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Chairman's Statement

Message from Chairman Mr Baocai Zhang

In 2021, Yancoal has again overcome significant challenges. Uniting as “one Yancoal” across all our operations in Australia, we achieved outstanding business results despite the impact on our operations of the ongoing COVID-19 pandemic and significant rain events caused by the prevailing La Nina weather system. These results included maintaining a safety performance that continues to trend in the right direction and remains better than the relevant industry average. Offsetting these operational headwinds was the stronger coal price, which drove Yancoal to post record revenue and operating EBITDA results, facilitated an early debt repayment and the resumption of dividends. 

One of the reasons for this positive performance in the face of adversity is Yancoal’s ongoing commitment to our existing business plan and strategy. We maintained a disciplined focus on operational optimisation and made further progress in implementing the “Four Initiatives” project that was launched in 2020. 

These “Four Initiatives” were introduced to support the continuous improvement of the business through: optimising our marketing plan; adjusting our product offering to better meet our customers’ needs; tightening expenditure controls across the whole organisation to reduce costs; and actively measuring and quantifying the effectiveness of our actions. As an example, in 2021 Yancoal sold coal to 19 different countries whilst also focusing on the premium markets of Japan and South Korea. We continued our ‘wash harder’ strategy to upgrade the quality of our coal product, capturing the price arbitrage for higher energy thermal coal that persisted throughout the year. 

Yancoal’s 2021 performance indicated the success that we had achieved in these endeavours. Additional factors that underpinned our success included promoting intelligent and innovative mining methods and ensuring strong leadership and effective management. Yancoal’s efforts in 2021 demonstrated a spirit of courage and resilience, as well as persistence and hard work. Yancoal’s workforce should be proud of the operational and financial performance that was achieved in such difficult circumstances. 

In 2022, Yancoal will continue to strive for excellence: the future is full of exciting and new horizons for the company. While Yancoal will remain committed to our core business and to ensure our coal mining operations are world-class, there will also be opportunities to expand Yancoal’s asset portfolio beyond a pure focus on traditional energy.

As the world moves towards a lower carbon economy, Yancoal has identified the development of renewable energy projects and the pursuit of diversification into minerals and commodities beyond coal as important elements of a strategy to underpin the ongoing sustainability of the business into the future. The need to explore opportunities in the new energy sector and other commodities is critical, especially given that investors are increasingly focused on decarbonisation and carbon-neutral themes. 

This bold strategy aligns with the ambitions of Yankuang Energy, Yancoal’s major shareholder. Yankuang Energy is pursuing a path of evolution from being a pure-play coal mining business to diversification into an international energy and commodities group with a global presence. Having commenced this journey and with the support of its major shareholder, the coming years will be a transitional period for Yancoal. 

I thank my fellow Directors for their efforts and support in 2021, and I look forward with confidence to another record year for Yancoal in 2022 and with excitement about what the future holds for Yancoal, as it continues to be an industry leading coal producer and as the busines grows and matures into a diversified global mining company. 

Baocai Zhang 

Chairman of the Board