Good day. Thank you for standing by. Welcome to Yancoal Q3 2023 production report conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you need to press star 1 1 on your telephone. You'll then hear an automated message advising your hand is raised. You can also submit your questions via the webcast. Please be advised that today's conference is being recorded. I would now like to hand the call over to Mr. David Moult, CEO. Thank you. Please go ahead.
Thank you, Desmond, and thank you to everyone on the call for joining this briefing on Yancoal's Q3 production report for 2023. I'm joined on this conference call by several members of the Yancoal management team. I will provide a summary of the activities from the Q3 based on the production report published on the Australian Securities Exchange and Stock Exchange of Hong Kong yesterday, the October 19th. We will then open the call to a question-and-answer session, with the call scheduled to conclude at midday, Sydney time. I'll speak to the content of the production report. There is no presentation pack for this conference call. The Yancoal website holds past presentations for any participants that require additional information on the company. Yancoal's operational and financial performance is made possible by our people.
The Total Recordable Injury Frequency Rate, which was 5.1 at the end of September, lies well below the industry weighted average of 8.3. An outcome made possible by the continued wholesale support for the safety initiatives across all the Yancoal mine sites. I once again commend everyone involved in delivering this performance. Yancoal reported another robust financial performance during the quarter. We added AUD 324 million to our cash position through the three months. This is after all the operating and corporate costs, including the capital expenditure and progressive tax payments we are now making on a monthly basis. After distributing a further AUD 489 million in dividends during the period, we held a AUD 920 million in cash at the end of September.
The company is debt-free, and we continue to accumulate cash each month. The good weather continued in the September quarter, and minimal weather disruptions contributed to increased production. Total ROM coal volume for the quarter was over 16 million tons, and Yancoal's attributable saleable production increased 7% to 9.3 million tons. We have previously discussed our need to prioritize pre-strip and overburden removal activities at most of our mines to facilitate better productivity and output in the subsequent quarters. This effort is proving effective. Attributable output during the quarter was similar to levels we achieved in prior years.
We are pursuing opportunities to lift overall production again in the final quarter, particularly at Moolarben, where we've been working on conveyor availability, and the longwall phase will return to its normal length after a planned shortage, the result of a proactive measure to protect an Indigenous heritage site on the surface. At Ashton, longwall operations remain suspended due to a water inundation event. The recovery and repair work will likely take the remainder of the year to complete. We currently expect to return to normal operations toward the end of the Q4 . The production loss from Ashton is modest in the context of Yancoal's total production, but we look forward to having its high-value metallurgical coal back in our product profile in early 2024. Labor shortages are abating, and we expect Yancoal's output production trend to extend into the Q4 .
We have retained the 2023 guidance of 31 million-36 million tons and cash operating costs of AUD 92-AUD 102, AUD 102 per ton. Yancoal continues to meet its obligations under the New South Wales Domestic Coal Reservation Directions. We delivered 251,000 tons of coal to domestic power generators during the quarter. The New South Wales government will increase coal royalty rates for coal exports at the conclusion of the Domestic Coal Reservation Directions, which is mid 2024. The current royalty rate will increase by 2.6%, and this will affect several Yancoal operations, including our three primary assets, Moolarben, MTW, and HVO. The cash generation I described earlier is directly linked to increased production, combined with our realized coal price.
Our realized thermal coal price was AUD 178 per ton for the quarter, and our metallurgical coal price was AUD 360 per ton. The overall realized coal price of AUD 197 per ton was down marginally from the June quarter, but coal pricing still remains strong. By the end of the quarter, the relevant thermal and metallurgical coal indices were trading up. The start of coal stockpile accumulation ahead of winter across Asia and Europe, disruptions in the Chinese domestic market, and lower hydro generation in India all contributed to the thermal coal price trend. In the metallurgical coal markets, supply-side constraints in Queensland and stronger demand from India provided pricing support. The timing of our shipments resulted in a sales lagging production by a few hundred thousand tons in the quarter.
We expect to catch up on these sales, as well as a further increase in our attributable saleable coal production in the final quarter. I will now hand back to Desmond so that we can commence the question-and-answering session.
Thank you. As a reminder, to ask questions on the phone, you may press star one one and wait for your name to be announced. There are no questions from the phone line. Please continue.
Thank you Desmond. Brendan Fitzpatrick from the Investor Relations team. I'll take the opportunity to read at some of the questions coming through by the webcast platform and invite any participants to submit further question by the platform. The first question from Albert. I would like to know where we see and the markets going in 2024/2025 given the trends in energy and other aspects of the global energy markets and then the second question from Albert, what's the outlook for the company's debt profile, capital management, and growth prospects in the longer term?
Thanks, Albert. I picked on a couple of points, actually, in the main part of my response today. What I might do is pass across to Mark Taylor, our Head of Marketing, to give a bit of a more detailed overview of how we see the market at the moment.
