THE future of one of the Hunter's biggest coal companies, Yancoal, is up in the air, with the Chinese mainland parent company Yankuang Energy, wanting to take over the Australian subsidiary and de-list it from the Australian stock exchange.
The takeover bid was launched from Yankuang's head office in Zoucheng City in China's northern coastal province of Shandong on Wednesday, May 25, just four days after Australian voters ended nine years of Coalition rule and installed Anthony Albanese's Labor government.
Yancoal Australia's board has rejected the initial takeover offer, and formally wrote to Yankuang in late June to say so.
But Yankuang has responded again with reasons as to why it thinks the bid should go ahead, and has appealed to Yancoal shareholders to get out while the share price is high, implying that the good times - including a recent dividend of 74 cents a share - will not last forever.
At the time of its bid, Yankuang already owned 62.26 per cent of Yancoal's shares, which are dual listed on the Australian and Hong Kong stockmarkets.
Yancoal has majority stakes in the Mount Thorley/Warkworth pits and Hunter Valley Operations (HVO) near Singleton, and owns the Stratford/Duralie opencuts near Gloucester and the Ashton, Austar and Donaldson mines in a portfolio of 11 operations in NSW, Queensland and WA.
Its partner in HVO, the Swiss-controlled Glencore, recently announced it had sold shares it held in Yancoal that represented a 6.4 per cent stake in the company, prompting speculation it had sold them to Yankuang.
But a Yancoal spokesperson told the Newcastle Herald yesterday that the speculation was wrong, and that the brokers involved in the sale had placed Glencore's shares with a range of institutional buyers.
The Yankuang bid is seen as a test of Australia's Foreign Investment Review Board policies under Labor.
Yancoal has formed an independent board committee to evaluate the Yankuang bid, with members including former Australian ambassador to China, Geoff Raby, a Yancoal director since 2012.
Bid information posted by Yancoal with the stock exchange shows Yankuang offering $US3.60 a share for Yancoal scrip, or $5.17 at the present exchange rate.
The share prices of all coal companies have risen substantially since the global shortage of thermal coal - Yancoal, and the Hunter Region's, main product - shot to absolute record levels of more than $US400 ($575) a tonne, an eight-fold increase on the sub-$US50 prices being paid midway through last year.
Yancoal's shares have risen from a recent low of $2.47 in December, to a peak after the bid of $6.10, settling back to a close on Friday of $4.71.
This is less than the indicative price of the original Yankuang offer, which Yancoal noted was a non-binding expression of interest and not a formal takeover bid at this stage.
The industry journal Australian Coal Report had the price of top-quality Newcastle thermal coal last week at $US425 ($610), reflecting the continued - and largely unexpected - boom.
A European Union ban on the importation of Russian coal is set to formally start on Thursday, and is tipped to add to the price pressures, as Russia is the third biggest exporter of coal after Indonesia and Australia.
The next stage of the Yankuang/Yancoal tussle may play out on Wednesday week, August 17, when the Yancoal board meets to discuss the company's half-yearly results.
Yancoal's latest update, for the three months to June 30, shows it sold 7.9 million tonnes of coal at an average price of $368 a tonne.
Chief executive David Moult said the high prices allowed the company to pay $930 million in dividends in April and generate $1.8 billion in June quarter cash on the way to a "record" year, and net zero debt in July.
