As filed with Securities and Exchange Commission on April 27, 201229, 2013

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

OR

For the fiscal year ended December 31, 20112012

OR

OR

Date of event requiring this shell company report

Commission file number: 001-14714

(Exact name of Registrant as specified in its charter)

Yanzhou Coal Mining Company Limited

(Translation of Registrant’s name into English)

People’s Republic of China

(Jurisdiction of incorporation or organization)

298 Fushan South Road

Zoucheng, Shandong Province

People’s Republic of China

(Address of principal executive offices)

Zhang Baocai

298 South Fushan Road

Zoucheng, Shandong Province

People’s Republic of China (273500)

Tel: (86)537 5382319

Fax: (86)537 5383311

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

2,960,000,000 Domestic Shares, par value RMB1.00 per share

1,958,400,000 H Shares, par value RMB1.00 per share, including H Shares that were represented by 13,933,698 ADSs

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  x    No  ¨

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes  ¨    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Webweb site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.)    Yes  ¨    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.    Item 17  ¨    Item 18  ¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

TABLE OF CONTENTS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This annual report includes statements of our expectations, intentions, plans and beliefs that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are intended to come within the safe harbor protection provided by those sections. The statements relate to future events or our financial performance, including, but not limited to, projections and estimates concerning the timing and success of specific projects and acquisitions. We use words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will” and the negatives of such terms or other similar expressions to identify forward-looking statements.

Without limiting the foregoing, all statements relating to our future operating results and anticipated capital expenditures, borrowings and sources of funding are forward-looking statements and speak only as of the date of this annual report. These statements are based on numerous assumptions that we believe are reasonable, but are subject to a wide range of risks, uncertainties and contingencies, which may cause actual results to differ materially from those discussed in these statements. Among the factors that could cause actual results to differ materially are:

All of the forward-looking statements made in this annual report are qualified by this cautionary statement. We cannot assure you that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected effect on us, our business or our operations. We caution you not to place undue reliance on any such forward-looking statements. Unless we are required to do so under U.S. federal securities laws or other applicable laws, we do not intend to update or revise any forward-looking statements.

DEFINITIONS AND SUPPLEMENTAL INFORMATION

As used in this annual report, references to “Yanzhou Coal,” “we,” “our,” “our Company,” “the Group” or “us” refer to Yanzhou Coal Mining Company Limited and its subsidiaries, which have been consolidated into its accounts for the purpose of the consolidated financial statements, unless the context indicates otherwise. References to “the Company” refer to Yanzhou Coal as a stand-alone statutory entity.

“ADSs” are to the American depositary shares.shares of the Company.

“A Shares” are to domestic shares in the ordinary share capital of the Company, with nominal value of RMB1.00 each, which are listed on the Shanghai Stock Exchange.

“Articles of Association” are to our Articles of Association, as amended from time to time.

“ASX” are to ASX Limited or, as the context requires, the financial market known as the Australian Securities Exchange operated by it.

“Austar Company” are to Austar Coal Mine Pty Limited, a wholly owned subsidiary of Yancoal Australia Limited incorporated in Australia, which mainly engages in the mining, processing and sale of coal in Australia.

“Australia” are to the Commonwealth of Australia.

“BBSY” are to the Australian Bank Bill Swap Rate.

“Beisheng Industry and Trade” are to ZouchengYankuangZoucheng Yankuang Beisheng Industry and Trade Co., Ltd., a limited liability company incorporated in the PRC;PRC.

“Beisu Company” are to Yankuang Group Beisu Coal Mine Co., Ltd., a limited liability company incorporated in the PRC, which is a wholly owned subsidiary of Yankuang GroupGroup.

“CAGR” are to the compound annual growth rate.

“CASs” are to Accounting Standard for Business Enterprises (2006) and the relevant regulations and explanations issued by the Ministry of Finance of the PRC.

“China” or the “PRC” are to the People’s Republic of China, excluding, for purposes of this annual report, the Hong Kong Special Administrative Region (“Hong Kong”), Macau Special Administrative Region and Taiwan.

“CSRC” are to the China Securities Regulatory Commission.

“CVR Shares” are to fully paid shares in the share capital of Yancoal Australia as defined in the amended merger proposal deed for the Gloucester acquisition.

“Directors” as used herein refer to our directors as discussed in Item 6 herein.

“Easterneastern China” are collectively to Shandong Province, Jiangsu Province, Anhui Province, Zhejiang Province, Fujian Province, Jiangxi Province and Shanghai Municipality; “Southern“southern China” are to Guangdong Province, Hunan Province and Guangxi Zhuang Autonomous Region; “Northern“northern China” are to Beijing Municipality, Tianjin Municipality, Hebei Province, Shanxi Province and the Inner Mongolia Autonomous Region; and “Northwestern“northwestern China” are to Shaanxi Province, Gansu Province, Qinghai Province, Xinjiang Uyghur Autonomous Region and Ningxia Hui Autonomous Region.

