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Annual Results 2012
Disclaimer
u The information contained in this presentation is intended solely for your personal reference. In
addition, such information contains projections and forward-looking statements that reflect the
Company’s current views with respect to future events and financial performance. These views are
based on assumptions subject to various risks. No assurance can be given that future events will
occur, that projections will be achieved, or that the Company’s assumptions are correct. Actual
results may differ materially from those projected. Past track record cannot be used as guidance for
future performances.
Saskatchewan
Shandong
Shanxi Inner Mongolia Autonomous Region Shaanxi
Western Australia
Queensland
New South Wales
Geographical Coverage
Page ♣ 1
Hong Kong
1 2012 Operation Review
2 Market Analysis of Major Products
3 2013 Operation Targets
4 Operation Strategies
Page ♣ 2
Agenda
Page ♣ 3
Part I 2012 Operation Review
Three Breakthroughs Five Achievements Four Enhancements
• Operating scale hit record
high
• Rapid growth of international
business
• Three operating regions
came into shape
• Effective marketing and sales strategies
• Successful cost control
• Efficient management of Yancoal Australia
• Good progress of key projects
• Healthy and steady financial position
• Credit rating
• Quality management
• Investment value
• Corporate governance
Production and trading volume exceeded 100 mn tonnes
Sales income reached RMB58.1 bn
Total assets exceeded RMB120 bn Net income recorded RMB6.2 bn
Page ♣ 4
Three Breakthroughs: Economies of scale hit record high
‘000 tonnes RMB bn
RMB bn
101 mn tonnes RMB58.1 bn
RMB122.7 bn
Mining sites in Shandong
Mining sites in other provinces
Overseas mining sites
Coal purchased from other companies
0
2,000
4,000
6,000
8,000
10,000
2011 2012
6,773 4,164
2,100
2,000
23
36
30.3% RMB mn
RMB6.2 bn
Overseas assets account for 39.8% Overseas coal production volume accounts for 33.3%
Overseas coal resources accounts for 36.1%
Page ♣ 5
Three Breakthroughs: Rapid growth of international business
Yanzhou Coal
Yancoal Australia Yancoal International
Austar Coal Mine Pty Ltd Gloucester Coal Limited
Austar coal mine
Yarrabee coal mine
Ashton coal mine
Moolarben coal mine
Gloucester basin
Middlemount coal mine
Donaldson coal mine
Premier coal mine
Cameby Downs coal mine
Yancoal Canada Resources
Holding Co., Ltd
40%
60%
Overseas Domestic
Page ♣ 6
Three Breakthroughs: Three operating regions came into shape
Sales volume of saleable coal ‘000 tonnes
Sales income of saleable coal RMB bn
1 �
2 �
0
20,000
40,000
60,000
80,000
100,000
Total Mining sites in Shandong
Mining sites in other provinces
Overseas mining sites
Coal purchased from other companies
64,250
35,280
5,600 10,060 13,310
94,150
36,240
8,180 17,310
32,420
2011 2012
0 10 20 30 40 50 60
Total Mining sites in Shandong
Mining sites in other provinces
Overseas mining sites
Coal purchased from other companies
45.5
24.7
1.8 9.4 9.6
56.4
22.4
2.1 10.3
21.6
2011 2012
Page ♣7
Four Enhancements on Management
Asian Recognition for Excellence in Quality Practice
The Most Valuable Listed Company
2012 Information Disclosure Award
The sole Chinese coal mining company won Asian highest quality management award
The Golden Bauhinia Award by China Securities Journal
Top award of Information disclosure among listed
companies
International investment rating
The first coal mining company being rated as “investment grade” in the
world
Significant rebound of selling price in 4Q 2 �
Decrease in selling price was lower than the market level 1 �
Company 2012 2011 Y-O-Y 2012
Change Change (%) 4Q 3Q 2Q 1Q
The Headquarters 612.49 686.01 -73.52 -10.72 591.18 536.48 631.81 691.56
Shanxi Neng Hua 349.59 467.67 -118.08 -25.25 314.26 287.29 376.24 468.21
Heze Neng Hua 725.37 912.86 -187.49 -20.54 671.04 538.40 774.89 844.93
Ordos Neng Hua 237.28 290.71 -53.43 -18.38 288.70 208.48 258.41 277.16
Yancoal Australia 647.81 929.80 -281.99 -30.33 588.19 718.53 642.97 653.60
Yancoal International 335.35 - 335.35 - 344.79 334.62 407.08 -
Average selling price (RMB/tonne)
580
680
780
