YANCOAL shares have risen by 10 per cent since the company's latest quarterly report confirmed "record cash generation despite production slipping 20 per cent due to wet weather and pandemic disruptions".
The Chinese-backed company has long owned the Stratford Duralie, Moolarben and Ashton mines exporting through Newcastle, and in 2017 bought an 82.9 per cent stake in Mount Thorley Warkworth and a 51 per cent share of Hunter Valley Operations (with joint venture partner Glencore), after Rio Tinto decided to exit thermal coal.
Yancoal said it was expanding the capacity of the Moolarben coal preparation plant to take advantage of an approval to lift run-of-mine production from 14 million tonnes a year to 16 million tonnes a year.
It was still assessing the possibility of a new underground mine at Mount Thorley Warkworth, but did not expect to "reach a conclusion" this year.
Wet weather dogged production at open-cut mines last year, and Yancoal's 20 per cent fall in production is mirrored in a noticeable drop in total exports through Newcastle's three coal export terminals, where shipments totalled 136 million tonnes for 2022, a 13 per cent fall on the 156 million tonnes recorded in 2021.
But as with other recent earnings updates from coal companies, Yancoal said the present run of record high prices had more than outweighed the tonnage reductions.
Yancoal said its average realised price for all coal in the three months to December 30 was $422 a tonne, more than double the $209 a tonne in the final three months of 2021 and almost six times the $72 a tonne reported for the fourth quarter of 2020.
The strong quarterly report has seen Yancoal shares rise 10 per cent to near record levels of $6.73 yesterday.
Yancoal noted that prices for top-quality 6000-kilocalorie Newcastle thermal coal remained "near record levels".
"But if the heavy rain associated with the La Nina weather pattern has passed, as suggested by the Bureau of Meteorology, Australia's exports should gradually improve," the company's earnings report said.
It said extra mining and dewatering equipment had been introduced at affected mines to speed the return to planned production levels.
Yancoal said that while "supply-side constraints" were a factor in driving up prices, it noted another record year of demand, with the International Energy Agency reporting a 1.2 percentage point increase in consumption last year, topping eight billion tonnes for the first time.
In other coal news, Japanese company Idemitsu has scaled back extension plans for its Boggabri open-cut, seeking another three years of operation to 2036 (instead of 2039 previously) and to maintain maximum production at 8.6 million tonnes a year, rather than raising it to 9.1 million tonnes as previously requested.
Documents are on display with the Department of Planning and Industry, for public comment by January 31.
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