Yancoal earmarks $1.2 billion to fuel expansion plans

Australia’s Yancoal (ASX: YAL) plans to invest its A$1.8 billion ($1.2bn) capital reserve, amassed during a three-year coal boom, into acquiring new assets, potentially beyond the home country and even outside the coal sector.

The company, which announced the unexpected departure of chief executive David Moult in January, reported a profit after tax of A$1.2 billion for 2024. This marks a A$603 million or 38% decline from the previous year. Revenue also fell by 10% year-on-year, totalling A$6.9 billion. Yancoal attributed this downturn to a 14% increase in attributable coal sales, which was overshadowed by a 24% drop in coal prices amid soaring stockpiles in Asia. 

Despite the challenges, Yancoal declared a final dividend of A$687 million, equivalent to half of its net profit for the year. The payout reduces its cash reserves, which had climbed to A$2.5 billion, leaving A$1.8 billion available for potential acquisitions.

As Australia’s second-largest coal producer, Yancoal has expressed a continued interest in expanding its thermal coal operations, primarily used for power generation. Thermal coal constituted 90% of its sales over the twelve months leading to December 31, with operations spanning New South Wales, Queensland, and Western Australia.

David Bennett, Yancoal’s executive general manager, indicated that metallurgical coal, essential for steelmaking, offers a more promising growth avenue, provided the company can acquire the right assets at suitable prices.

To mitigate expected short-term volatility in thermal coal prices, Yancoal is focusing on optimizing product quality and volume while actively seeking to expand its customer base and explore new markets. The company is predominantly owned (60%) by the China-based Yankuang Energy Group, with China Cinda Asset Management holding a 7% stake.

Yancoal also announced the appointment of three new non-executive directors— Jiuhong Wang, Zhiguo Zhao, and Ang Li — effective Friday.