880
980
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兖州煤业5500大卡混煤现货价格 秦皇岛港-山西5500大卡优混煤平仓价
RMB/tonne
70 80 90
100 110 120
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兖煤澳洲动力煤销售平均价格 澳大利亚BJ动力煤现货价格
USD/tonne
Page ♣8
Five Achievements: Effective marketing and sales strategies
BJ spot price of thermal coal in Australia
Average selling price of thermal coal in Yancoal Australia
Shanxi Quality Mixed Coal Price in Qinghuangdao
Quality Mixed Coal Spot Price in Yanzhou Coal
Cost of coal sold in the headquarters up 8.97% y-o-y, achieving the goal of controlling
cost increase within 10%
Company 2012 2011 Change (+/-)
Change (%) 2H2012 1H2012
The Headquarters 314.40 288.53 25.87 8.97 310.54 318.48
Shanxi Neng Hua 310.02 332.7 -22.68 -6.82 338.75 268.47
Heze Neng Hua 548.42 649.1 -100.68 -15.51 588.09 513.98
Ordos Neng Hua 168.34 158.59 9.75 6.15 177.13 158.51
Yancoal Australia 438.12 426.27 11.85 2.78 428.29 448.11
Yancoal International 217.59 — — — 212.85 271.33
Average cost of coal sold (RMB/tonne)
Cost Structure (Yancoal Australia)
Page ♣9
Five Achievements: Successful cost control
Cost Structure (The Headquarters)
14.45%
44.90% 9.44%
12.91%
18.30% Materials
Wages and employees’ benefits
Depreciation
Cost for land subsidence
Others
Page ♣10
Five Achievements: Efficient management of Yancoal Australia
1
2
3 Strengthened competitive advantages
Cost control through financial management
Resource integration management
Page ♣11
Middlemount (50% equity) Operation
PCI coal & semi-hard coking coal
Reserves 96mn tonnes Resources 123mn tonnes Sales Volume(2012) 930,000 tonnes
Austar (100% equity) Operation
Semi-hard coking coal & thermal coal
Reserves 49.7mn tonnes
Resources 221mn tonnes Sales Volume(2012) 1.62mn tonnes
Gloucester basin(100% equity)
Operation & Development
Semi-hard coking coal & thermal coal Reserves 69.4mn tonnes Resources 323mn tonnes
Sales Volume(2012) 1.13mn tonnes
Donaldson (100% equity) Operation
semi-soft coking coal & thermal coal Reserves 148mn tonnes
Resources 827mn tonnes
Sales Volume(2012) 1.35mn tonnes
Middlemount coal mine
Yarrabee coal mine
Yarrabee (100% equity) Operation
LV PCI coal Reserves 61.4mn tonnes
Resources 180.6mn tonnes
Sales Volume(2012) 2.09mn tonnes
Austar Coal Mine
Gloucester basin Donaldson coal mine
Ashton coal mine Moolarben coal mine
Moolarben (80% equity) Operation &
Development
Thermal coal Reserves 301mn tonnes
Resources 1,222mn tonnes
Sales Volume(2012) 4.43mn tonnes
Ashton (90% equity) Operation & Development
semi-soft coking coal & thermal coal Reserves 74mn tonnes
Resources 323mn tonnes Sales Volume(2012) 1.1mn tonnes
Premier (100% equity) Operation & Development
Thermal coal Reserves 141mn tonnes
Resources 462mn tonnes
Sales Volume(2012) 4.19mn tonnes
Cameby Downs (100 equity) Operation &
Development
Thermal coal Reserves 288mn tonnes Resources 362mn tonnes
Sales Volume(2012) 1.41mn tonnes
Cameby Downs coal mine
Premier coal mine
Five Achievements: Efficient management of Yancoal Australia
Resource integration management
Page ♣12
2012 2011 Change (+/-)
Change (%)
Austar 725.75 538.73 187.01 34.71
Ashton 760.99 669.42 91.57 13.68
Yarrabee 636.26 552.25 84.01 15.21
Moolarben 242.40 227.94 14.46 6.34
Gloucester 645.85 675.18 -29.32 -4.34
Donaldson 572.71 737.24 -164.52 -22.32
Yancoal Australia Average 523.07 499.31 23.76 4.76
Premier 222.53 249.34 -26.81 -10.75
Cameby Downs 225.13 281.38 -56.25 -19.99
Yancoal International Average 223.19 253.65 -30.46 -12.01
Cost of sales for mining sites in Australia (RMB/tonne)
Five Achievements: Efficient management of Yancoal Australia
Cost control through financial management
Five Achievements: Efficient management of Yancoal Australia
Management competitive advantages
Page ♣13
Management competitive advantages
Global integration of marketing
Product mix of multi-type of coals
Output Enhancement
Complementary advantages among shareholders
Project Equity Interests
Resource Volume
(mn tonnes)
Planned capacity (mn tonnes) Progress
Zhuan Longwan Coal Mine 100% 547.7 5 Under construction, expect to commence operation in
2014
Shilawusu Coal Mine 74.82% 1,144 10 Under construction, expect to commence operation in