“Excluded Assets” are the following assets which are to be excluded from the Yancoal Australia prior to the Mergermerger with Gloucester and currently held by or by other subsidiaries of the Company (and all but the last two of which are to be subject to a right of first refusal in favor of Yancoal Australia)International (Holding):

“Felix” are to Yancoal Resources (formerly Felix Resources Limited).

“FOB” are to Free on Board, meaning the risk passes to the buyer, including payment of all transportation and insurance costs, once goods are delivered on board of the ship by the seller, as defined in the latest edition of the International Rules for the Interpretation of Trade Terms as published by ICC Publishing SA, 38 cours Albert 1er, 75008 Paris, France from time to time or such official rules for interpretation of trade terms as issued by the ICC in substitution therefore as amended from time to time.

“Gloucester” are to Gloucester Coal Ltd., a company incorporated in Australia, which focuses on the exploration, mining and sale of coal in Australia. We completed the merger with Gloucester in June 2012, which turned Gloucester a wholly-owned subsidiary of Yancoal Australia.

“Grant Thornton” are to a registered firm of certified public accountants in the People’s Republic of China and is the principal auditor for the purpose of reporting to the United States Securities and Exchange Commission and other relevant U.S. regulatory bodies.

“Grant Thornton Hong Kong” are to a firm of certified public accountants which was a former member firm of Grant Thornton International Ltd. and has since changed its name to JBPB & Co as of December 10, 2010 (original official name in Hong Kong: Grant Thornton).

“Grant Thornton Jingdu Tianhua” are to a firm of certified public accountants in Hong Kong, which has beenoriginally practised as a member firmpartnership under the name of Grant Thornton International Ltd. since November 2010.Jingdu Tianhua and now operates as a corporate practice under the name of Grant Thornton Hong Kong Limited. This firm is the auditor for the purpose of the Hong Kong H Share listing only.

“H Shares” are to overseas listed foreign invested shares in the ordinary share capital of the Company, with nominal value of RMB1.00 each, which are listed on the HKSE.

“Haosheng Company” are to Inner Mongolia Haosheng Coal Mining Company Limited, a Company incorporated in the PRC and a 61%74.82%-owned subsidiary of the Company, which engages in applying for project development and mining rights for Shilawusu Coal Field in the Inner Mongolia Autonomous Region.

“Heze Nenghua” are to Yanmei Heze Nenghua Company Limited, a Company incorporated in the PRC and a 98.33%-owned subsidiary of the Company, which manages our exploration for coal resources at the Juye Mine in Heze City, Shandong Province.

“Hong Kong Listing Rules” are to the Rules Governing the Listing of Securities on the HKSE.

“Hong Kong Stock Exchange” or “HKSE” are to The Stock Exchange of Hong Kong Limited.

“Hua Ju Energy” are to Shandong Hua Ju Energy Co., Limited, a Company incorporated in the PRC and a 95.14%-owned subsidiary of the Company, which engages in the generation of electric power from coal gangue and coal slurry, which are by-productsbyproducts of our coal mining process.

“IFRS” are to International Financial Reporting Standards, as issued by the International Accounting Standard Board (“IASB”).

“Industry Guide 7” are to the United States Securities and Exchange Commission Industry Guide 7.

“Inner Mongolia Xintai” are to Inner Mongolia Xintai Coal Mining Company Limited, a company incorporated in the PRC that is a 80%-owned subsidiary of Ordos Neng Hua, which operates the Wenyu Coal Mine in Inner Mongolia Autonomous Region.

“JBPB” are to JBPB & Co., a firm of certified public accountants in Hong Kong Special Administrative Region formerly known as Grant Thornton in Hong Kong.

“Jiemei Wall Materials” are to Jining Jiemei New Wall Materials Co., Ltd., a limited liability company incorporated in the PRC.

“JORC Code” are to the 2004 Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia.

“LIBOR” are to the London Interbank Offered Rate.

“MEP” are to the Ministry of Environmental Protection of the PRC.

“Merger” are to the merger by way of scheme of arrangement under Australian law pursuant to which Yancoal Australia will acquire all of the shares in Gloucester, and Gloucester shareholders will receive a combination of Yancoal Australia ordinary shares and CVR Shares, unless they elect to receive only Yancoal Australia ordinary shares, as further described below in this annual report.

“MLR” are to the Ministry of Land and Resources of the PRC.

“MOC” are to the Ministry of Commerce of the PRC.

“MOT” are to the Ministry of Transportation of the PRC.

“MRRT” are to the Minerals Resource Rent Tax, a tax on assessable profits generated from the extraction of coal and iron ore in Australia.

“NDRC” are to the National Development and Reform Commission of the PRC.

“NYSE” are to the New York Stock Exchange, Inc.

“Ordos Neng Hua” are to Yanzhou Coal Ordos Neng Hua Company Limited, a wholly owned subsidiary of the Company incorporated in the PRC that is principally engaged in the constructiondevelopment of a 600,000-tonne methanol project in Ordos Citycoal resources and the development of coal resourceschemical business in the Inner Mongolia Autonomous Region.

