ANNUAL%20REPORT%202015%20eng

Management Discussion and Analysis
Whilst the reduced LTIFR has been influenced by lower production activity, the result is also attributable to the
focus of the Group’s management efforts and commitment to the goal of Zero Harm. This has been maintained
through a difficult period operationally, during which there has been proportionally more man-hours of exposure
to tasks with typically higher potential for LTI. During 2015, the Group continued to deliver Occupational Health,
Safety and Environment (“OHSE”) specific training to employees, contractors, sub-contractors and visitors, with
delivery of 5,149 training sessions to individuals, totalling 12,598 man-hours.
The Group’s safety performance continues to compare favourably in terms of LTIFR against publicly reported
mining safety statistics, such as those from the Queensland Government Department of Natural Resources and
Mines (Surface Coal Mines, 2.3, 2014-2015) and the New South Wales Department of Resources and Energy
(Surface Coal Mines, 1.9, 2014-2015).
Sales and Marketing
Challenging market conditions in steel and steelmaking raw materials industry were further exacerbated in 2015.
Intense competition remained amongst Chinese domestic and international coal exporters to the China market.
HCC prices dropped to the lowest levels seen in many years, and signs of a slowing economy in China put further
downward pressure on an ongoing global coking coal supply and demand imbalance.
The Group pursued a strategy to maintain relationship with its existing customer base, which includes key endusers
with long term strategic value, while maintaining prudent management of liquidity in sales arrangements.
On 3 April 2015, the Group signed a sales agreement with Shenhua Bayannoer Energy Co., Ltd., a subsidiary of
China Shenhua Group, under which the Group committed to supply 1.2 Mt of HCC to China Shenhua Group.
Furthermore, on 8 May 2015, the Group signed a long-term cooperation agreement with Baotou Iron and Steel
Co., Ltd. (“Baogang Group”) to supply coking coal products, as such reinforcing the direct relationship with the
Baogang Group, which is the largest steel mill in Inner Mongolia, China.
The Tianjin Zhengcheng Import and Export Trade Co., Ltd. (“TZ JV”), the Group’s subsidiary in China, which
operates as a joint venture with Risun Mining Co., Ltd, continued to maintain its relationship with its existing endusers’
base mostly comprised of steel mills and coke plants located in Hebei, Shandong and the surrounding
coastal area in China. The Group developed and maintained a product mix of coking coal products produced by
the Group with supplementary third party coal products from Chinese origins in order to keep a proper balance
of efficient cost structure as well as maintaining its market share. The variety of coal such as SSCC, weak caking
coal, gas coal and lean coal was sourced from third parties from different regions of Shanxi and resold by TZ JV
to customers located in Hebei, namely Jianlong Janeboat Steel Co., Ltd, Qiananshi Jiujiang Wire Co., Ltd and
Tangshan Dafeng Coking Co., Ltd.
The Group sold a total of 1.5 Mt of coal products in 2015, out of which 1.2 Mt was exported from the HCC
originated from Mongolia, and 0.3 Mt of other types of coal products originated from third parties in China which
included SSCC, lean coal, weak caking coal and gas coal. Out of the sales volume of 1.2 Mt HCC that was
originated from Mongolia 0.7 Mt, 0.3 Mt, and 0.2 Mt were sold under Delivery-at-Place (“DAP”) GM, FOT and
Cost-and-Freight (“C&F”) terms, respectively. Exported HCC volume in 2015 represents a 64.6% year-on-year
decrease compared to 3.4 Mt HCC sold in China in 2014.
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Annual Report 2015