2015
Yingpanhao Coal Mine 100% 2,168.2 12 Under construction, expect to commence operation in 2015
Wanfu Coal Mine 98.33% 291.3 1.8 Under construction, expect to commence operation
during the beginning of “The 13th Five-year Plan”
600,000-Tonne Methanol Project in Ordos
100% – 0.6 Under construction, expect to commence trial operation in late 2013
CTL Project and Jin Jitan Coal Mine 25% 1,872 8 Under construction, expect to commence operation in
2014
Moolarben Coal Mine 80% 1,222 17
Annual production capacity in existing mining sites have been granted to increase from 7mn tonnes to 8mn tonnes; expansion plan of Phase II commences with plan to raise coal production capacity up to 17 mn tonnes
Ashton Coal Mine 90% 323 5.2
The development application of Southeast open cut mine has been approved by the Australian Planning Ministry, expect to receive final approval from environmental assessment hearing
Middlemount Coal Mine 50% 123 5.4 Production capacity expands from 1.8 mn tonnes to 5.4 mn tonnes
Page ♣14
Five Achievements: Good progress of key projects
Cash settlement accounts for 68%
Cash Settlement,
68%
Others, 32%
Notes receivables settlement accounts for 65%
Notes receivable settlement,
65%
Others, 35%
Optimize payment settlement
Optimize debt structure
RMB mn 2012-12-31 2011-12-31 Change Change(%)
Cash at bank and on hand� 15,904.3 17,688.5 -1,784.2 -10.09
Note receivables & accounts receivable� 7,459.6 7,312.1 147.5 2.02
Total assets� 122,702.3 97,151.6 25,550.7 26.30
Interest bearing debt� 40,996.4 34,457.8 6,538.6 18.98
• Debt due one year 7,712.6 19,588.5 -11,875.9 -60.63
Shareholders’ equity� 45,826.4 42,634.5 3,191.9 7.49
Net asset value per share (RMB)� 9.32 8.67 0.65 7.50
Interest bearing gearing ratio� 33.41% 35.47% Down 2.06ppt –
Page ♣15
Five Achievements: Healthy and steady financial position
Page ♣ 16
Part II: Market Analysis
Coal market analysis
• Domestic market
• Overseas market
Domestic methanol market analysis
Coal price dropped significantly in 2012
• Emergence of production capacity
• Lackluster growth in demand
• Surge in imports
• Growth in hydro-power
Coal price to fluctuate within a small range in 2013
• Sufficient supply
• Strong trend of import
• Environmental constraints on
protection and energy saving
• Slow rebound of demand
Page ♣ 17
Domestic Coal Market
Coal price dropped significantly in 2012 Coal price to fluctuate at a low level in 2013
• Demand from Europe and the US
decreases
• Demand from Asia increases
• Stable international export
• Restricted export from Vietnam and
Indonesia
70
80
90
100
110
120
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Unit: USD/tonne
Price trend of Australia BJ thermal coal in 2012
Page ♣ 18
Overseas Coal Market Analysis
Domestic price saw a continued correction
Domestic price to be adjusted at a low level in 2013
• Excess capacity
• Weakened demand
• Pressure from seaborne exports
2500
2600
2700
2800
2900
3000
1-Ja
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Unit: RMB/tonne
Average domestic methanol price in 2012
Page ♣ 19
Domestic Methanol Market Analysis
Page ♣ 20
Part III: Operation Targets in 2013
Sales target
Costs of sales per tonne target
CAPEX plan
Sales target of coal: 89.85 million tonnes
Page ♣ 21
Operation targets in 2013: Sales Target
Unit: ‘000 tonnes
Production volume of raw coal Sales volume of saleable coal
2013 target 2012 actual Change Change (%) 2013 target 2012 actual Change Change (%)
The Headquarters 34,800 34,290 510 1.49 34,800 33,940 860 2.53
Shanxi Neng Hua �
1,200 1,360 -160 -11.76 1,200 1,340 -140 -10.45
Heze Neng Hua 3,000 2,700 300 11.11 2,600 2,290 310 13.54
Ordos Neng Hua 6,200 6,860 -660 -9.62 6,000 6,840 -840 -12.28
Yancoal Australia 23,520 19,320 4,200 21.74 14,960 14,350 610 4.25
Yancoal International 6,700 3,280 3,420 104.27 5,290 2,970 2,320 78.11
Subtotal of self-produced coal 75,420 67,810 7,610 11.22 64,850 61,730 3,120 5.05
Coal purchased from other companies
25,000 32,420 -7,420 -22.89 25,000 32,420 -7,420 -22.89
Total 100,420 100,230 190 0.19 89,850 94,150 -4,300 -4.57
Page ♣ 22
Cost of sales per tonne in Shandong Province to remain at 2012 level
