Host advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Brendan Fitzpatrick, Investor Relations Manager. Please go ahead.
Thank you, Desmond, and thank you to everyone for joining us on this briefing for Yancoal's 2024 financial results. As mentioned, my name is Brendan Fitzpatrick, the Investor Relations Manager. To present today's briefing, we have several members of Yancoal's executive leadership team, including Miss Yue, Chair of the Executive Committee and Acting CEO, Kevin Su, Chief Financial Officer, David Bennett, EGM Operations, Mark Salem, EGM Marketing, Mike Wells, EGM Finance, and Laura Zhang, Company Secretary. After the executive team completes the review, we will move to a question-and-answer session. The commentary provided today is based on the 2024 financial results and associated announcements published to the Australian Securities Exchange and the Stock Exchange of Hong Kong yesterday, the 20th of February. Slides two and three contain notices and disclaimers relevant to today's presentation and the forward-looking statements it contains.
Please make yourself familiar with the content on these two slides. Throughout the presentation, we use Australian dollars unless otherwise stated. I invite Mr. Yue to present introductory comments on Yancoal's 2024 financial results.
Thank you, Brendan. I welcome everyone on the call. 2024 was a very good year for the company. We finished the year with our best-ever half-year production performance. In the inflationary cost setting, we brought our cash cost down. Our cash generation enables both a dividend payment and the potential to pursue growth.
按约增产是所谓，我们一直持续在加强安全管理，力求不断优化安全表现。2024年我们实现了产量指引目标，全年原煤产量近6,300万吨，全役商品煤产量近3,700万吨，同比提升10%。尽管销售价格较去年有所下降，但仍保持在176澳元每吨的稳健水平。我们同样兑现了成本指引，得益于下半年的强劲表现，现金经营成本完成93澳元每吨，扣除特许权使用费后，隐含现金利润达66澳元每吨。
I'll provide the translation. Safety is first. We have been continuously strengthening our safety management and striving to optimize our safety performance. We delivered on our production guidance in 2024. From nearly 63 million tons of ROM coal, we generated almost 37 million tons of attributable production, a 10% increase on 2023. Our realized coal price, while lower than last year, was still very healthy at AUD 176 per ton. We delivered on our cost guidance. A strong second half brought the full-year cash cost down to AUD 93 per ton. This gave us an implied cash operating margin of AUD 66 per ton.
Increasing production as planned is what we call it. We have consistently strengthened safety management, striving to continuously optimize safety performance. In 2024, we achieved our production guidance targets, with total raw coal production reaching nearly 63 million tons and total commercial coal production reaching nearly 37 million tons, an increase of 10% year on year. Although sales prices declined compared to last year, they remained at a solid level of AUD 176 per ton. We also met our cost guidance; thanks to strong performance in the second half of the year, cash operating costs were AUD 93 per ton, and after royalties, implied cash profit reached AUD 66 per ton.
A strong production, good realized price, and low costs drive financial performance. AUD 6.9 billion of revenue and AUD 2.6 billion of operating EBITDA at a 37% margin were great outcomes. We delivered AUD 1.2 billion of profit after tax and finished the year with close to AUD 2.5 billion in cash. The board has decided to return AUD 687 million to shareholders. This is a payout ratio of 56% and delivers shareholders AUD 0.52 per share fully franked. I will now hand over to the management team to take you through the detailed 2024 results presentation. Thank you, Mr. Yue. Slide five shows our safety performance. The TRIFR statistic improved late in the year, but it's not at the level we would like it to be. Safe minds are productive minds, and we remain committed to improving the trend through targeted safety intervention activities. Keeping our workforce safe is always our first consideration.
Our TRIFR may be below the industry average, but we are keen to see it improve. Our focus on sustainability, as with safety, is constant. In 2024, we moved beyond the Environmental, Social, and Governance report published in past years, and in April, we issued our first sustainability report. We will release our 2024 sustainability report alongside the annual report in late April. I'll now hand over to David Bennett to take you through our operational performance.
