Yancoal Australia (ASX:YAL) reported record production and a stronger cash position in its fourth quarter 2025 production call, with management highlighting operational execution across its mine portfolio, modest realized price improvement, and ongoing cost discipline. Executives said the company ended the year with more than A$2 billion in cash and no debt, positioning it to consider dividends and “potential value-adding growth opportunities,” while noting that formal 2026 guidance will be provided with full-year results on Feb. 25.
Record quarter and record year for attributable coal
Chief Executive Officer Sharif Farah said the company delivered 10.4 million tonnes of attributable saleable coal in the quarter, which he described as a company record. The fourth quarter performance lifted full-year 2025 attributable saleable coal to 38.6 million tonnes, also a record, and placed the company at the top end of its annual production guidance range.
Bennett noted the quarter included temporary challenges such as hard coal encountered by the Moolarben longwall, wet weather delays, and equipment reliability issues, but said these were resolved or managed through “effective adaptations.” He also clarified that the 10.4 million tonnes of attributable saleable coal includes the additional 3.75% interest in the Moolarben Joint Venture secured on Oct. 3. Excluding that incremental interest, attributable saleable coal would have been 10.2 million tonnes, which he said still would have matched the company’s best-ever historical quarter.
Safety performance and mine-level commentary
Bennett said Yancoal’s total recordable injury frequency rate (TRIFR) declined throughout 2025 to 6.14 at year-end, below the industry-weighted average of 7.45. He said the company remains committed to further improvement.
In response to a question about the production uplift at Hunter Valley Operations, management said the business delivered a strong fourth quarter after wet weather earlier in the year affected both Hunter Valley Operations and Mount Thorley Warkworth. Bennett said the company mitigated later wet weather impacts through capital investment made in prior years and improved equipment fleet productivity, including output records. He said the mines are being operated in “steady state” and that the company is getting “the most that we can from our people assets, our equipment assets, and our geological assets.”
Management also addressed a question about the ratio of saleable coal to ROM coal, acknowledging that ROM volumes rose faster than saleable output in the quarter. Bennett said the company was not able to process all ROM coal through its coal handling and preparation plants (CHPPs) during the quarter. Unprocessed coal is sitting on stockpiles ahead of CHPPs and will be processed into saleable product during the first quarter of 2026, he said.
Coal market conditions and realized pricing
Management characterized fourth-quarter market conditions as challenging and mixed across indices, but said Yancoal’s average realized price improved 6% to A$148 per tonne from the prior quarter. Investor Relations Manager Brendan Fitzpatrick said the realized price reflected a 6% increase in average thermal pricing to A$138 per tonne and a 4% increase in average metallurgical coal pricing to A$203 per tonne.
Fitzpatrick said attributable sales volumes were 10.8 million tonnes, similar to the third quarter, and aligned with Yancoal’s strategy of optimizing volumes and managing stock positions. He outlined divergence in thermal benchmarks, noting API 5 averaged 12% higher quarter-over-quarter while the GC Newcastle index was flat, though GC Newcastle ended the quarter with “positive momentum.” In metallurgical coal, he said Platts Low Vol PCI averaged 2% lower while Platts Semi-Soft averaged 10% higher.
On demand drivers, Fitzpatrick said Japan continued to utilize coal for power generation and increased imports 16% in 2025. South Korea increased imports but favored Indonesian and Colombian coal over Australian supply. He said China’s annual thermal coal imports fell 18% due to strong domestic production in the first half, despite a restocking cycle in the fourth quarter. Taiwan imported 12% less coal, and India reduced imports amid cooler summer weather and increased hydro generation.
On supply, Fitzpatrick said Australia faced constraints at times in 2025, Indonesia’s exports fell 10% and Colombia’s declined 18%, while Russian exports continued to reach global markets. He also said improved rail and port operations helped South Africa’s exports rise 5%.
Marketing and Logistics EGM Mark Salem said prices recovered toward the end of the year on Chinese restocking but eased slightly heading into Chinese New Year as buying slowed. He said the market could pick up after the holiday period, particularly in a “high-ash area,” citing ongoing demand in southern China. For metallurgical coal, Salem said supply disruptions could lead to softening, and he emphasized the need for stronger steel demand, which he said has been weakened by China’s property market conditions. He added that pricing and demand appear “supply-driven,” and “we need just stronger demand to really have a bigger impact.”
Salem also addressed a question about the U.S. market, saying Australia has not supplied coal into the mainland United States and describing the U.S. as a large producer and “swing supplier” to seaborne markets—exporting more when prices are high and pulling back when prices are low. He said the U.S. is not on Yancoal’s radar as a future coal import market for mainland demand, while noting the company monitors increasing electricity demand tied to AI in Asian markets.
Costs, capital spending, and balance sheet strength
Farah said Yancoal does not include cash operating costs per tonne in its quarterly report, but reiterated that at the half-year cash operating costs were A$93 per tonne, in the middle of its A$89 to A$97 guidance range. He said the company still expects full-year unit costs around the middle of guidance and described cost control as a key focus.
Farah also updated expectations for capital expenditure, saying the company now anticipates spending toward the bottom end of its A$750 million to A$900 million guidance range.
Chief Financial Officer Kevin Su said Yancoal ended the quarter with over A$2 billion in cash and no interest-bearing debt. He added that the ship queue at the Port of Newcastle has cleared and “most of those temporary cost pressures” discussed previously have subsided. Su called it a “notable achievement” to remain on track for costs around mid-guidance in the current industry setting and said it reinforces Yancoal’s position as a low-cost exporter.
Management said the improved realized price, 10.8 million tonnes of attributable sales, and cost discipline contributed to a A$307 million increase in the company’s cash balance during the quarter. When asked about interpreting fourth-quarter free cash flow in an annualized context, Su cautioned that realized prices can lag benchmark price curves and said seasonal shipment volumes can contribute to a stronger quarter.
Dividend framework and upcoming guidance
On capital management, Farah said the company has a dividend framework and that the board reviews the final position after year-end to determine dividend capacity. Su added that the company’s approach has been communicated previously as “about a 50% NPAT or 50% free cash flow, whichever is higher,” while balancing debt management and growth opportunities. He said management will assess priorities and that a board decision would be made in February alongside full-year results.
Farah said Yancoal will provide 2026 guidance for production, cash operating costs, and capital expenditure with the 2025 financial results release on Feb. 25. In closing remarks, he pointed to three themes: record production supported by “world-class assets,” disciplined cost control with unit costs flat year-over-year, and more than A$300 million added to cash in three months, which he said highlights the leverage of being the second-largest coal producer in Australia to improving coal prices.
About Yancoal Australia (ASX:YAL)
Yancoal Australia Ltd engages in the exploration, development, production, and marketing of metallurgical and thermal coal in Australia, China, Japan, Taiwan, South Korea, Europe, Malaysia, Vietnam, Thailand, India, Chile, Indonesia, Cambodia, and Bangladesh. The company owns a 95% interest in the Moolarben coal mine located in the Western Coalfields of New South Wales; 80% interest in the Mount Thorley and Warkworth mines located in the Hunter Valley region of New South Wales; and 51% interest in the Hunter Valley Operations located to the north-west of Singleton in the Hunter Valley region of New South Wales.