“PBOC” are to the People’s Bank of China.

“PRC government” are to the central, provincial or municipal government of the PRC.

“PRC Standards” are to the standards in the Solid Mineral Resource/Reserve Classification of the PRC (GB/T17766-1999).

“Promoter Shares” are to the domestic legal person shares held by Yankuang Group.

“SAFE” are to the State Administration of Foreign Exchange of the PRC.

“SASAC” are to the State-owned Assets Supervision and Administration Commission.

“SAT” are to the State Administration of Taxation of the PRC.

“SEC” are to the United States Securities and Exchange Commission.

“SERC” are to the State Electricity Regulatory Commission of the PRC.

“Shanxi Nenghua” are to Yanzhou Coal Shanxi Nenghua Company Limited, a wholly owned subsidiary of the Company incorporated in the PRC that manages our investment projects in Shanxi Province.

“Shares” refers collectively to our (i) domestic invested shares listed on the Shanghai Stock Exchange, par value RMB1.00 each (the “Domestic Shares” or “A Shares”), (ii) foreign-invested shares issued and traded in HK dollars and listed on the Hong Kong Stock Exchange, par value RMB1.00 each (the “H Shares”) and (iii) American Depositary Shares, (the “ADSs”), each of which represents ten H Shares.

“ShengyangWood”Shengyang Wood” are to Shandong Shengyang Wood Co., Ltd., a limited liability company incorporated in the PRC.

“significant subsidiary” are to a significant subsidiary as defined in Rule 1-02 of Regulation S-X under the U.S. Securities Act of 1933.

“SSE” are to the Shanghai Stock Exchange.

“State” are to the PRC government.

“Tianhao Chemicals” are to Shanxi Tianhao Chemicals Company Limited, a 99.89%-owned subsidiary of Shanxi Nenghua and a Company incorporated in the PRC, which is principally engaged in the operation of a 100,000 tonne methanol project in Shanxi Province.

“Tonne” are to metric tonne, which is equivalent to 1,000 kilograms or approximately 2,205 pounds.

“Treasurer” are to the Treasurer of Australia.

“Twelfth Five-Year Plan” are to the Twelfth Five-Year Plan (2011 to 2015) for National Economic and Social Development in the PRC.

“Yancoal Australia” are to Yancoal Australia Limited, aan ASX-listed subsidiary of the Company incorporated in Australia that manages our investment projects in Australia, which is currently wholly owned by the Company (save for one temporary redeemable preference share held by Gloucester in connection with the Merger) but which will become 78%-owned by the Company and 22%-owned by Gloucester shareholders following the Merger.Company.

“Yancoal Canada” are to Yancoal Canada Resources Co., Ltd., a wholly owned subsidiary of the Company that manages our investment projects in Canada.

“Yancoal Resources” are to Yancoal Resources Limited, formerly known as Felix Resources Limited (“Felix”), a limited company incorporated under the laws of Australia and an indirect wholly owned subsidiary of Yancoal Australia, which mainly engages in coal mining, sales and exploration of coal.

“Yancoal International (Holding)” are to Yancoal International (Holding) Co., Limited, a wholly owned subsidiary of the Company.

“Yankuang Finance” is Yankuang Group Finance Company Limited, a joint venture established by the Yankuang Group, China Credit Trust Co., Ltd. and Yanzhou Coal Mining.

“Yankuang Group” or “Controlling Shareholder” are to Yankuang Group Corporation Limited (formerly known as Yanzhou Mining (Group) Corporation Limited), a wholly state-owned enterprise established in the PRC, and the Controlling Shareholder of our Company.

“Yulin Nenghua” are to Yanzhou Coal Yulin Nenghua Company Limited, a wholly owned subsidiary of the Company incorporated in the PRC, which is principally engaged in the operation of a 600,000-tonne methanol project in Shaanxi Province.

Certain mining terms used in this annual report are defined in the “Glossary of Mining Terms”, which was included as Appendix B to our registration statement on Form F-l that we filed with the U.S. Securities and Exchange Commission. A copy of the “Glossary of Mining Terms” may be obtained upon written request to the Company.

CONVENTIONS

Unless otherwise specified, all references in this annual report to “U.S. dollars”, “USD” or “US$” are to United States dollars, the lawful currency of the United States of America; all references to “HK dollars”, “HKD” or “HK$” are to Hong Kong dollars, the lawful currency of Hong Kong; all references to “AUD” or “A$” are to Australian dollars, the lawful currency of Australia; andall references to “RMB” are to Renminbi, the lawful currency of the PRC.PRC; all references to “Euro” or “€” are to Euro, the lawful currency of the European Union; and all references to “British Pound” or “£” are to British Pound, the lawful currency of the British Kingdom. Our financial statements are denominated in RMB and, except as otherwise stated, all monetary amounts in this annual report are presented in RMB.