Thank you, Brendan. Slide seven summarizes the operational drivers behind our full-year performance. As Mr. Yue touched on, we delivered on our production and cash cost guidance. We operated in accordance with our mine plans and hit the midpoint of both target ranges. The 10% increase in attributable saleable production to 36.9 million tons was a good outcome. This included a 17% increase in the second half over the first half, where we produced almost 20 million tons. As Mr. Yue mentioned, this was the best half-year performance we have ever had. It was a pleasing result that we're able to counter the inflationary cost environment with increased production and a focus on cost control, delivering a 3% decrease in our cash operating costs. Coal sales exceeded production as the marketing team did a great job optimizing our products to meet the market conditions.
I'll leave it to Mark Salem to speak further on coal markets and realized prices in later slides. Total ROM coal on a 100% basis was almost 63 million tons. Our mines are much better placed to mitigate the effects of rainfall events after investing in additional water storage capacity and associated infrastructure. However, we still curtail activity during rainfall events to ensure safety and avoid asset damage, and this was the case during 2024. At the Moolarben open cut mine, the single largest contributor to our attributable saleable production, operations ran so well we achieved the annual permitted ROM limit of 16 million tons well before the end of 2024. The output we delivered in the second half of 2024 demonstrates what can be achieved when the mines are operating at or near optimal performance levels. Attributable saleable production was up 10% compared to 2023.
The increase in saleable production was in part the result of the successful completion of our site's mine recovery plans. The strong second half performance I mentioned is close to the limit of what our portfolio of mines can produce over a six-month period. This will link into the production guidance discussion later in the presentation. We have started 2025 well and are aiming for more consistent output through the year, but do anticipate the first quarter will have lower production than the rest of the year due to the mining sequence. We have included slide 10 in the presentation pack to display our three largest mines in context of other Australian thermal coal mines. The total cash costs are on an energy-adjusted basis to counter the influence of coal quality on the operating margin.
While the comparison may not be perfect, the key takeaway is clear: our three largest mines are some of the best thermal coal mines in Australia. We also consider the people we have operating these assets as some of the best in the country. Large-scale, low-cost mines such as these remain viable when many other mines struggle through coal price cycles. Cash operating costs were AUD 86 per ton in the second half and AUD 93 per ton for the full year. Increased production was the key driver of the 3% decrease in full-year costs and the 15% decrease in second half costs, together with an unwavering focus on cost control. In coal mining, like other bulk commodity industries, the unit costs are strongly influenced by production volumes. Unfortunately, cost inflation factors from recent years, including labor, explosives, electricity, and spare parts, are now largely embedded in our cost base.
Operating costs also escalate naturally as mines mature, typically resulting from higher strip ratios and increased truck haul distances. Cost control has always been and will continue to be a key focus for all of us. From what we can see reported across the industry, our cash operating costs remain at the lower end of the cost curve. Turning to slide 12, we demonstrate why keeping cash costs operating costs low is critical. Our implied operating cash margin was AUD 66 per ton. The combination of cost inflation and increased state government royalty rates has pushed up the industry cash cost curve significantly over the past few years. I'll now hand over to Mark Salem to cover the coal markets. Thank you, David. Yes, 2024 was definitely a year of supply recovery, and thermal coal pricing was relatively stable.
We saw Australian thermal coal exports increase by approximately 2%, but we also encountered supply growth from other exporting countries. This increase in supply was met by the demand growth coming from China's expansion of coal-fired capacity and India's strong demand for electricity. We price our thermal coal against the API 5 and Global Coal Newcastle indices. Our realized price in US dollar terms sits between these indices, as shown on Chart 13. In Australian dollar terms, our realized thermal coal price was AUD 160 per ton, down 24% from 2023. Metallurgical coal markets exhibited declining demand in the second half of 2024. This was driven by weakening steel market conditions, as global steel output fell approximately 6% compared to 2023. China's demand growth continued, however, it was met by strong land-borne metallurgical coal imports from Mongolia and Russia.
In the first half, our realized price in US dollar terms was benefiting from product quality and contract structures. In Australian dollar terms, our realized met coal price was AUD 276 per ton for the year, down 22% from 2023. In 2024, approximately 86% of our sales were thermal coal, with the balance being weaker-grade metallurgical coals. This product split varies period to period, depending on which coal seams are in production at each mine and how we can maximize the market opportunities. Turning to slide 16, we show our market splits. We continue to optimize the revenue contribution of our various coal products to specific markets. China is a significant buyer, both on volume and revenue basis. Customers in China tend to take a lot of the API 5 equivalent quality coal we produce.
