Yancoal (ASX:YAL): Still thriving despite falling coal prices, but for how much longer?

Yancoal (ASX:YAL) was one of the largest producers of coal in Australia in 2024, showcasing resilience and flexibility in its strategic approach towards the ever-changing markets. Despite the occasional mellowing of coal prices and the uneasy start of competition from around the globe, the company continued to perform solidly in financial highlights, accomplish growth in operational capacity, and identify precious acquisition opportunities.

The company’s financial and operational performance in 2024 was robust, characterised by strategic initiatives for expansion to secure its long-term leadership in the thermal and metallurgical coal production markets.

 

Financial Performance in 2024

Yancoal demonstrated resilience in 2024 despite facing lower coal prices and heightened competition. Total revenue stood at A$6.9bn, reflecting a decline from A$7.8bn in 2023, primarily due to a 24% drop in realised coal prices. However, a 14% increase in attributable coal sales offset part of this impact, showcasing the company’s ability to maintain operational efficiencies and market responsiveness.

 

Operating EBITDA was A$2.6 billion, with a 37% EBITDA margin, reinforcing the company’s ability to generate strong earnings even in a weaker pricing environment. Net profit after tax stood at A$1.2 billion, a decrease from the previous year but in line with market conditions. Cost control measures and capital discipline remained central to Yancoal’s financial strategy, ensuring the company’s ability to sustain operations, return capital to shareholders, and pursue expansion opportunities.

A key highlight for investors was Yancoal’s commitment to shareholder returns, with a fully franked final dividend of A$687 million (A$0.52 per share), representing a payout ratio of 56%. Despite this, the company retained a strong liquidity position with A$2.5 billion in cash, reinforcing its ability to finance future acquisitions and strategic investments. With its strong financial footing, disciplined capital management, and operational efficiencies, YAL stood in a fine position to deal with both market booms and downturns on its way to successive growth and expansion in the field of coal.

 

Production and Operational Highlights

Coal Production and Sales

Yancoal increased its attributable coal production by 10% to 36.9 million tonnes in 2024, with total run-of-mine (ROM) production reaching 62.7 million tonnes and saleable coal output at 47.8 million tonnes. This production growth underscores two things. First, the company’s operational stability despite logistical and workforce challenges. Second, that it is doing well in negotiations with operational disruptions, logistical constraints, and workforce shortages while delivering production targets within their timelines.

 

Safety and Environmental Commitments

The company maintained a disciplined approach to workplace safety, recording a Total Recordable Injury Frequency Rate (TRIFR) of 6.7—significantly below the industry average of 9.0. Investments in risk management, workforce training, and real-time hazard monitoring contributed to this strong safety performance. Yancoal continued advancing its environmental initiatives, including:

• Adoption of cleaner technologies to lower emissions.
• Progressive rehabilitation of mining sites.
• Active engagement in community development programs.

Safety and Workforce Management

For Yancoal, maintaining a safe and healthy workplace is its priority, and in 2024, it also focused on improving the organisation’s safety culture. It recorded a rolling 12-month Total Recordable Injury Frequency Rate (TRIFR) of 6.7, less than the industry TRIFR of 9.0. Some important safety initiatives were:

• Strengthening risk management frameworks to prevent accidents and injuries.
• Enrolling workers in safety awareness and best practices training programs.
• Implementing sophisticated monitoring tools to identify and address hazards in real time.

Through the effective implementation of rigorous safety protocols and the nurturing of continual safety ownership at all levels, Yancoal is proving to be an industry leader in workplace health and safety performance.

 

Strategic Acquisition Efforts

Expansion Through Acquisitions

Yancoal has a proven reputation for growth through acquisitions that have allowed it to grow its operational footprint. The company budgeted A$1.5bn in 2024 for possible acquisitions to underscore its strategic emphasis on fortifying its asset portfolio and broadening its market presence. The company has expressed a particular interest in growing its operations in metallurgical coal, which is used to make steel. Metallurgical coal continues to be a major commodity, with worldwide infrastructure projects and steel production demanding a steady supply of it.

Bid for Anglo American’s Coal Assets

A key development in 2024 was the companies bid for Anglo American’s metallurgical coal mines in Queensland. Working with investment banks RBC and CITIC CLSA, Yancoal pursued a deal valued at approximately US$5bn. However, Peabody Energy secured the acquisition with a US$3.8bn billion bid, leveraging its access to equity funding. If it is any consolation, YAL is not the only ASX-listed company to miss out on a deal with Anglo American.

Despite not securing the acquisition, YAL’sparticipation in the bidding process reinforced its standing as a serious contender in global coal asset transactions. Future acquisitions remain a key priority as the company seeks to optimise its asset mix and expand its operational footprint.

 

Market Dynamics and Future Outlook

Coal markets in 2024 remained volatile due to shifting energy policies, geopolitical uncertainties, and evolving demand patterns. While developed economies accelerated renewable energy transitions, coal remained essential in key markets such as China, India, and Southeast Asia (i.e. the ASEAN region). Metallurgical coal demand is expected to remain strong in those economies, driven by infrastructure projects, urbanisation, and the automotive sector.

Yancoal’s strategic focus on high-grade coking coal positions it well to capture growth opportunities, particularly in Asian markets where steel manufacturers prioritise supply stability. With A$2.5bn cash reserves and a disciplined investment strategy, Yancoal is well-positioned to weather price fluctuations and capitalise on market shifts. The company’s focus on cost efficiency, operational scale, and disciplined capital allocation ensures long-term competitiveness in the global energy and resources sector.

 

Conclusion

Yancoal’s 2024 performance highlights its ability to navigate market challenges while maintaining strong financial health and operational efficiency. The company has expanded coal production, sustained profitability, and remains committed to growth through strategic acquisitions. Looking ahead, Yancoal’s strong balance sheet, capital discipline, and operational resilience make it a key player in an increasingly competitive energy landscape. Its focus on metallurgical coal expansion, efficiency improvements, and disciplined investments positions it well for sustained growth in the coming years unless coal prices substantially collapse.

 

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Frequently Asked Questions (FAQs)

• What were Yancoal’s key financial results for 2024?

  In 2024, Yancoal had revenues of AUD 6.86 billion, profit before tax of AUD 1.689 billion, and profit after tax of AUD 1.216 billion.

• How did coal prices impact Yancoal’s 2024 performance?

  Revenue dropped 7% despite a 14% rise in attributable coal sales as the average realised coal price fell 24% to AUD 176 per tonne in 2024.

• What are Yancoal’s plans for expansion through acquisitions?

  Yancoal has AUD 1.5 billion set aside for potential acquisitions, primarily to expand in metallurgical coal. The firm is also reportedly interested in purchasing Anglo-American’s met coal assets in Queensland, Australia.

• How did Yancoal’s production in 2024 compare to the previous year?

  Yancoal had an increase of 10% in attributable production during 2024, producing 36.9 million tonnes from 62.7 million tonnes of ROM.

• What is Yancoal’s outlook for the coal market?

  Yancoal expects some short-term volatility in thermal coal prices and will address this by optimising both product quality and volume and by exploring new markets.