Solely for your convenience, certain items in this annual report contain translations of Renminbi amounts into U.S. dollars, which have been made at the rate of RMB6.2939RMB6.2301 to US$1.00, being the exchange rate as set forth in the H.10 weekly statistical release of the Board of Governors of the Federal Reserve System of the United States on December 30, 2011.31, 2012. All such translations in this annual report are provided solely for your convenience and no representation is made that the Renminbi amounts could have been or could be converted into U.S. dollars at that rate, or at all.

In this annual report, where information has been presented in percentages, or thousands or millions or billions of units, amounts may have been rounded up or down. Accordingly, the amounts identified as total amounts in tables may not be equal to the apparent sum of the amounts listed therein.

In this annual report, business taxes and surcharges have been reclassified as corresponding costs of each category of revenue to provide a more appropriate presentation. The same adjustments have been made to the corresponding prior year. The reclassification has no impact on our overall results. The attention of Shareholders and potential investors is drawn to such adjustments.

Coal resources and reserves are key elements in our Company’s investment decision-making process. The term “resources” describes a concentration or occurrence of material of intrinsic economic interest in or on the Earth’s crust in such form, quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge. Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories. “Inferred resource” is the part of a mineral resource for which tonnage, grade and mineral content can be estimated with a low level of confidence. It is inferred from geological evidence and assumed but not verified geological and/or grade continuity. It is based on information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes which may be limited or of uncertain quality and reliability. “Indicated resource” is the part of a mineral resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are too widely or inappropriately spaced to confirm geological and/or grade continuity but are spaced closely enough for continuity to be assumed. “Measured resources” refers to the part of a mineral resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a high level of confidence. It is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are spaced closely enough to confirm geological and grade continuity. The term “reserves” describes the recoverable quantity of coal that is commercially viable for development given the prevailing economic situation, particularly with respect to the prices of coal at the time of estimation. Reserves are estimated using a deterministic method, in which a single best estimate is made based on known geological, engineering and economic data, or a probabilistic method, in which known geological, engineering and economic data are used to generate a range of estimates and their associated probabilities. All coal reserves data are estimates, which are revised when additional information becomes available (for example, when additional coal mines commence operations or when actual coal production or extraction commences). “Proven reserves” refers to estimated quantities of coal that geological and engineering data demonstrate have reasonable certainty of being recovered in future years from known deposits under existing economic and operating conditions (that is, prices and costs at the date the estimate is made). “Probable reserves” refers to the estimated quantities of coal that geological and engineering data demonstrate have fair to good probability of being recovered in future years from known deposits under existing economic and operating conditions. To qualify as proven reserves, there should be at least a 90% probability that the quantities actually recovered will equal or exceed the proven estimate. To qualify as probable reserves, there should be at least a 50% probability that the quantities actually recovered will equal or exceed the proven plus probable estimate. Our total in-place proven and probable reserves are presented to include all mining and preparation losses that occur during the processing of coal after it is mined. Recoverable reserves refer to the amount of in-place proven and probable reserves but exclude all mining and preparation losses that occur during the processing of coal after it is mined. Our estimates of recoverable reserves are reported after deduction of actual production volume and non-accessiblenonaccessibe reserves up to December 31, 2011.2012. Unless otherwise specified, coal reserves and resources are presented on a 100% basis.

A majority of our Company’s total estimated proven coal reserves are located in China and Australia. The coal reserves data in this annual report represent estimates of our Company that were calculated by its internal reserves system, which includes, among others, procedures for classifying and estimating reserves. Our Company believes that the methods it uses to estimate these reserves are consistent with definitions and classifications in theSecurities Act Industry Guide 7, the JORC Code and the PRC Standards, as applicable, to its PRC and Australian mines. Our Company’s internal geological team focuses on periodically estimating reserves information based on geological data obtained from various geological, geophysical and engineering studies. Estimates of net reserves are based on numerous assumptions and estimates relating to technical factors such as initial coal reserves, initial production rates, production decline rates, ultimate recovery of reserves, as well as commercial factors such as future coal prices, timing and amount of capital expenditures, and operating costs that may occur during the production life of the coal reserves.

Unless otherwise indicated, information regarding our Company’s coal production in this annual report refers to our Company’s share of production based on its percentage of equity interest in the relevant subsidiaries or coal mining projects.

PART I

Not applicable.

Not applicable.

Historical Financial Data

The following table sets forth selected financial data as of and for the years ended December 31, 2007, 2008, 2009, 2010, 2011 and 2011.2012. The selected income statement and cash flow data for the years ended December 31, 2009, 2010, and 2011 and 2012 and the selectedsummary balance sheet data as of December 31, 2010, 2011 and 20112012 have been derived from our audited consolidated financial statements included elsewhere in this annual report and should be read in conjunction with those financial statements and the accompanying notes. Unless otherwise indicated, the financial statements have been prepared and presented in accordance with IFRS, as issued by the IASB. Our selected income statement data for the years ended December 31, 2007 and 2008 and our selected balance sheet data as of December 31, 2007, 2008 and 2009 have been derived from our audited consolidated financial statements for those periods and dates, which are not included in this annual report.