Our Japanese customers purchase a significant portion of our higher calorific value thermal coals combined with a mix of PCI and semi-soft coking coals. This market was our second highest revenue generator last year. There are various groups providing forecasts for international thermal coal markets. A common theme we see in recent forecasts is the ongoing revision when coal demand will peak and at what level. Delays to projected closure dates for existing coal-fired power plants combined with new facilities coming on stream are driving the ever-evolving increasing demand profile. As you can see, since we last included this slide in the second half of 2024, revisions to the forecast have seen the projected demand peak lift once again. On slide 18, we look at projections for seaborne thermal coal supply over the next 10 years. Approval and financing challenges for new mines compound natural reserve depletions.
Over time, global demand for coal will undoubtedly diminish as energy markets transition. That being said, there is a growing appreciation that coal still has a meaningful role and there is the potential for supply shortfall in the coming years. Even in a relatively balanced coal market, a 5% shift in supply or demand can have a notable influence on prices. In the seaborne metallurgical coal market, demand for mature regions like Europe and Northern Asia are forecast to decline over the next 15 years. However, this could be outpaced by growing demand from emerging economies, leading to an increase in total demand. Unlike the thermal coal market, some supply growth is projected in seaborne metallurgical coal markets. Looking at the profile in the prior slide, the supply keeps pace with demand. This suggests a balanced market driven by short-term fluctuations in economic sentiments.
I will now hand over to Mark Wells to cover our financial performance. Thank you.
Thank you, Mark. Starting with the key numbers on slide 21, Mark talked about our lower average realized coal price in 2024, and this was the main factor behind our revenue decreasing by 12%. With the good work done by our teams to keep costs under control, it was primarily the lower revenue that impacted the other key lines of the income statement. When looking at the cash flow statement, the 69% increase in the operating cash flow stands out. However, as you may remember, we made a AUD 1.4 billion tax payment in 2023 with respect to our record earnings in 2022, and that distorts this comparison. As noted at the start of the call, at the end of December, we held close to AUD 2.5 billion in cash, and other than some lease liabilities, we are debt-free. We are starting 2025 in a very strong financial position.
The two charts on slide 22 show the correlation between average realized price, revenue, operating EBITDA, and the operating EBITDA margin. As we have said on prior calls, realized coal price is the primary driver of our financial results given our production and cost profiles. AUD 2.6 billion of operating EBITDA at a 37% margin was a strong result. Taking our year-end share price and balance sheet, the EV to EBITDA ratio was just 2.4 times. The profit after tax and operating cash flow tend to replicate the revenue and EBITDA profiles. The step-up in operating cash inflows includes the impact of the one-off tax payment in 2023 I mentioned earlier. I will now hand over to Kevin Su to complete the presentation.
All. It's worth remembering that in the three years to early 2023, we repaid more than AUD 3 billion of loans. The debt repayment transformed the capital structure of the company. These long repayments have already saved us around AUD 300 million in finance costs per year for the past two years. These savings are also meaningful contributors to the AUD 2.5 billion cash position we have. Turning to slide 25, not only did we repay all our debts, Yancoal has also rewarded its shareholders very well during the past six years. The board has allocated AUD 687 million to a fully-funded final dividend for 2024. This is AUD 0.52 per share at a 56% payout ratio. Using the year-end share price of AUD 6.50 per share, the final dividend provides an 8% dividend yield. If it had a raised share price, it would be even higher.
Including the 2024 dividends, we will have distributed AUD 2.5 billion of unfunded dividends and AUD 2.5 billion of the funded dividend since 2018, a total of over AUD 5 billion or AUD 3.85 per share. Deducting the 2024 dividend payments from December cash balance, we still hold AUD 1.8 billion. Combined with our ongoing cash generation and access to debt markets, we retain the considerable capacity for potential corporate initiatives. Over the past 20 years, we have grown shareholders' returns through acquisition and expansion. We have a very capable team that continuously assesses potential growth opportunities. At this time, we will not be drawn on speculation about specific scenarios. If events warrant disclosure, we will inform the markets in accordance with our regulatory obligations. Slide 6 has our operational guidance for 2025. We are looking to repeat our strong operational performance of 2024. The attributable saleable production guidance is 35 to 39 million tons.
