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Gloucester chairman James MacKenzie told shareholders Yancoal’s parent company Yanzhou Coal owned and operated 14 coal mines, employed more than 65,000 employees and in 2011 produced 51 million tonnes of coal and was the world's leading exponent of longwall top coal caving.
“Yanzhou’s impressive credentials and proven track record make them an exceptional partner in this proposed merger,” he said.
“It has a strong track record of good financial management and corporate governance and has received numerous awards for its corporate governance practices.”
MacKenzie said the merged company would have a significant pipeline of growth projects and play a key role in the supply of this global demand.
“The merged company will have significant scale initially producing more than 12 million tonnes per annum of coal,” he said.
“This scale is significant in the Australian market and the company will also benefit from its diversified portfolio of coal assets.
“When compared to Gloucester Coal today, the merged company will have a broader geographic spread of coal mines, a superior offering of coal products and a lower average operating cost base.”
MacKenzie said with a resource base of approximately 3.5 billion tonnes of coal and reserves of almost 700Mt, the merged group would have a solid foundation to expand its operations for the next 40 years and beyond.
The merged group expects to grow its production from 12Mt today to between 25 and 33Mtpa by 2016.
Moolarben is considered the jewel in the crown of the proposed merger between Yancoal Australia and Gloucester Coal.
Yancoal-Gloucester will invest $1 billion over the next four years to develop underground and open cut operations at Moolarben if its proposed merger is approved.
Yancoal has now resubmitted its stage 2 planning application to increase open cut run of mine production capacity to 13Mtpa, with the underground mine expected to reach ROM production of approximately 4Mtpa.
Moolarben – which is currently 80% owned by Yancoal – has coal reserves of 315Mt and resources of 1183Mt.
ROM production in 2011 was 7Mt with saleable production of 5Mt.