Number of Shares Outstanding

The following table sets forth the number of our A Shares, H Shares and ADSs outstanding as of the dates indicated.

Exchange Rate Information

The following table sets forth information concerning exchange rates between the Renminbi and the U.S. dollar for the periods indicated. These rates are provided solely for your convenience and are not necessarily the exchange rates that we use in this annual report or will use in the preparation of our periodic reports or any other information to be provided to you. The source of these rates is the Federal Reserve H.10 Statistical Release.

On April 20, 2012,19, 2013, the noon buying rate was US$1.00 = RMB6.3080.RMB6.1772.

Not applicable.

Not applicable.

Our business, financial condition and results of operations are subject to various changing business, industry, competitive, economic, political and social conditions in China and worldwide. In addition to the factors discussed elsewhere in this annual report, the following are some of the important factors that could cause our actual results to differ materially from those projected in any forward-looking statements.

Risks Relating to Our Business and Industry

Our business and profitability are affected by global and local economic conditions.

The coal industry depends on general economic conditions, including the conditions of global and local economies. For the past threeseveral years, the economies of the United States, Europe and certain countries in Asia experienced a severe and prolonged recession and China experienced a slowdown in overall economic growth, which has led to a reduction in economic activity. Moreover, the economic conditions in the second half of 2011, the European sovereign debt crisis worsened and international financial markets experienced significant volatility.Europe remain uncertain. In this regard, following GDP growth of 10.4% in 2010 and 9.2% in 2011 and 7.8% in 2012, according to statistics published by the National Bureau of Statistics of the PRC, the PRC loweredmaintained its GDP growth target for 2012 to2013 at approximately 7.5% in the face of continuing global turbulence and pressing domestic demand for economic restructuring. In the first quarter of 2012,2013, the PRC’s GDP grew at an annualized rate of 8.1%7.7%, according to statistics published by the National Bureau of Statistics of the PRC. Australia’s overall economy, as well as its export-oriented coal industry, has also been adversely affected by these developments. The growth of the Australian economy was also affected by natural disasters, including flooding in Queensland in early 2011. Australia experienced GDP growth of 2.7%3.4% in 20102012 and, according to the WorldReserve Bank of Australia, Australia’s GDP was expected to grow by 3.2%3.0% in 2011. The International Monetary Fund has forecasted Australia’s GDP2013, lower than its actual growth in 2012 to be 3.5%.2012. From late 2008 to mid-2009, the export prices of thermal coal in the PRC and Australia botheach decreased significantly. Since late 2009, the export prices of thermal coal in China and Australia have recovered but continue to fluctuate. In addition, in the period from February 2011 to April 2012, demand for semi-hard coking coal declined considerably and demand for semi-soft coking coal also declined. The

We expect that the export coal market and, in particular, thisthe semi-soft coking coal segment of the market, are expected towill remain weak for the balance of the current financial year, based on our analysis of market trends.year. Despite policies and initiatives implemented by the PRC government to alternately stimulate and then moderate economic conditions, recession or a decline in overall economic conditions may recur in the future. In the event of such a recession or decline in economic conditions, whether globally, locally in the PRC or Australia or in our other major markets, our business and profitability may be materially and adversely affected. In addition, increases in inflation and the consumer price index may put pressure on governments to maintain caps on the price of coal and to subsidize power generation companies. At various times, the PRC or Australian governments may implement policies to stimulate or slow the growth of the economy in the future which may, in turn, affect coal prices. In the event that this occurs, our business, results of operations and financial condition may be materially and adversely affected.

Our business, results of operations and financial condition depend on volatile domestic and international coal markets.

Coal sales accounted for 96.5%96.0%, 96.0% and 96.0%96.7% of our revenues in 2009, 2010, 2011 and 2011,2012, respectively, and we expect our coal sales to continue to account for a substantial portion of our revenue. As we derive a substantial portion of our revenue from sales of coal and coal-related products, our business and operating results depend heavily upon supply and demand for coal and coal-related products in the domestic and international coal markets. Accordingly, we are vulnerable to downturns in the demand for coal, increases in supply of coal through new or expanded coal production and declines in coal prices.

The prices of coal and coal-related products have historically been volatile and fluctuate in response to general economic conditions, supply and demand and the level of global inventories. FromIn 2012, the fourth quarter of 2008 through early 2009, thesluggish global economy has led to weak demand for coal decreased significantly as a result ofin both the global financial crisis. Since 2009, overall demand for most types of coal in ChinaPRC and the restoverseas markets and the average selling price of the world, alongour coal products decreased as compared with coal prices, has generally recovered.that of 2011. The average selling price of our coal products was RMB529.2, RMB663.5, RMB707.7 and RMB707.7RMB599.3 per tonne in 2009, 2010, 2011 and 2012, respectively, representing a drop of RMB108.4 per tonne from 2011 respectively. However, weto 2012, which in turn had a direct and adverse impact on our sales income. Our operating profit also decreased by 30.7% from 2011 to 2012. We cannot assure you that demand for and prices of coal will not further decline, again, the occurrence of which may adversely affect our business, results of operations and financial condition.