As David explained, the first quarter production will be a little lower, but we are looking for a more even profile than last year. This should take away some of the production risk at the tail end of the year. We are once again targeting on operating costs per ton of AUD 86-AUD 97 per ton. If we can deliver freight costs in the current inflationary setting, we see that as a positive outcome. Our capital expenditure guidance is AUD 750 million-AUD 900 million. Continual reinvestment is required to ensure our large-scale mines remain low-cost mines. The 2025 capital cost incorporates ongoing mining fleet replacements, some carryover of 2024 spend, and additional capital development work. Each year, we will continually balance volume by quality, efficiency metrics, operating costs, and the capital expenditure to deliver the best possible outcome. This year is no different.
Our executive team and the people on site are focused on delivery. I will now hand back to Brendan to coordinate the Q&A session. Brendan.
Thank you, Kevin. An additional observation before we start the Q&A session. The appointment process for Yancoal's next CEO is underway, but the timeline to completion is subject to several factors. We will make an announcement to the market once it is appropriate to do so. Also, there are appendices and additional information for reference at the end of the presentation pack. We will move on to the question and answer session, starting with questions from the phone lines and then moving on to the written questions submitted via the webcast. Desmond, could I please ask you to start the process for the phone line questions?
Thank you. We will now begin the question and answer session. If you'd like to ask questions on the phone, please press star 11 and wait for a name to be announced. To cancel your request, please press star 11 again. One moment for the first question. Your first question comes from the line of Peter Wong from CICC. Please go ahead. Peter, your line is open. You can unmute locally.
Congratulations on the return earnings that the income has retrieved. I have one question for the management. Considering that the production and cost guidance for 2025 remains unchanged compared to 2024, could you provide additional insights on any potential cost improvement that may arise? Thank you.
Sorry, Peter, could you just repeat that last component of the question? You're asking for additional insights into something, but I couldn't make out the question.
Yeah, additional insights on any potential cost improvements.
Cost improvement. Thank you. So yes, Peter, this is Brendan Fitzpatrick speaking in the first instance. Our production guidance, both for attributable production and cash operating costs, are replicated from last year. We are actually quite pleased to be aiming for flat costs, given that it is an inflationary cost environment that we're facing at this point in time, and the unit costs are typically heavily influenced by the production volumes, as David Bennett mentioned in his comments. In terms of cost-saving initiatives, there are several elements that go into our cost guidance. Labor is one of the largest components. Fuel and consumables are other elements. We've talked in the past about the increases we've faced from third-party providers for spare parts and the likes. But perhaps I'll turn over to David Bennett to see if there's something we can make in terms of observations about the cash cost elements.
Mindful, of course, that we have several mines of different production profiles and different scales that contribute to the average cash cost we report at the group level. David.
Thank you, Brendan. Thank you, Peter, for your question. First and foremost, in our minds, we have a very large focus on productivity. To drive the unit cost down as low as practicable, increasing our productivity and getting the most from our assets, whether they're our geological assets, our equipment assets, our human assets, is the best way for us to lower unit cost. At the same time, each of our sites has a laser focus on ensuring that we reduce cash costs across our operating sites as much as we reasonably can. Mostly, that relates to things like contractor spend, for example. We have procurement processes where we analyze different contracts. Parts and consumables is another big area for us as well. So those two things combined reduce the overall cash cost spend component.
And with the volume being protected, it really does equate to hopefully a lower unit cost for us.
All right. Thank you. I actually have another question. So we have also noted an increase in CapEx guidance. Could you elaborate on what's driving the higher CapEx? Is it also because of the inflationary pressure?
So yes, Peter, that's a good observation. It's a similar comment to start with. Inflationary cost elements are part of it. You might have noticed that we did not fully utilize our cash allocation or capital allocation in 2024. So there's some carryover tons, and there's some capital development works as well. But again, David Bennett's far better placed than I to give you the detailed insights. David.
