About Yankuang Energy Group Company

Yanzhou Coal Mining Company Limited engages in the mining, washing, processing, and distribution of coal through railway transportation. The company offers coal products, including thermal coal, semi-hard coking coal, semi-soft coking coal, PCI coal and other mixed coal products which are sold to power plants, metallurgical mills, chemical manufacturers, construction material manufacturers and fuel trading companies in China and other countries, including Japan and South Korea. As of December 31, 2015, the company was 52.93% directly owned by its parent, the Yankuang Group Corporation Limited (Yankuang Group), which is wholly owned by the Shandong Provincial Government under the control of the SASAC (State-owned Assets Supervision and Administration Commission) of the Shandong Provincial Government. As of December 31, 2015, the company owned and operated 21 coal mines across China and Australia with coal resources, including Shandong and Shanxi Provinces and the Inner Mongolia Autonomous Region in China, as well as Queensland, New South Wales and Western Australia in Australia. In addition, as of December 31, 2015, the company had four coal projects under construction in China and four advanced-exploration stage projects in Australia. In the People’s Republic of China (PRC), the company directly owns and operates eight coal mines, namely, Nantun, Xinglongzhuang, Baodian, Dongtan, Jining II, Jining III, Beisu and Yangcun. As of December 31, 2015, these eight mines had approximately 3,352.6 million recoverable reserves. The company also holds equity interests in coal mines in China through its subsidiaries. Shanxi Nenghua operates Tianchi Coal Mine, which holds approximately 115.8 million tonnes of recoverable reserves; Heze Nenghua operates Zhaolou Coal Mine, which holds approximately 409.5 million tonnes of recoverable reserves; and Ordos Neng Hua operates Anyuan Coal Mine and Wenyu Coal Mine, which holds approximately 26.7 million and 43.1 million tonnes of recoverable reserves, respectively. In Australia, the company conducts its operations primarily through its subsidiaries, Yancoal Australia Limited (Yancoal Australia) and Yancoal International (Holding). Yancoal Australia operates nine coal mines in Australia, including Austar, Yarrabee, Ashton, Moolarben, Gloucester, Donaldson, Middlemount, Cameby Downs and Premier which collectively held approximately 4.5 billion tonnes of reserves, as of December 31, 2015. Yancoal Australia also holds an advanced-exploration stage project, Monash. Yancoal International (Holding) owns the advanced-exploration stage projects Athena, Harrybrandt and Wilpeena. Coal Business The company is primarily engaged in the production of coal, which involves the mining, washing, processing and distribution of coal. The company’s products primarily consist of thermal coal, semi-soft coking coal, semi-hard coking coal, PCI coal and other mixed coal products which are suitable for power generation and metallurgical production. Sales and Marketing: The company sells the majority of its domestic coal products to power plants, metallurgical mills, coking manufacturers, chemical manufacturers, and trading companies. The majority of the coal sales of its Australian subsidiary, Yancoal Australia, are to power plants and metallurgical mills. The company’s domestic coal sales are concentrated primarily in Eastern China, particularly in Shandong, and to a lesser extent, in Southern China. The company’s Australian subsidiaries primarily conduct their export sales directly by entering into agreements with end user customers. The company’s Australian subsidiaries also export a small portion of coal through export agents with which its Australian subsidiaries have established longstanding relationships. The primary destinations for the export sales of its Australian subsidiaries are South Korea, Japan and China. Customers: As of December 31, 2015, the company’s major customers included Shanxi Lu’an Mining (Group) Rizhao International Trading Co., Ltd.; Shaanxi Iron & Steel Group Hancheng Iron & Steel Co., Ltd.; Shanxi Yangmei Chemical International Business Co., Ltd.; Shanxi Xishan Coal and Electricity Trade Co., Ltd.; and Shanxi Jicheng Anthracite Mining International Trading (Rizhao) Co., Ltd., Suppliers: The company procures steel primarily from Shandong Iron and Steel Group Co., Ltd. Jinan Branch and Laiwu Branch, Shandong Shiheng Special Steel Group Co., Ltd., Ansteel Wire Rope Co., Ltd. and Guizhou Steel Rope (Group) Co., Ltd., and cement primarily from Shandong Lucheng Cement Company, Ltd. and Shandong Luzhu Group Cement Company Ltd. The company procures water primarily from the Yankuang Group pursuant to the Materials Supply Agreement and its supplemental agreements, and, to a lesser extent, from local water companies. Competition: Australian mining operations: The company primarily competes with coal mining enterprises in Australia, including BHP Billiton, GlencoreXstrata, Rio Tinto, Anglo American and Peabody Energy Australia. Railway Transportation Business The company provides railway transportation services to its customers, including the Yankuang Group. In 2015, the company transported 16.0 million tonnes of coal on its railway network. The company owns 15 steam locomotives, 2 heavy-duty rail motors and approximately 200 kilometers of railway tracks constructed for coal transportation that connect most of its coal mines with Zouxian Power Plant located in Jining City, Shandong. The company’s railway network also connects to two major national railways, namely, Beijing-Shanghai Railway and Yanzhou-Shijiugang Railway. Coal Chemical Business The company’s coal chemical business focuses on the production of methanol, a liquid commodity that could be produced from coal or natural gas. The company operates its coal chemical business primarily through Yanzhou Coal Yulin Nenghua Company Limited (Yulin Nenghua) and Ordos Nenghua. Sales and marketing: The company’s coal chemical sales are made pursuant to sales contracts that the company enters into from time to time with customers. The company sells its methanol exclusively in China and predominately to chemical producers in northern and eastern China and methanol distributors. Electric Power and Heat Supply Business As of December 31, 2015, the company owned and operated seven power plants, which generate electricity for internal use and external sales. In 2015, the company generated a total of 2,639.5 million KWh of electricity, 1,677.4 million KWh of which it sold to third parties. Shandong Hua Ju Energy Co., Limited (Hua Ju Energy) operates five coal-fired power plants whose main facilities consist of energy conversion CFB boilers, and extraction and condensing steam turbines. The power plants at Hua Ju Energy have an aggregate installed capacity of 132 MW. The company sells a small amount of electricity to third parties. These plants have an aggregate installed capacity of 60 MW. In 2015, the power plants operated by Yulin Nenghua generated 265.8 million KWh of electricity, of which 122.2 million KWh was sold to third parties. Sales and marketing The company sells a portion of the heat generated by its power plants to the Yankuang Group. Seasonality The company’s heat supply operations are affected by seasonality and experience higher demand during winter. Significant Events In July 2016, Yanzhou Coal Mining Co. Ltd. entered into the JV Agreement with Duanxin Investment and Great Wall Securities in relation to, among other things, capital commitment to the joint venture. In March 2020, the company acquired 10% interest in the Moolarben Coal Joint Venture from Sojitz Moolarben Resources Pty Ltd (Sojitz) by Yancoal Moolarben Pty Ltd, a wholly-owned subsidiary of Yancoal Australia Ltd (Yancoal Australia). Yancoal Australia holds 95% participating interest in the Moolarben Coal Joint Venture through its wholly owned subsidiaries Moolarben Coal Mines Pty Ltd (85%) and Yancoal Moolarben Pty Ltd (10%). The remaining joint venture interest is held by a consortium of Korean companies (5%). History Yanzhou Coal Mining Company Limited was founded in 1973.