Global coal demand correlates strongly with the global economy and the performance of coal-consuming industries, including but not limited to the power generation, chemical, metallurgy and construction materials industries. In addition, the availability and prices of alternative energy sources to coal, as well as international shipping costs, also affect coal demand. Coal supply is primarily affected by the geographic location of coal reserves, transportation capacity, the level of domestic and international coal supplies and the type, quality and price of coal from various producers. Developments in the international coal market may adversely affect our overseas sales, which we expect to increase following the expansion of our Australian operations and the anticipated completion of the acquisition of Gloucester.sales. A significant increase in global coal supply or reduction in demand for coal from key consuming industries may decrease coal prices, which in turn may significantly reduce our profitability and adversely affect our business, results of operations and financial condition.

Our domestic products may be subjectThe PRC government’s new policy on removing state-sponsored contracts and ceasing to PRC government price control measures, whichreserve allocations of railway capacity for thermal coal transportation may materially and adversely affect our profitability.business, results of operations, financial condition and prospects.

AlthoughHistorically, power utilities purchased coal either on the PRC government has implemented measuresspot market or through the annual NDRC coordinated contracts. The prices negotiated under this system were lower than prevailing market prices on the spot market and many producers were unwilling to overhaul historical price and supply controls and continuesfulfill their contracts when market prices were higher than contract prices. In December 2012, the NDRC announced a policy to supportchange the developmentChinese domestic thermal coal pricing mechanism. The stated goal of the policy is to eliminate the state-controlled annual contracts which currently govern a market-oriented PRC coal market, it may intervene in thelarge share of domestic coal market fromsales. At the same time, to time to stabilize the market and achieve national social and economic goals. For example, the State Council and the NDRC adopted measures in 2010has also ceased reserving allocations of railway capacity for thermal coal transportation. Similarly, the stated aim of the new railway capacity ruling is to force coal producers and 2011, respectively,power utilities to controlcompete with other railway users and negotiate directly with local railway departments.

By removing these state-sponsored contracts, the pricesintended aim of the NDRC policy change is to expose domestic thermal coal pricing to market forces and encourage coal suppliers and power utilities to reach medium- to long-term contracts. The policy change of thermal coal pursuanttransportation capacity reservation is intended to which pricesencourage sales to local customers and stable supply agreements between miners and power plants. However, we cannot assure you that we will obtain enough coal sale contracts without the coordination of the NDRC, or obtain sufficient railway capacity for thermal coal suppliedtransportation under the new policy, to power generation enterprises in 2012 must be no more than 5% higher than the thermal coal prices effective in 2011, and the spot prices of thermal coal (5,500 kcal/kg) received at major domestic ports are capped at RMB800 per tonne, inclusive of VAT. Such price-intervention measures may limit the degree of control we have over certain aspects ofsustain our business and may havehistorical operating results. As a material and adverse effect onresult, our business, results of operations, financial condition and financial condition.prospects may be materially and adversely affected.

We derive a significant portion of our revenue from a limited number of customers, and the loss of, or a significant reduction in, sales to any of these customers could materially and adversely affect our business, results of operations and financial condition.

For the years ended December 31, 2010, 2011 and 2012, our top five customers accounted for 24.7%, 19.4% and 19.4% of our revenue, respectively, and sales to our largest customer accounted for 13.0%, 8.5% and 6.3% of our revenue, respectively. We expect that our results of operations will continue to depend on sales to a limited number of customers for the foreseeable future. For the years ended December 31, 2009, 2010 and 2011, our top five customers accounted for 28.7%, 24.7% and 19.4% of our revenue, respectively, and sales to our largest customer accounted for 15.4%, 13.0% and 8.5% of our revenue, respectively. We may not be able to rely on these customers for revenue generation.generation in the future. We may lose these customers due to the intensified competition. See “— Competition in the PRC and the international coal industry is intensifying, and we may not be able to maintain our competitiveness.” We may also experience reduction, delay or cancellation of orders from one or more of our significant customers, and any decline in the businesses of our customers could also reduce their purchasepurchases of our products. The loss of sales to any of these customers could have a material adverse effect on our business, results of operations and financial condition.

We face risks associated with our sales contracts and letters of intent,strategic framework agreements, which may materially and adversely affect our business, results of operations and financial condition.

Sales of our coal produced in China are made primarily on the spot market or pursuant to letters of intentstrategic framework agreements and to a lesser extent, pursuant to sales contracts. Sales of our coal produced in Australia are made pursuant to sales contracts.contracts and spot market sales. Our domesticPRC sales contracts generally have terms of one year and specify the price, quantity and quality of coal and delivery schedule of coal. Our Australian sales contracts generally have terms of one year and specify the quantity and quality of coal and delivery schedule of coal, while the purchase price is determined every month or quarter by our customer and us, subject to market conditions. In 2012, due to the volatile international coal markets, customers purchasing our coal produced in Australia generally entered into quarterly contracts with us. As such, if we experience a weak coal pricing environment that results in a decline in coal prices at the time of actual delivery, our revenue and profitability may be materially and adversely affected. In addition, the renewal ofour sales contracts upon expiration of the term isare not automatic but subject to mutual agreement between the relevant customer and us.automatically renewable. If we are not able to maintain our sales contracts with our major customers on terms commercially acceptable to us or at all, our business, results of operations and financial condition may be adversely affected.