Thanks, Brendan. Thanks, Peter, for your question. Look, with regard to capital, I think Kevin touched on it in his presentation a few moments ago. The carryover component is one part, but also making sure that we capitalize our business with regard to our assets, our mining fleets, for example, to make sure that they can operate productively and at the lower end of the cost curve is all important to us. To that point, we're bringing in new fleets this year to replace existing fleets that have reached the end of their serviceable life. And in some cases, there's some additional fleet to open up some new mining areas and account for the slightly longer haul cycles that we see in some of our mines year to year, as I spoke about earlier in the presentation.
All right. Thank you. That concludes all of my questions.
Thank you, Peter.
Thank you for the questions. One moment for the next questions. Our next question comes from the line of Meng Chen Ma from Huatai Securities. Please go ahead.
Okay. Well, thank you for taking my question. This is Meng Chen Ma from Huatai Securities. First of all, I would like to say congratulations on 2024 performance. It's a tremendous increase from the first half of 2024. So my first question here, I would like to follow up on the CapEx guidance. If we look at the guidance, it's increased from 2,750 to 900. Well, so for this part, you just mentioned it's mainly about adding more fleets. So I would like to know, is that something about the Moolarben Extension Project update? So if it's not about the Moolarben, so can you share more about the Moolarben Extension Project update? And will that cause more CapEx when it's moving forward to the next step?
So, David, perhaps you could give a comment on where the fleet's going and what position we are with regards to comment on the Moolarben Extension.
Thank you for your question. First of all, with regard to additional fleets, we are putting some additional fleet into our Yarrabee mine site where we're opening up a new mining area. Mount Thorley Warkworth has a small increase in truck fleet as well to combat slightly longer haul cycles that we envisaged this year and into the future years, likewise with Hunter Valley Operations. With regard to Moolarben, Moolarben will be largely operating on the same fleet size that it's operated on over the past couple of years. With regard to the capital for Moolarben, however, and around the approval of future mining areas, there's always expansionary capital that is required for projects such as setting up new haul roads, water management activities, for example, monitoring-type activities.
In every mining approval, there's inherent capital that is required to be spent to make sure that the new mining areas that we go into are adequately set up to be productive and ultimately generate the outcomes that we're seeking.
I've got it. Thank you. Oh, well, sorry. Sorry, go ahead.
No, you go ahead, please, Meng Chen.
Oh, okay. Yeah. So my second question is about the export, the coal exports. So with the 29% sales to China in 2024, it's kind of like one-third of the total sales volume. And we've noticed that the Chinese coal price has been declining for the past few months. So how do you see the Australian coal export to China for this year, especially given the Chinese coal price compared to last year will be much lower? And as we all know, the Australian production costs have been increasing for the past few years. So how do you see the dynamic changes for the Australian coal export for the seaborne market?
Thanks, Meng Chen. Mark Salem, could I ask you to provide an initial comment on how we're viewing the Chinese domestic coal supply and pricing and the influence that has on Australian exports?
Sure. Yeah. Thanks, Brendan. Thank you for the question and appreciate that, Meng Chen Ma. But very simply, the current prices delivered into China, seaborne imports are still cheaper than domestic. So there is still a market and there's still strong demand coming from China for Australian thermal coal. And as we said in our presentation, as we look to optimize the revenues to various markets, China still demonstrates a good return for the quality of coal that they consume and the quality of coal they import. So we are expecting a very similar product mix profile into China in 2025. And we do believe that China will maintain imports at a similar level to they have in 2024. Price competitiveness is always going to be a major issue for us. And this is just something we have to contend with in the marketplace.
Mark, could we test that second component a little further? In the presentation, David showed the position of our large thermal coal mines relative to the Australian industry. I guess the sort of read-through on that is there are other elements of supply out of Australia which are relatively high cost and potentially struggling in this coal price setting. Do you have any observations on a likely supply reaction or reduction out of Australia in response to the current coal price markets?
Yeah. Thanks, Brendan. Look, to put that into context, from our major mines, and as you said, they're in the lower cost quartile, even at these current low prices, there are still very good viabilities. In relation to a supply adjustment as a result of the decline in prices, the decline in prices has been only in the last three to four months in terms of the significant impact and the most dramatic drop, and so we're really going to have to see some of the other producers incur a little bit of pain before any supply cuts are taken, but that is a likely scenario within the next six months.
