of Technology.”

“The CSP element that is managed by sites contributed $0.8m across 154 organisations.”

“During 2023, we also commenced a process to assess implementing an appropriate framework so that Yancoal can continue to improve engagement with our indigenous stakeholders.”