Key Highlights

  • Revenue for 1H26 was A$3,024 million, up 13 per cent.
  • Attributable saleable coal production was 19.8 million tonnes, up 5 per cent and a first-half record.
  • Operating profit rose 42 per cent to A$328 million, but non-operating items cost A$272 million.
  • The Interim Dividend was A$0.07 per share, fully franked, paid on 18 September 2026.

What does it mean when a coal producer posts record production and higher Earnings before interest, tax, Depreciation and Amortisation (EBITDA) but a 90% fall in profit? Yancoal Australia Ltd (ASX:YAL) did exactly that in its half-year to 30 June 2026, reported on 19 August 2026. Operating EBITDA rose 29% to A$767 million, yet net profit after tax attributable to members fell to A$17 million from A$163 million. The explanation lies in A$272 million of non-operating charges, and in a pending US$1.85 billion Acquisition that will change the group's coal mix.

Business and Revenue drivers

Yancoal mines thermal coal, used for power generation, and metallurgical coal, used in steelmaking, in New South Wales and Queensland. Revenue depends on tonnes sold and on realised prices, which follow international benchmarks priced in US dollars and translated to Australian dollars. Costs are driven by diesel, labour, maintenance, and royalties, the last of which vary with price.

For 1H26, revenue was A$3,024 million, up 13% from A$2,675 million. Attributable saleable coal production was 19.8 million tonnes, up 5% and a first-half record. The June quarter alone produced 10.8 million tonnes attributable, a quarterly record and 20% above the March quarter. The average ex-mine selling price for the half was A$154 a tonne, up 3%, helped by higher US dollar coal prices.

In the June quarter, the average realised price was A$160 a tonne, compared with A$146 in the March quarter. Thermal coal realised A$149 a tonne and metallurgical coal A$219. Quarterly sales of 11.6 million tonnes comprised 9.8 million tonnes thermal and 1.8 million tonnes metallurgical.

Why profit fell

Operating profit rose 42% to A$328 million, but non-operating items cost A$272 million. They included a A$188 million Fair Value loss recycled from the hedge reserve, tied to US dollar denominated loans, a A$49 million Impairment on the Middlemount mine, and contingent Royalty adjustments.

The impairment signals that an asset is expected to earn less than previously assumed, and the loan-related loss shows the exposure created by foreign currency debt.

Costs, guidance and Capital returns

Cash operating costs excluding royalties were A$96 a tonne, up from A$93, mainly due to higher diesel prices and maintenance. The 2026 cost guidance is A$90 to A$98 a tonne. Production guidance is 36.5 to 40.5 million tonnes attributable, with the company tracking in the upper half.

The interim dividend was A$0.07 per share, fully franked, about A$92.4 million in total, paid on 18 September 2026.

The Kestrel acquisition

In April 2026, Yancoal announced it would acquire Kestrel Coal, a large, long-life hard coking coal mine in Queensland, for an upfront US$1.85 billion. The Foreign Investment Review Board had approved the deal, other key conditions were cleared, and completion was expected by the end of the September 2026 quarter, possibly earlier.

Kestrel is excluded from the 2026 guidance. Strategically, it shifts the group toward metallurgical coal, which is tied to steel Demand rather than power generation. That is a diversification, but it concentrates the company's investment in one large asset, and financing it will absorb a large part of the cash on hand.

Sector and competitive position

Australian coal exporters compete with Indonesian, Russian and North American supply, and demand comes largely from Asia. Thermal coal faces long-term structural pressure from decarbonisation policies, while near-term demand remains supported by power systems in developing Asia. Metallurgical coal is tied to blast furnace steelmaking, and the shift toward electric arc furnaces and hydrogen-based methods could affect it over time. Yancoal's scale and cost position, measured by cash operating cost per tonne, are its main defences in a cyclical market.

The group also announced in late June 2026 that its Ashton underground mine would close from early 2028. In the June quarter, Ashton produced 0.8 million tonnes of run-of-mine coal and 0.4 million tonnes of saleable metallurgical coal. Its rolling twelve-month total recordable injury frequency rate was 6.64 at June 2026, up from 5.77 in March, though below the industry weighted average of 9.23 cited by the company.

Risks and what to monitor

Coal price Volatility is the main risk for earnings, followed by the Australian dollar and diesel costs. Regulatory and environmental scrutiny of coal mining, including the possibility of higher royalties or restricted approvals, is a further risk. Acquisition risk includes integration, financing and the need to deliver the expected production from a new asset. Safety performance, which can affect operating licences and productivity, is another.

Upcoming items include confirmation of Kestrel completion and the revised guidance that would include it, the September quarter production report, full-year 2026 production against the 36.5 to 40.5 million tonne range, and the final dividend decision with the full-year result in early 2027. Investors should also watch cash balances after the acquisition payment and whether foreign exchange losses recur.