In addition, the strategic framework agreements used in the sales of our letters of intentcoal produced in China generally only specify the quantity and quality of coal, and delivery schedule of coal, while the purchase price is determined on the basis of comparable prices in the spot market atannual or monthly sales contracts we enter into under the time of actual delivery.strategic framework agreements. As a result, we are subject to market conditions at the time of actual delivery. Moreover, as letters of intent are not legally binding, customers entering into letters of intent with us are not obligated to purchase the agreed quantity of products, or any products at all. In addition, in accordance with industry practice, our customers do not enter into long-term contracts (those exceeding one year) with us. Therefore, we do not have long-term commitments from our customers to purchase our products, and our customers may reduce or stop purchasing products from us for various reasons, such as decreases in demand for electricity and availability of similar products from our competitors. In addition, our lack of long-term contracts makes it difficult for us to make long-term business plans, which may also materially and adversely affect our business, results of operations and financial condition.

We rely primarily on ports, highways and private and nationalthird party operated railway systems in the PRC and Australia to deliver our coal, any major disruption of which may adversely affect our business, results of operations and financial condition. We have limited ability to secure sufficient capacity on national railways to transport our coal products to target markets.

We rely primarily on highways and our own railway network, as well as the PRC nationalthird party operated railway system, to deliver coal to customers in China. The remaining portionWe also deliver small volumes of our sales of coal products, which comprise the invoiced amount of coal sold, net of returns and discounts, was transported through ports and canals. As to our domestic transportation on highways, our customers generally engage a transportation provider and will bear the costs and risks with respect to the transport of products. With respect to domestic transportation on the PRC national railway system, we generally enter into transportation agreements with the national railway authorities, with such transportation costs included in the invoices to be paid by our customers. Coal resources and production in China are mainly located in Northernnorthern and Northwesternnorthwestern China, while coal consumption is primarily in Easterneastern and Southernsouthern China. As a result, coal suppliers must transport coal via the PRC nationalthird party operated railway systemsystems from major supply areas to major demand areas. Although the PRC government has taken steps to upgrade and expand the national railway system,systems, its current capacity is not sufficient to meet the entire domestic coal transportation demand resulting from regional imbalances. Even though our domestic customers are mainly located in Easterneastern China, where the railway system is more developed than other regions of China, our ability to deliver coal is still restricted by the transportation capacity. The future development of our mining assetsPursuant to the Twelfth Five-Year Plan, the PRC government plans to construct several railways for coal transportation in cities in northern China and northwestern China, such as Shanxi Province, Shaanxi Province and the Inner Mongolia may therefore require us to build our own railway system, which may require us to incur substantial costs and time. In addition, constructing and expanding the capacityAutonomous Region. However, as it will take a significant amount of our own railway is subject to various approvals and permits granted bytime for the relevant PRC authorities to grant approvals and permits and to complete the costconstruction of operating our ownthe railway, network may increase.we anticipate that we will continue to face challenges with respect to access to railway transportation. In addition to railway transportation, we use major coal shipping ports along the coast of China to deliver coal to customers located along the coastal regions of China. However, we may not be able to continue securing sufficient railway or port capacity to deliver our coal and may experience material delivery delays or substantial increases in transportation costs as a result of insufficient railway capacity.

In Australia, we rely substantially on national and privatelythird party operated railway networks to deliver coal to ports in New South Wales and Queensland, for onward shipping to our customers. We generally enter into transportation agreements with national and privately operated railway networks, rail haulage operators and ports to secure transportation capacity, generally for terms of five to ten years and generally on a “take or pay” basis. As the transportation capacity secured by these agreements is based on assumed production volume, we may not have sufficient capacity if our actual production volume exceeds our estimated production volume. Conversely, we may have excess transportation capacity (which, in the case of “take or pay” agreements, we will have to pay for even if unused) if our actual production volume is lower than our estimated production volume. In 2012, the sluggish global economy led to weak demand for coal in both the PRC and overseas markets. We expect that global economic conditions will remain uncertain and international coal markets to continue to be volatile in 2013, and as a result, we cannot assure you that we will fully use the transportation capacity secured on a “take or pay” basis. In addition, we may not be able to continue securingsecure sufficient transportation capacity to deliver our coal in the future and may experience material delivery delays or substantial increases in transportation costs as a result of insufficient transportation capacity, which may also adversely affect our business, results of operations and financial condition.

Competition in the PRC and the international coal industry is intensifying, and we may not be able to maintain our competitiveness.

