April 9, 2017 - By the end of 2017, Yancoal Australia may become one of the top three coal producers in this country.
The company entered Australia in 2004 with the acquisition of the Austar coal mine in New South Wales. It has grown steadily since through further acquisitions. Listed in Australia, it is controlled by Yanzhou Coal Mining Company of China.
In Australia, Yancoal is a medium-sized coal producer, with operations mainly in New South Wales and Queensland. Annual production is approximately 25 million tonnes of saleable coal. (This covers the eight mines that it own, operates and/or manages.)
If Yancoal's planned acquisition of Coal & Allied Industries is successful, its annual production will double.
The reason: Coal & Allied Industries (controlled by Rio Tinto) has two major coal mines in New South Wales, known as Hunter valley Operations and Mount Thorley Warkworth, with combined production last year of 26 million tonnes.
In production terms, the acquisition will place Yancoal behind Glencore Australia, a little behind BHP Billiton and ahead of all other producers in Australia.
The acquisition – announced in January this year and dubbed Project Monke King by Yancoal's Chinese parent – is currently being assessed by the Federal government. A decision is expected mid-2017.
Yancoal also has substantial expansion prospects at its Moolarben mine, near Mudgee in New South Wales, with government approvals to double production there.
In the last year, the global outlook has improved for both coking coal (used in steel production) and thermal coal (used in electricity production). Global steel production has increased steadily since early 2016, following a fall in 2015. In addition, Asian countries have ambitious plans for the expansion of electricity production, much of this based on coal.