Thank you.
Thank you. That's very clear. Thank you. That's all my questions today.
Thank you.
Thank you for the question. There are currently no questions from the phone line. Please continue.
Thank you, Desmond. I'll start to utilize the webcast for the next set of questions. I do note that many of the questions are similar in nature, so I will amalgamate or consolidate questions in the interest of efficiency. I'll start off with a high-level question. What has caused the recent decline in the share price? A very simple response. We've delivered on our production and cost guidance. We've had a very strong operating performance, and we've delivered our dividend as per the constitution. I think the simple answer is it's very closely related to sentiment resulting from the coal market conditions. As Mark Salem has just identified, coal markets have been weak in recent times. And I would suggest that the share price performance for Yancoal is reflective of what we're seeing across the broader coal sector. On that topic of dividends, moving to another set of questions.
Dividend is coming up several times through the webcast profile. Kevin, I'll turn to you. We have questions asking about the dividend that was just paid. Could you confirm the dividend payment in relation to the constitution or the policy that we have in place and the continuity of that dividend policy going forwards?
Thanks, Brendan. Yancoal's constitution stipulates the dividend should be no less than the higher of 50% of NPAT, net profit after tax, or 50% of free cash flow. In that case, for what we're currently paying, about AUD 0.52 per share is just close to that 50% free cash flow. So we can definitely confirm Yancoal is consistently paying our shareholders in line with our constitution.
Brendan? Okay. Thank you, Kevin. And in terms of the forward outlook, there is one query there with regards to timing of dividends. I'll just clarify that for the dividend announced in the full year results, the 2024 final dividend, the payment date is the 30th of April, 2025, and the record date will be the 14th of March, 2025. Moving on to the topic of production, there's a question coming through with regards to capacity utilization. It appears to be somewhere around the 90% level according to the question coming through. David, could we have some comments on what restrictions we face or what ability we have to maximize our capacity and utilization of the equipment and how that ties into the productivity focus you were talking about earlier?
We will do. Thanks, Brendan, and thank you for the question. While I can't actually quote a capacity utilization rate, an exact number, what I would say is that we always plan our production profiles to be both challenging and achievable. And we have a very strong focus on productivity and cost, as I spoke about earlier. Each of our mine sites has a different set of constraints and different potential upsides, no different to any mining operation right around the world, in fact. As can be seen in our H1 2024 results, we ran our operations very close to our maximum capacity of 20 million tons. This year, we're aiming for a much more consistent profile. As we spoke about earlier, Q1 will be slightly lower.
But what I can assure people of is that across all of our Yancoal operations, we have a laser focus on productivity, getting the most out of our assets, the most out of our capital, as I spoke about earlier, and delivering the best results that we can. We are very, very focused on productivity right across all of our sites to unlock not just the budgeted coal, but any potential upsides that we see beyond that. Thanks, Brendan.
Thank you, David. Several questions coming through on the topic of capital management and allocation of capital going forwards. As we've noted, Kevin's provided commentary on the dividend. We've paid a dividend as per policy. Capital returns have been a part of Yancoal's focus for the past several years. It's not for me to speak on behalf of the board. The dividend is always determined by the board or typically at the end of each half-year and full-year financial period. But we've also talked about retaining cash at this point in time. As Kevin mentioned, there's about AUD 1.8 billion still on the balance sheet at the end of December after allowing for the dividend that's been allocated. We've talked of the intention for further growth. Yancoal has a history of growth.
We've just completed our 20th year, and we've got to where we are through growth, through acquisition, optimization, and expansion of assets. What we've said in the past is we're open to continuing that process. We've got a great team. We've got an excellent skill set and operational platform to leverage up here in Australia. We could look at opportunities outside Australia, but Australia is certainly where we've got strength. And similarly, we're strong in the coal market. We're one of the best coal miners in the business as far as we're concerned. And we are the current second-largest coal producer in Australia as we see the numbers. We've talked about having some of the best thermal coal assets in the business.
