[Ferro-Alloys.com] Chinese-Australian coal firm Yancoal expects to produce 38mn t of saleable coal in 2020, up by 6.7pc from 35.6mn t in 2019. The company has deferred all non-essential spending until at least next year as it tries to cut costs in response to low prices.
Yancoal sees a mixed outlook for thermal coal, with the prospect of increased gas use weighing against price increases but stronger demand from China potentially strengthening prices. The market for pulverised coal injection (PCI) and other lower-grade coking coal is difficult, as steelmakers prefer hard coking coal. Lower steel production outside of China has seen coking coal prices cut across the board, giving hard coking coal a competitive advantage.
The amount of metallurgical coal sold by Yancoal fell by 40pc in April-June compared to the same period last year, as the firm cut sales of lower-margin PCI grade coal and increased thermal coal exports by 25pc in the same comparison.
The projected increase in Yancoal's production in 2020 over 2019 will largely come from its increased ownership of the Moolarben coal mine after it acquired partner Sojitz's 10pc stake in the complex. The firm produced 8pc less coal on a 100pc basis in April-June than in both the January-March and April-June 2019 quarters, but had a higher attributable production than in the year-earlier period.
The decline in production on a 100pc basis was largely the result of a 33pc year-on-year fall in output at Yancoal's Middlemount joint venture with US energy firm Peabody, after the equipment fleet was reduced across the site. Production was also 20pc lower at the Hunter Valley Operations (HVO) joint venture with global trading and mining firm Glencore, in which Yancoal has a 51pc stake. The firm expects production from HVO to increase this quarter following maintenance work on the coal handling plant in May.
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