Sure. Great. Thanks, David. Thanks, Albert, for your question. I think it's very safe to say that the demand for coal in the seaborne market is still going to be very strong going into 2024 and 2025. We recently participated in the Australian Japanese Coal Conference, and Japan, being one of our major markets, asked us to ensure that we could continue to source or supply that market well beyond 2030, 2050, in their attempts to make sure that that market is well-powered. We're not expecting any changes to the world demand in 2024, 2025 as a result of any renewable progression in electricity generation.
Thank you, Mark. The second part of the question regarding our outlook for debt, growth, and associated components. Perhaps Kevin, our Chief Financial Officer.
Thanks. From company capital management perspective, we have been, you know, de-leveraging the company pretty well. Doesn't mean, as a company, we will always keep 100% clean, you know, from debt. When there's a great opportunity show up, and then Yancoal will be confident to, you know, take up some sort of leverage. For now, in such a high interest environment, we will be cautious in managing our debt profile, which we have saved a significant amount of financial resources to pay dividend to the shareholders.
Thank you, Kevin. The next question coming from Mark Kelleher. Mark's asking if we can provide a comment on how much cash tax was paid during the quarter. I note that in our quarterly, we did make a reference to progressive tax payments being made by the company at this point.
From just financial view, that this particular number wasn't disclosed in the quarterly. So whatever we are going to say is not audited amount anyway. We will be very cautious to disclose such a number, but I would, you know, probably give a range.
Yeah, I'll just interject for a moment. We're always mindful that we're typically paying tax at or around the corporate tax rate, so that would usually be the start point for any assumption being made by investor or market participants. Kevin, perhaps in that context, if we just acknowledge that we can see the cash generation that was made during the quarter, and a corporate tax rate applied on that cash generation that was disclosed in the quarter, would be a basis for people forming a view on the cash tax that was potentially made on a periodic basis.
Yeah, it will be the right approach. Yeah.
Okay. We'll leave that one there. We'll move on to the next question coming from John Ogden. It's a specific question related to diversification. In this case, John is asking if there is any interest in the Mount Arthur mine in New South Wales.
Thanks. Thanks, John. I mean, the Mount Arthur mine has been around for a long time. I think our strategy has been well documented previously that we're really looking at coal and coal in the metallurgical sector when we look for assets. I would suggest at this moment in time, if it was to become available again in the future, we don't have a lot of interest in Mount Arthur.
Thanks, David. We have a question from Glyn Lawcock at Barrenjoey. He directed it to David. Are there any additional thoughts on the met coal outlook? It seems there are a number of disruptions to supply from Yancoal and other participants in the market, such as BHP and South32, in the September quarter. Has this been the driver of recent strength in price, or are there other drivers at play?
Thanks, Glyn. Look, I'll let Mark comment on that again. He's a bit closer to the market on some of those issues than I am. I mean, I can't think of anything that's sitting behind it other than some of the comments you make yourself. I might ask Mark to take that question.
Yeah, there have been those small supply disruptions, but in addition to that, what's driving some appreciation in the prime hard coking, low-vol hard coking coal price has been demand from India of recent times. It's that demand in India, from India, that's really driving some of the more recent strengthening in pricing.
Thank you, David. Thank you, Mark. Question coming through from Sara Chan at Morgan Stanley related to fuel cost. Given the recent spike in oil price, is there any comment on earnings sensitivity to diesel price? Looking at the sales mix, how much coal was sold domestically in regards to the Australian energy preservation, and is there any comment on the coal preservation for the Q4 ?
Okay. On diesel, I mean, our guidance as it stands, we've factored in our view on diesel price, taking account of current issues globally. The guidance we've reconfirmed again today, I think we are comfortable on that. I did say during the quarter, we sold 251,000 into the domestic generators, so that was our part of the domestic reservation policy. The domestic reservation policy now runs through until the end of June 2024. Of course, for quarter four, we will be talking to generators as we go into this quarter. Of course, providing coal up to potentially 300,000, up to our cap.
I mean, I'm not suggesting that's what we're going to sell this quarter, but that is our cap on what we're required to reserve.
Okay, thanks for that. We've got a follow-up question from Glyn Lawcock at Barrenjoey. On costs, there was the comment, "Labor shortages are abating," has the guidance of AUD 92-AUD 102 per ton... Oh, and we have the guidance of AUD 92-AUD 102 per ton. Any comments on expectations into calendar 2024 in terms of headwinds and tailwinds to drive cost outcome?
Thanks, Glyn. I don't think there's really any other headwinds out there at the moment than we've already been dealing with, and some of those headwinds are pulling back a little bit. I think labor shortages are abating, and we are now getting ourselves back into a sort of, not, I wouldn't suggest fully manned position, but very close to being fully manned. I think we told you previously at one of the previous quarters that we renegotiated all our site enterprise agreements last year, so we're pretty comfortable for all our site-based personnel what our labor costs are going into 2024.
I think the big driver is always with our unit cost is volume, and we are seeing a quarter-on-quarter improvement, and we would expect that to continue into 2024. Again, I think what you'll see is start to see some of the volume effect coming back as 2024 develops on our cost.
Thank you, David. As usual, the official guidance for 2024 will be made available with our financial result in February, as per standard practice. Looking at a question from Alexander Beere. Can you please talk about the three main mines? The ROM coal production from Moolarben, Mount Thorley, and Hunter Valley Operations was very strong at 5.3, 4.5, and 4.5 million tons for the quarter, respectively. Is there a comment on the run rate we see for these mines heading into next year?
