Yankuang Energy has stepped away from its bid to buy out the remaining shares in its majority-owned unit, Yancoal Australia.
The company had recently said it was still open to negotiations with the Australian coal miner, in which it holds a 62.26 per cent stake, after an initial $1.8 billion offer was rejected.
Yankuang filed documents with the Hong Kong stock exchange in late May suggesting it was considering a bid of $US3.60 ($5.27) per share to acquire the remaining stake in the coal miner.
Yancoal was trading at $HK39.55 on the Hong Kong stock exchange at the time of writing (September 12), which is the equivalent of $US5.04 and far higher than what it was worth when the initial offer was proposed.
This comes as coal prices continue to skyrocket amid the global energy crunch.
Yankuang said in a statement it would now terminate all potential transactions “in light of recent market conditions”.
Mining giant Glencore also recently sold its minority stake in the coal producer for $442 million.
Yancoal generated record cashflow of $2.8 billion in the first half of 2022, which came off the back of a realised sales price of $368 per tonne (t) in the June quarter.
This was up from $258/t in the previous quarter and significantly higher than the $101/t price achieved in the June quarter of 2021.
Fitch Solutions recently forecast that the coal price could remain above $US250/t until at least 2024.
Fitch forecasts the Newcastle thermal coal price to average $US320/t in 2022, which is a sizeable increase from its previous forecast of $US230/t.
“We expect coal demand to be stronger than we had previously anticipated and this is the reason for our higher price forecast,” Fitch said in a report.
“The main driver of high thermal coal prices since Russia’s invasion of Ukraine in February 2022 has been a rapid diversification of European energy demand away from Russian gas and coal, with a resulting increase in demand for gas and coal from other suppliers.”