Operation targets in 2013: Cost of sales per tonne target �
Yancoal Australia to decrease by 15% on the same basis
CAPEX Plan of the Group for 2013
RMB mn 2013 plan 2012 actual Change Change (%)
The Headquarters 2,086.9 1,355.4 731.5 53.97
Heze Neng Hua 1,540.3 560.8 979.5 174.67
Hua Ju Energy 44.8 35.1 9.7 27.64
Shanxi Neng Hua 41.6 16.5 25.1 152.12
Yulin Neng Hua 27.9 23.9 4.0 16.74
Ordos Neng Hua 3,418.2 2,026.1 1,392.1 68.71
Haosheng Company 672.8 - 672.8 -
Yancoal Australia 3,233.9 2,161.4 1,072.4 49.62
Yancoal International 938.2 444.4 493.8 111.12
In which: Canada Company (CAD) 27.2 27.4 -0.3 -0.95
Excluded assets in Australia (AUD) 118.8 42.0 76.8 182.81
Total 12,004.6 6,623.6 5,381.0 81.24
Page ♣ 23
Operation targets in 2013: CAPEX Plan
Page ♣ 24
Part IV: Operation Strategies and Initiatives
Operation strategies
Initiatives
Page ♣ 25
Operation Strategies
Development model
High efficiently
High quality and
efficiency
Marketing layout
Regional marketing
Global marketing
Operation management
Cost and expenses reduction
Value management
Resources allocation
Economies of scale
Efficiency advantage
To prudently expand To improve internally
Optimize development
strategies
Initiatives
Page ♣ 26
To improve internally +
Prudently expand
1 Place management as top priority and create value to unleash potential
2 Managed adjustment on CAPEX
3 Optimize its resources distribution to transform and upgrade its development model
5 Support overseas operation management to achieve synergies
6 Prudently develop capital management for a stable growth of the Group
4 Optimize its global marketing system to improve the profitability of products
Improving and enhancing efficiency
Comprehensive budgeting
Cost and expense control
Capital control Debt management
Initiative I: Place management as top priority and
create value to unleash potential
Page ♣ 27
Initiative II: Managed adjustment on CAPEX
Page ♣ 28
Advance or retreat Keep or suppress Fast or slow Step by step
Speed up investment of projects with quick investment return
Manage investment in projects that are unlikely to
make profit in short term
Ordos Coal Mine under construction
Moolarben Coal Mine under construction
Ashton Southeast open cut mine
Exploration projects
……
Page ♣ 29
Increasing inventory: increase production
volume of new mines
Reducing inventory: close down or cease production to mitigate loss
Reserving inventory: unleash potential in existing regions
Initiative III: Optimize its resources distribution plan
to transform its development model
Page ♣ 30
1
Set up global marketing network to enhance integrated efficiency
3 2 Utilize competitive
edge of location and coal types whilst improving the
profitability of products
Improve market expansion capability by leveraging the Group’s marketing resources
Initiative IV: Optimize its global marketing system to
improve the profitability of products
Page ♣ 31
Realise synergies with the development of assets in Australia
Cost control initiatives
Synergy effect
Adopt “LEAN”
methodology
Improve financial control
Nurture competitive advantage
Initiative V: Support overseas operation
management to achieve synergies
Page ♣ 32
1
2
3
4
Prudently reduce equity interest to maximize returns
Optimize debt structure to guarantee capital needs
Formulate hedging strategies to prevent foreign exchange risks
Develop strategic collaboration for mutually beneficial development
Initiative VI: Prudently develop capital management
for a stable growth of the Group
Page ♣ 35
Looking ahead in 2013 when both challenges and opportunities emerge,
Yanzhou Coal will proactively capitalize on the new trend, adapting to the
new features and seize the new opportunities of the development of
international coal industry. We will taking the synergy of both domestic and
overseas markets as well as both resources to full strength. We will also
maximize investment efficiency by reviewing development with global vision,
initiating development with thorough consideration and pushing forward
development with management innovation, so as to enhance profitability and
increase shareholder’s returns.
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