Austar costs weigh on Yanzhou Coal
Yanzhou Coal Mining, a unit of China's fourth-largest coal producer, said its 23.9 per cent decline in first-half net profit was due to the combined effects of start-up costs at its new Australian mine and obstacles to coal production at home as a result of delays in the resettlement of villages located atop coal seams.
The Shandong-based company released details of its performance yesterday after posting its raw figures in a stock exchange announcement on Friday.
It said its New South Wales subsidiary, Yanmei Australia, which owns the Austar coal mine, recorded a 178 million yuan first-half loss. This was the main reason for Yanzhou Coal's slide in profit to 1.43 billion yuan from 1.88 billion yuan a year earlier.
The H-share company said the loss came because 'Austar coal mine was still at the preliminary preparation stage for production'. It said commercial production would begin only in the third quarter this year. Yanzhou Coal bought what was originally called the Southland coal mine at the end of 2004, its first major overseas mine purchase. It said in last year's annual report that its investment in the Austar mine would total 1.51 billion yuan.
In China, said group director Wu Yuxiang, production had been continuously affected by the delayed removal of villages located atop coal reserves.
The company's sales volume was 16.86 million tonnes, up a meagre 1.3 per cent from a year earlier. Of this, domestic sales rose 4.7 per cent to 13.55 million tonnes while exports dropped 13.4 per cent to 3.2 million tonnes. The company's net sales dropped 2.1 per cent to 5.92 billion yuan.
The average coal price during the period also dropped 3.5 per cent to 345.62 yuan per tonne, a decrease of 1.1 per cent when compared to the average coal price last year.
'It was due mainly to the decrease in selling prices of low quality domestic coal,' the company said in its announcement.
