Australia’s Wet Weather Impacts Yancoal’s Coal Exports

The impact of one of Australia's wettest summers on coal exports has been reinforced by the 21% slump in produced coal sales by Chinese-owned Yancoal during January-March compared with the previous quarter. Yancoal reported attributable sales of 7.8 million tonnes during January-March, leaving it with a target of 27.2-30.2 million tonnes for April-December, or an average of 9-10 million tonnes each quarter. This is possible but requires optimal operating conditions, unlike those in the wetter than average April and second week in May.The rain, which resumed has caused flooding at saturated mine pits throughout the first half of 2022, leaving Australian coal mine operators with nowhere to pump water with storage facilities at critically high levels. This is being compounded by Covid-19 worker absenteeism and delays securing key items such as spare parts because of stretched global supply chains, cutting Australian coal mining productivity.Yancoal, which is Australia's biggest independent coal producer, is building new water storage at key mines in New South Wales to allow it to better drain pits after it run-of-mine production fell by around a third at its Mount Thorley Warkworth and Hunter Valley Operations mines in the latest quarter because of flooding. Other coal firms across NSW and Queensland are making similar investments as they seek to reduce the impact of the rain to allow them to capitalise on the current firmer price environment.The rain, Covid-19 and higher diesel prices are pushing Yancoal's production volumes towards the bottom of its 35-58 million tonnes attributable saleable coal production target and unit costs towards the top of its USD 71-76 per tonne guidance, the firm warned in April. The risk of not remaining within guidance has been increased by the current period of heavy rain in NSW and in Queensland.

Australia’s Wet Weather Impacts Yancoal’s Coal Exports

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