ASX-listed Yancoal Australia produced 17-million tonnes of run-of-mine (RoM) coal across its operations for the quarter ended June 30, aligned with the company’s forecast and up 12% from the first quarter.

Saleable coal production for the period was 12.3-million tonnes, which the company says matched the previous quarter. Yancoal says the mines operated to plan after some weather disruptions.

Prior investment in pumping and water storage continues to provide the capability to quickly resume mining at full production rates after rainfall.

Moreover, the company reports 9.4-million tonnes of attributable saleable coal production.

Although attributable sales were lower than production at 8.1-million tonnes, owing to temporary port closures following the weather events, the company expects to reduce accumulated inventory and fully recover the sales position by September.

The A$142/t overall realised coal price in the second quarter, comprised an 11% lower realised thermal coal price and a 10% lower realised metallurgical coal price compared with the first quarter. The realised coal prices were in line with relevant coal index trends.

The company expects to produce between 35-million and 39-million tonnes of attributable saleable production for the full year, noting that output from the first half of the year was ahead of the mid-point, adding that the full year will potentially be toward the upper end of the range.

The company also expects to achieve between $89/t and $97/t in cash operating costs, noting that costs from the first half of the year are likely to be about mid-range when reported in August.

Yancoal says it expects between $750-million and $900-million in attributable capital expenditure and is on track to fall within guidance.

“We have delivered the best first half operational performance of the past five years. We successfully built on our first quarter operational performance and are now well placed to deliver a better production outcome than last year,” says acting CEO Ning Yue.

Yue says the production figures are 15% to 16% ahead of the first six months last year.

“If we sustain the first-half attributable saleable coal production rate, we will be in the upper half of the guidance range this year, and a modest uplift can take us toward the upper end of the range.”

Yue notes that the company’s cash operating costs are also on track and should sit within guidance when it reports the first-half results in August.

He explains that international coal indices faced a soft pricing environment owing to strong supply and subdued demand in both the thermal and metallurgical coal markets during the second quarter of this year.

Volatility and economic uncertainty stemming from geopolitical events in the Middle East and implementation of global trade tariffs bolstered speculative trading activity but have not impacted underlying demand factors at this time.

During such conditions, Yue says it focuses on maximising its operational efficiency and minimising costs to navigate the current cyclical low in coal prices.

The company finished the quarter with a cash balance of $1.8-billion after paying a fully franked final dividend of $687-million – A$0.52 a share – in April and completing an additional tax payment related to the 2024 financial year period.

Yue says some sales slipped from the second to third quarter as a result of temporary closures at the Port of Newcastle which impacted both the revenue and cash balance recorded in the second quarter.

“Our strong financial position enables us to evaluate and consider opportunities that may present during this cyclical downturn.

“We are beginning to see supply-side response to the lower coal prices, which aligns with our view that coal indices are well below marginal cost on the global cost curve,” says Yue.

He says Yancoal anticipates further supply-side reductions from higher-cost producers, contributing to a potential recovery in coal price indices, as was the case with past coal price cycles.

DEVELOPMENT PROJECTS

The company notes that, at the Mount Thorley Warkworth underground mine, in Australia, prefeasibility studies are subject to further assessments, with a feasibility study to potentially begin in the first quarter of 2026.

Should the development proceed, the company says this project could significantly extend the future production profile, without change to annual production limits.

At the Hunter Valley Operations (HVO), the company says the joint venture is working through the approvals process to allow operations to continue within the existing mining lease footprint and to extend the mine life beyond the current extraction limit for HVO North.

Additionally, the New South Wales Department of Planning, Housing and Infrastructure is continuing its assessment of Moolarben’s OC3 extension project, which, if approved, would add 30-million tonnes to the mine’s average life-of-mine RoM production – without change to yearly production limits.

The Stratford pumped hydro and solar project is subject to ongoing feasibility assessment, commercial viability evaluation, and both internal and external approval processes.

Yancoal incurred $870 000 in exploration capital expenditure during the period at HVO and Moolarben.

The exploration work comprised 14 core and noncore boreholes for a total of 2 482 m drilled. Drilling was focused on structure and coal quality at HVO and structure at Moolarben.