Adding further thermal coal to our production profile may not be the best opportunity, but we've certainly talked about potentially adding metallurgical coal if we can find the appropriate asset at the appropriate price. We would consider going beyond the coal industry as we've indicated in the past, but that would take some further study and resources to be applied. We do have a very capable business development team that's been looking into many, many opportunities. As and when is appropriate, we would inform the market of any potential way forward. As Kevin mentioned in his comments earlier, there's no point speculating on specific scenarios at this point in time. As per our policy, we don't talk to specific assets or transactions that are underway, whether we are involved or not.
Turning to the question list, there's still a lot of questions coming through on the coal markets. I'll join a few of them together and ask your comments, Mark Salem. We talked about China earlier and the increasing profile of supply in China. What does the demand look like in China, and will that be an influence on our general view for the commodity price outlook, specifically on the thermal coal market?
Yeah. Thanks, Brendan. Now, if we look at China in terms of being a producer of nearly over 4 billion tons of coal, and the amount of imports that they bring into the country of thermal coal or coal in total is around 500 million. And so the imports are only a very small portion of their overall production and their overall availability. So the demand for imports is always generated on the back of the higher quality coal and the fact that imports are typically cheaper in the Pearl River Basin in the southeast area of China. And that's really what's driving the continued imports. As I mentioned before, we're not expecting the quantity of imports in 2025 to be different to what has been imported in 2024. So we're expecting consistent demand.
Some of the independent forecasters are predicting a small growth, but in the order of magnitude, it's less than 10% from the current number. That could have a very big impact on prices, as I mentioned in my speech. We just have to monitor that very closely. The winter here in China at the moment is very mild. The reason why coal prices are down here at the moment is because stocks are high. We really need to see that drawdown of coal stocks to happen, which is expected as a result of the end of Q1, Q2, coming into the summer burn. Then we can see the true impact of coal imports going forward. We're not expecting anything less than 2024.
Thank you, Mark. It's interesting that observation you're making about the stock levels and the demand or consumption of those stocks. It's one of the specific questions that I see on the webcast. Are the stock levels particularly different than we would normally see at this time of year, both in China and other major markets? And is there a timing for a restocking phase that might be anticipated?
Yes. Thanks, Brendan. Yes, they are different. We do have nearly record high stocks at Qinhuangdao, which is one of the major ports here in China that supplies the domestic China markets. And generally, there's high stocks at most of the power plants. And that's what's really driving the current price structures. So yes, they are at record high levels. In relation to recovery from these stocks, typically following a mild winter, we normally have a very hot summer. That will also encourage a lot of demand, a lot of burn. So we are expecting these stocks to really be drawn down towards the end of Q1, coming into Q2. I trust that answers the question.
Thank you, Mark. That was great. Desmond, could I turn back to see if we have any further questions coming through on the phone line, please?
Yes, we have a question from Alex Shu from Millennium. Please go ahead. Alex Shu, your line is now open. Please go ahead.
Oh, hey. Good day, Brendan and Ning Su. Yeah, this is Alex Shu from Millennium. So I'm just wondering, my first question regarding the HVO North. So when do you expect us to receive an update on this?
Thanks, Alex. The HVO North, you're referring to the application for a mining lease extension. We are in the process of waiting for a response on the interim 18-month extension requirement. We're ideally going to receive that in the coming months. Certainly, we'd like to see it ahead of the end of the current mining lease in late June. If that comes through as we've requested, then we have until the end of 2026 to complete the application process for the license renewal for the additional number of years. I'll hand over to David to see if there's anything specific that's worth mentioning on that process.
No, I think you've covered it, Brendan. That's exactly right. So I've had the application or the modification has been submitted, and we're looking for a favorable outcome sooner rather than later.
Thanks, David. Alex, did you have a second question?
Yeah, that's great. Thanks, Brendan. So the second question is just regarding the sustaining CapEx, 750-900. As you alluded to here, there's some fleet replacement going on. So can I just confirm if this is a step up from the previous year because of the fleet replacement, or should we think this is more as a one-off bump in the next couple of years?
Yeah. Thanks, Alex. You're quite right. We have been working through a fleet replacement cycle for the last couple of years. I'll hand over to David to make a comment about what's included in this year's budget and how it fits into the forward years, although mindful that we only provide capital expenditure guidance on a year-by-year basis. So we only have the live guidance for this year.
