Revealed in its December quarter results, Yancoal said Austar encountered challenges in ramping up production in the stage 3 area after hitting record production in the September quarter.

“Difficult roof conditions resulted in a sales force majeure situation in December 2013, which was subsequently lifted in January 2014,” Yancoal said.

“Although conditions for both longwall mining and development remain challenging in the new area, it is anticipated that when all the associated infrastructure for stage 3 is completed in the June quarter 2014, mining conditions will improve significantly and production rates should increase.

“One longwall move is planned for 2014 and is scheduled for the June quarter.

“With any such longwall move there are potential short-term risks to production budgets.”

The setbacks reduced Austar’s saleable coal production by 24% year on year to 334,000 tonnes for the December quarter, while the run of mine result was 34% lower to 643,000t.

Over to the former Donaldson Coal operations, also in New South Wales, Yancoal suspended mining at the Tasman underground in the December quarter but increased output from the Abel underground.

“With a 2.5 million tonne annualised production rate for the quarter, Abel is believed to be the highest production bord and pillar coal operation in Australia,” Yancoal said.

“Non-site factors including a weak market for semi-soft product and continuing take-or-pay obligations are the key ongoing challenges for the operation.”

In a pre-Christmas decision, the state government approved proposed planning modifications that would allow conventional longwall and shortwall mining methods to be introduced at Abel underground.

However, Yancoal said it would consider the appropriate “time and market conditions” to commit to development.

Overall, Yancoal’s total saleable coal production across NSW and Queensland was up 11% year on year for the December quarter to 4.97Mt, with its metallurgical coal sales of 2.4Mt up 43% year on year.

The Moolarben open cut mine in NSW produced 1.57Mt of saleable coal in the recent quarter, a 23% year on year increase, with Yancoal reporting that the operation continued to perform well.

Yancoal said the ongoing focus at Moolarben was on cost control and facilitating the stage 2 development approvals – an expansion that will also introduce longwall mining.

On the privatisation front, Yancoal is still in negotiations with its Chinese parent Yanzhou Coal Mining.

Last month Australian Treasurer Joe Hockey allowed Yanzhou to maintain its existing 78% stake of Australia-listed Yancoal – and he is even open to a 100% acquisition by Yanzhou.

The stance taken by Hockey contrasts with the boundaries set on Yanzhou’s takeover of Australian coal producer Felix Resources by the previous government in 2009.