The company is also facing a financial hit this quarter because it can’t use its rail and port allocation and is unable to find other coal producers which can take it up.

“As a consequence [of lower sales] coal stocks have increased, resulting in the potential for production rescheduling during the next quarter to mitigate being stock bound at several group mines,” Yancoal said in a statement.

“Sales across the group are currently less than both port and rail ‘take or pay’ obligations, resulting in these liabilities having an impact on the financial performance of the company.

“In the current market environment, difficulties are being encountered in securing short to medium-term opportunities to reallocate excess capacity to other shippers and mitigate ‘take or pay’ financial obligations.”

The “take or pay” liability exposure for Yancoal’s three Donaldson operations in New South Wales is increasing as more port capacity is commissioned at the Newcastle Coal Infrastructure Group.

“Donaldson will look to reduce this exposure by transferring port capacity to other producers where possible,” Yancoal said.

Equity coal sales for the September quarter were 3.2 million tonnes, about 18% higher than the September 2011 quarter but about 6% lower than in the June 2012 quarter.

Sales of all coal types have been impacted by the market downturn with the lower quality metallurgical coal bearing the brunt of the weak markets.

A significant amount of this coal is being sold into the thermal market on an energy adjusted basis at a price lower than would be achieved if the coal was sold as a metallurgical product.

“The market outlook remains uncertain despite coal production cuts in several countries, a restocking phase in China at steel mills and higher gas prices in the United States,” the company said.