Coal news and updates

Yancoal loss widens amid low coal prices, global oversupply

Chinese-controlled coal miner Yancoal has vowed to maintain its output target despite soft global market conditions which have led to a blowout in the company’s bottom line.

Yancoal (YAL) posted a net loss of $145.4 million for the half-year ending June, a 24.5 per cent widening compared to last year’s interim loss of $192.7m.

Revenues for the miner also declined, falling 3.1 per cent to $634.4m.

“Sustained global market oversupply and depressed thermal and metallurgical coal prices provided little opportunity for earnings improvement during the half-year,” Yancoal said.

But the company said the continuing restructure of its mining operations led to improved operational efficiencies and cost reductions.

Late last month the miner said it was planning to cut up to 225 staff from its Hunter Valley mines in NSW because of the global coal market downturn.

Over the six months, the miner saw production in the order of 10.6 million tonnes of run-of-mine coal, and 7.7 million tonnes of saleable coal.

The price of thermal coal has fallen almost 10 per cent since the start of the year, down to just under $US60 a tonne, a far cry away from the $US150-per-tonne level just three years ago.

Electricity generated by coal in China declined 3.6 per cent between February and June, compared to the same period last year. The government in Beijing plans to cap coal use to 62 per cent of power generation by 2020, and it has announced new quality controls on dirty coal.

Yancoal further developed its product blending strategies to target new marketing opportunities and meet the requirements of China’s new import quality standards.

“Our operations have not been immune to the significant impacts of the negative operating environment,” chief executive Reinhold Schmidt said.

“lat coal prices and global market oversupply, aided by the ongoing impact of take or pay arrangements, have forced our New South Wales operations to reduce their employee numbers in recent months,” he said.

Yancoal said it was holding steady on its production guidance, despite seeing a flat thermal and metallurgical coal global market.

“In the second half of the year, we remain focused on reducing costs and maintaining consistent strong production in line with operational targets, while developing our brownfield growth strategy,” Mr Schmidt said.

source: http://www.theaustralian.com.au