Staff cuts to deliver savings for Yancoal

YANCOAL estimates that it will make $7 million per annum of corporate costs savings after its merger with Gloucester Coal with the elimination of duplication of corporate costs and a round of “headcount reduction”.
Staff cuts to deliver savings for Yancoal Staff cuts to deliver savings for Yancoal Staff cuts to deliver savings for Yancoal Staff cuts to deliver savings for Yancoal Staff cuts to deliver savings for Yancoal

Yancoal's Austar longwall

Lou Caruana

The rationalisation of corporate suppliers has also been completed.

Yancoal’s major shareholder, Yanzhou Coal Mining Co, which is China’s fourth-largest producer of the fuel, reportedly plans to cut another 400 jobs at its two Australian units to save costs amid weak coal prices, according to a report by Bloomberg.

Yanzhou Coal reported a net loss of 2.07 billion yuan ($A376 million) in the first six months of 2013.

Yanzhou Coal spokesman Zhang Baocai reportedly said one of the company’s coal mines in Australia would be idle.

“Cutting employees in Australia was because we shut down a coal mine there and cannot retain employees while production is idle,” Zhang reportedly told Bloomberg.

“Over time, we will maintain a reasonable size of workforce in our Australian units as we plan to stay in the country for a long time.”

Zhang did npt name the shuttered mine.

Strong half-yearly production of 10.7 million tonnes of ROM coal by Yancoal was not enough to prevent the company reporting a loss after income tax of $749.4 million.

Yancoal is now looking to newly appointed chief executive and GlencoreXstrata veteran Reinhold Schmidt to drive it towards profitability in an uncertain market.

Yancoal said it was mainly attributable to a net unrealised foreign exchange loss of $492.7 million on the conversion of US dollar denominated debt, resulting from the weakening of the Australian dollar against the US and an impairment of mining tenements amounting to $343 million.

Operating EBIT for the half year ending June 30 was a loss of $109.3 million.

Yancoal’s acting chief executive Peter Barton said: “Yancoal has worked hard to respond to challenging market conditions.

“Prices remain the key driver of the company’s profitability at an operating level. However, our controllable costs are well managed and we continue to make good progress in lowering those costs.”

Onsite unit cash costs are falling on the back of management actions and in particular, through the reduction of contractors and the continuing implementation of the LEAN program.