Yancoal takes aim at take-or-pay regime

YANCOAL has spoken out about the costs faced by the industry due to take-or-pay rail and port capacity contracts.

Blair Price

"Enthusiasm for the dollar's fall and associated cost reduction gains needs to be tempered in light of the continued burden of take-or-pay overhangs for most producers," Yancoal spokesman James Rickards told Fairfax Media.

"While Australia outclasses its US and Indonesian competitors at both quality of product and guarantee of delivery levels, we are yet to see any sustainable improvement in an over-supplied marketplace."

Wood Mackenzie principal Asia Pacific coal analyst Rory Simington said the take-or-pay contracts were a considerable deterrent for mine closures.

Coal prices have also continued to struggle due to this restraint to cutting supply.

Explorer NuCoal, which is advancing a constitutional court challenge against the New South Wales government after it cancelled the company’s Doyles Creek project licence last year, is expected to pay Port Waratah Coal Services $A425,000 this calendar year to not export any coal under a take-or-pay deal.

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