Coal Miner Reports 33% Drop in Annual Profit Due to Lower Coal Prices
Sydney, Australia – Yancoal Australia has projected stable coal production estimates for fiscal 2025, despite reporting a 33% decline in annual profit, citing weaker coal prices as a key factor.
The miner anticipates attributable saleable coal production between 35 to 39 million metric tonnes for the fiscal year, aligning closely with the 36.9 million tonnes recorded in 2024.
“The production and cash cost guidance ranges remain the same as last year,” said Acting CEO Ning Yue in a company statement. Yue emphasized the company’s focus on operational efficiencies and cost management strategies to sustain profitability despite market headwinds.
Coal Prices and Market Challenges
The drop in profit comes as coal prices have slumped over the past six months, mainly due to China’s coal production surpassing demand, leading to higher stockpiles and falling prices. Despite seasonal increases in fossil fuel consumption during winter, excess inventory and sluggish economic growth have kept prices suppressed.
Industry analysts indicate that China’s coal imports and stockpiling behaviors have significantly impacted global price stability. Additionally, geopolitical factors and regulatory shifts in emissions policies across various countries have created uncertainties in the coal market.
Yancoal, which saw the unexpected departure of CEO David Moult in January, reported a 24% decline in the average ex-mine selling price of coal to A$176 per tonne in 2024. The company is now exploring long-term strategies to mitigate price volatility, including potential investments in alternative energy assets and diversification within mining operations.
Financial Performance
For the fiscal year, Yancoal recorded:
- Net profit after income tax (before non-recurring items): A$1.22 billion ($777.51 million), down from A$1.82 billion a year earlier.
- 12% drop in revenue to A$6.86 billion, compared to A$7.78 billion in fiscal 2023.
- Operational cash flow remained strong, though impacted by fluctuating commodity prices.
- Capital expenditure for expansion and maintenance projects remained consistent, focusing on efficiency enhancements at key mining sites.
Strategic Outlook
“To counter the anticipated short-term volatility in thermal coal price indices, we continue to optimize product quality and volume, while actively seeking to expand our customer base and access new markets,” Yancoal stated. The firm is looking to strengthen relationships with Asian and European buyers who are seeking reliable coal supply amid energy security concerns.
The company, majority-owned by China-based Yankuang Energy Group, has also declared a final dividend of 52 Australian cents per share for the year.
Additionally, Yancoal is exploring technological advancements in coal mining operations, including automation and AI-driven predictive maintenance, to improve efficiency and reduce operational costs.
Industry-Wide Cost Pressures
Addressing industry challenges, Yue noted that cost inflation remains a persistent issue in the coal sector, mining industry, and broader economy. Rising fuel costs, labor expenses, and supply chain disruptions continue to exert financial pressure. However, Yancoal remains focused on maintaining operational efficiency to navigate price fluctuations and sustain its market position.
Market experts suggest that Yancoal’s ability to maintain production levels and control costs will be crucial in weathering industry uncertainties. The company is also closely monitoring policy shifts related to emissions regulations, which could impact future coal demand.
