So great will Yancoal’s control be over NSW’s biggest export, coal, and so vast its coal empire, stretching from Mudgee to the upper Hunter and down to Mt Thorley near Singleton, that it would be the undisputed king of coal in the state.
There has been a lot of argy-bargy over the past two weeks between China-majority owned Yancoal and its formidable challenger Glencore, the Swiss-based commodities giant run by the billionaire trader Ivan Glasenberg.
After a number of offers and counter offers, it appears the Rio Tinto board is opting for the Yancoal bid because of the greater certainty of regulatory approvals in Australia and China.
Yancoal chairman Xiyong Li said the takeover would form the basis of the company’s future growth in Australia and financially strengthen the company.
“This is a transformative and exciting acquisition for Yancoal shareholders and will form the basis for our future growth and success as Australia’s largest pure-play coal company,” Li said in the company’s latest annual report.
“The substantial cash flows from Coal & Allied’s assets, combined with the anticipated synergies and proposed equity raising will materially strengthen Yancoal’s balance sheet.”
Li said the company was also growing by ramping up production at its existing mines to take advantage of higher prices experienced over the past six months.
“Responding rapidly and strategically to increased market demand and global coal market price improvements in the second half of the year, Yancoal achieved a total production result well above its previously published operational guidance of 13Mt saleable coal,” he said.
Yancoal’s March quarterly production of 4.18Mt of saleable coal was up 32% on the year prior.
In NSW, Yancoal continues to operate the Moolarben and Stratford Duralie open cut mines and manages the underground mines of Austar, Ashton and Donaldson on behalf of Watagan Mining Company.
In Queensland, Yancoal operates the Yarrabee open cut mine and has maintained its near 50% equity interest in Middlemount Coal.
When all is this added to Rio Tinto’s sizable Coal & Allied assets, the scale of Yancoal’s empire will be even greater.
In 2016 Rio produced 16.7 million tonnes of thermal coal, principally from its Hunter Valley assets which include Warkworth, Mt Thorley and HVO, and a further 4.1Mt of semi soft coking coal.
That is a lot of coal coming from one company.
Globally, this is going to give Yancoal some clout as a major producer and exporter.
Within NSW, it will be able to share resources between its operations as well as dictate the future shape of infrastructure development in the state going forward.
Hogsback thinks we are seeing the end of one phase of coal mine development in NSW, with the historical Coal & Allied assets passing from the 100% ownership by the Rio Tinto corporation to emerging global player Yancoal, which has the Chinese Yanzhou giant as its major shareholder.