Thanks, Alexander, for that question. Yes, it was a strong quarter for the three mines, and I think we're seeing this momentum now in our performance coming back in as we're starting to move through, away from the wet weather, getting our inventories back in place, getting the structure of our mines back in, and also reducing the amount of water that we're actually holding on site at the moment. What you're seeing, I think, is a move back to more, what I would call, an inverted commas, "normal" type of performance from our three big operations.
All I'll say on 2024 is we don't see anything in 2024 that would suggest to us at the moment that we'll not be producing at our normal type of output for those three big mines.
Thank you, David. I do have a few more questions still on the webcast, but I'll take a moment to come back to Desmond and ask if there are any questions waiting on the phone line.
As a reminder, to ask questions on the phone, you can press star one one and wait for your name to be announced. There are no questions from the line. Please continue.
Thanks, Desmond. Coming back to the webcast, John Ogden has some follow-up questions on coal markets. The first one's whether we see the conflict in the Middle East having any effect on buying strategies in the coal markets. A second question, somewhat longer-dated in nature. Do we have any thoughts on when China's demand may peak, given the renewable capacity ramp-up in their marketplace? What cause could that have for coal demand for domestic production and imports to deteriorate?
I'm gonna let Mark comment on both of those, but I would make one comment on the first one, and that is that we've talked about this quite a bit, about how fragile the energy market is globally, not just in coal, but in coal, oil, and gas. I think any sort of conflict anywhere around the world is potentially gonna have some sort of impact on that energy balance globally. Mark, I'll let you comment a bit more detail on those two.
Sure. Yeah, of course. Just on the Middle East crisis, we say, you know, in terms of looking at stocking up on coal more rapidly, we've seen some appreciation in oil pricing as a result of the crisis that's happening in the Middle East. We normally see the market react very quickly to situations like the Russian-Ukraine crisis and the crisis in the Middle East. Because Europeans have been so, so well-stocked, we would normally see that coming into European market. Really hasn't impacted the Asian market per se, and so we're not seeing the rapid stock build-up falling as a result of the crisis in the Middle East.
In relation to China, you know, Australia has only started to resume exports to China this year, following the geopolitical ban that had previously existed. Year-to-date, China imports are hovering at around 350 million tons so far, which is a public number. If you annualize that, that means their imports are going to be around, in excess of 460 million. That really is a peak in China import demand, seaborne import demand. It's a very positive sign still coming out of China. China is still a very good market for Yancoal product, and we're not really seeing that import market necessarily going to fall in the near future.
Thank you, Mark. We have another question from Glyn Lawcock at Barrenjoey. With regards to strategy, is there interest in South32's Illawarra and Eagle Downs met coal mines, given the comment earlier that interest in met over thermal is something we've referenced previously?
Thanks, Glyn. As always, we don't really comment on individual projects. We do keep very close to what is out there. Our business development team do look at opportunities. They do run the ruler over lots of things that never make it any further. Look, I wouldn't comment on the two, but certainly we'll be keeping a very close eye on what becomes available in the met coal markets.
Thanks, David. Another question coming through from Chris Keane, looking to clarify the comments earlier. Tax gets taken quarterly at corporate rates, and that's reflected in the cash build quarterly, confirming there's no large end-of-year tax payments. Because it is worth noting, as I'll just make an extension to the comment from Chris, that we did have that large tax payment for the 2022 period, which we made during this calendar year. I'll hand that one over to Kevin for the first comment.
Thanks, Chris. As we mentioned, currently, we are paying tax on corporate, and then it's very much a monthly PAYG process, as the normal business does. As for the large tax payment, I think the comment we can give is, we, as a company, we follow a very robust capital management strategy. We will try our best to avoid such thing if company already in a tax payable position. From PAYG perspective, this will be managed so that we can have a smooth capital profile. Thanks.
Thank you, Kevin. That's the last of the questions I have showing on the webcast platform. We'll extend the conference call for a short while longer, just to see if any questions come through. In the meantime, I'll hand back to Desmond to double-check if any questions have occurred on the phone lines.
There are currently no questions from the line. Please continue.
Okay. I don't see any questions coming through on the webcast. Mindful that it might take a moment for someone to type a question, but if nothing comes through in the next 30 seconds or so, I'll hand back to David for some closing comments. No, no further questions coming through. If people do have questions, by all means, contact the company through the details on the Yancoal website, and we'll be able to respond outside the conference call. David, back to you for the closing comments.
Thank you, Brendan. I'd just like to thank everybody for your time this morning and attending the Yancoal Q3 update. It was a strong quarter. It's good to be getting the dry weather now and getting our mines back to where we wanted to be. We are seeing that progression the way we indicated earlier in the year, and we look forward to continuing that into the future. Thank everyone again for attending this morning, and hope you all have a good day.
Thank you, David. Desmond, could you please conclude the call for us?
This concludes today's conference call. Thank you for participating. You may now disconnect.