Thanks, Alex. As you alluded to and I've touched on earlier, there is an increase in fleet, and most of that is sustaining CapEx to replace fleets that are at the end of their serviceable life with a mix of some new fleet coming in just to make sure that we maintain a fleet that is reliable and productive. Coupled with that, we talked a little earlier in the presentation about capital around the Moolarben open-cut extension and the need for project capital there as well, and the other things that are in the mix, of course, are rebuilds, CHPP plant shutdowns, long-haul relocations, and the like. They all add into the mix, but in short, this year, we see as a peak spend for capital at Yancoal. However, we'll go through our normal budget and strategic planning process as the year progresses and identify future capital requirements post that.
Great. Thank you very much. That's very clear.
Desmond, are there further questions on the telephone line?
There are no questions from the line. Please continue.
I'm looking through the webcast questions. As mentioned earlier, a lot of them are similar in nature, and we seem to have captured a lot of the main thematics here. A general question in terms of production capacity. David, you mentioned earlier that the second half of last calendar year was the best performance we've ever had and touched on the observation that that's near the limit of what the mines can produce. The question I see on the webcast is, is there any capacity to increase the production range going forwards?
Thanks, Brendan. Thanks for the question online. Look, there's always opportunity to increase the production range for our mine sites. That comes down really to understanding the particular mine, the deposit, and where the sweet spot is in terms of the value of that operation. You can always add in more fleet and increase the production profile in some cases, depending on your constraints. However, it really depends on where that value sweet spot exists. Some of our mines are limited with regard to their environmental approvals. So if you look at Moolarben open-cut at the moment, it's limited to 16 million tons. And as I spoke about earlier in the presentation, it delivered to 16 million tons in 2024. Other mines have different environmental approval limits and the like.
But typically, if we're running around our market guidance and in the case of half to 2024 at 20 million tons, that at this stage is the upper end of what we can produce. Notwithstanding good mining conditions and productive practices in place, we can always do a little bit better than that. That's what we strive to do.
Thanks, David. And should we clarify, are we talking about incremental production gains? We don't have any expansions or large-scale growth projects underway right now. So in terms of the scale of impact, we're talking about percentage increases, not step changes.
Yeah, correct, Brendan. That's right. Yeah, percentage increases, and when conditions are good, we like to overdeliver because we inevitably know we'll get the wet weather periods and some other impacts that we need to mitigate, so we certainly have that surge capacity there to be able to mitigate the times when we're not as productive due to other factors like rain and the like.
Perhaps we should just tie that back to the production guidance comment and the observations we made earlier. The first quarter of this year will be a little weaker due to the mine sequencing. The mines can run at levels for periods of time, a quarter or a half year, but to run at maximum levels for a sustained period such as a 12-month calendar year always a challenge due to the long-haul moves, the mine sequencing, the maintenance schedules, and so on. Is that correct?
Yeah, that's correct. Absolutely. We see months that have really strong peak performance. Like you mentioned, quarter one this year will be a little bit lower, but from then going forward, you'll see a flatter profile. And again, to the comment that I made earlier, we always plan our budgets to be challenging budgets. We certainly don't plan budgets to contain too much contingency, but while they are challenging, they are achievable at the same time.
Thanks, David. I believe I've covered off most of the questions in one form or another. I appreciate there were numerous questions, and I've combined them as I said I would. We're approaching the one-hour mark, and it's a very busy time of the year for everyone on the call, no doubt. So with that in mind, Desmond, I can't see any other phone line questions coming through. I'll hand over and ask Mr. Yue if he could please make his closing remarks.
Thank you, team. In 2024, we delivered on our guidance and aim to deliver a similar operational performance in 2025. We are in a very strong financial position and rewarded our shareholders with another healthy dividend. We hold cash that our board can also consider further growth opportunities. The company will focus on continuing strong production, cost control, and the balanced allocation of capital. We look forward to giving you our next update in April after we release our first quarter production report. Thank you to everyone who joined us on this call. Have a great day.
Thank you very much. Desmond, could I please ask you to conclude the call for us?
Just to conclude today's information participation, you may now disconnect your line.