We face competition in all aspects of our business, including pricing, production capacity, coal quality and specifications, transportation capacity, cost structure and brand recognition. Our coal business competes in the domestic and international markets with other large domestic and international coal producers. The ongoing consolidation in the PRC and Australian coal industry has increased the level of competition we face in our core business. In addition, countries such as Mongolia and U.S. have significantly increased their coal exports, which has intensified the competition among international coal exporters. Our competitors may have higher production capacities, stronger brand names and more financial, marketing, distribution and other resources than we do. We may not be able to maintain our competitiveness if changes or developments in the market weaken our existing competitive advantages. Efforts taken by our competitors to improve the quality of their coal may eroderender obsolete or irrelevant any quality advantage we have over them.

Continual improvements in China’s transportation infrastructure, particularly the national railway transportation network, may reduce our proximity advantage of being located in Eastern China, the region with the highest coal demand in the PRC. Our principal competitors are located predominately in Shanxi Province, Shaanxi Province and the Inner Mongolia Autonomous Region, where there have been occasional rail capacity shortages and the average costs of transporting coalfailure to Eastern China are higher. However, the PRC government has constructed and plans to continue constructing additional railways to transport coal from Northern China and Northwestern China to Eastern China. The improvement and completion of transportation infrastructure, including these railway projects, may increase the supply of coal to customers in Eastern China, whichcompete effectively may have a material adverse impact on our business, results of operations and financial condition.

In addition, we face intense competition in Australia, particularly with respect to port and railway network access. As the majority of Australia’s coal is exported overseas, the ability to expand and guarantee port and railway network access is a critical factor for competing successfully in the Australia coal industry. In the past, we have taken action to expand and guarantee port and railway access to secure enough transportation capacity. However, we may not be able to expand and secure sufficient port and railway access and capacity in the future.

We may not be able to meet our capital expenditure requirements or secure additional external financing in the future.

Our business is capital intensive and will require substantial expenditures for, among other things, the acquisition of equity interests in and assets of coal mines as well as mining rights, purchase of and investment in properties, machinery and equipment and operational capital expenditures. In 2009, 2010, 2011 and 2011,2012, our total capital expenditures were approximately RMB25,324.8 million, RMB3,785.3 million, RMB23,336.4 million and RMB23,336.4RMB20,809.2 million, respectively, largely due to investment in our core coal businesses. We intend to use cash on hand, funds from operations and additional debt and equity financing to finance our capital expenditures going forward. However, we may not be able to obtain sufficient amounts of capital in a timely manner, on terms acceptable to us, or at all, which could result in a material adverse effect on our business, results of operations and financial condition.

Our

In recent years, the size of our interest-bearing debt obligations has increased along with our expansion plans. In May and July 2012, we issued U.S. dollar and RMB denominated corporate bonds in aggregate principal amounts of US$1.0 billion and RMB5.0 billion, respectively. As of December 31, 2012, we had approximately RMB40,996.4 million in bank borrowings, of which approximately RMB7,712.6 million is due within a year and approximately RMB33,283.8 million is due after one year. In the first quarter of 2013, we entered into several U.S. dollar and RMB denominated loan agreements for aggregate amounts of US$601.4 million and RMB700 million. This level of debt could have significant consequences for our operations, including reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes as a result of our debt servicing obligations, limiting our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, our industry and the general economy and potentially limiting our ability to obtain, or increasing the cost of, any additional financing. In addition, our business plans may change from time to time due to changing circumstances, new opportunities or unforeseen contingencies. If we change our business plans, we may need to obtain additional external financing which may include bank borrowings or issuances of debt securities to meet our capital expenditure plans. If we raise additional funds through debt financing, our interest and debt repayment obligations will increase and we may be subject to additional covenants that could limit our ability to access cash flows from operations. We may not be able to raise sufficient financing to fund our future capital expenditures and service our debt obligations or at all. Failure to obtain sufficient financing could cause delays or abandonment of business development plans and have a material adverse effect on our business, results of operations and financial condition.

The coal reserve data in this annual report are only estimates, which may differ materially from actual reserve amounts.

Our coal reserve data are only estimates, which may differ materially from actual reserve amounts. Our reserve estimates may change substantially if new information becomes available. There are inherent uncertainties in estimating reserves, which require the consideration of a number of factors, assumptions and variables, many of which may be beyond our control and cannot be ascertained despite due investigation. Our reserve estimates may change substantially if new information becomes available.

In addition, reserve data for certain of our PRC mines are typically estimated in accordance with Industry Guide 7 for proven and probable reserves and the JORC Code for reserves and PRC Standards for basic reserves. Reserve data for our Australian mines are typically estimated in accordance with the JORC Code. As the mining standards and mining terminology of the JORC Code and PRC Standards may differ substantially from Industry Guide 7, our reserve data may materially vary when we compile and present such data. As such, our actual results of operations may differ materially from our long-term business and operational projections, which are based on our coal reserve estimates. We may adjust our coal reserve estimates downward in the future, and in such event, our long-term production and the useful lives of our mines may be materially and adversely affected.

Our business, results of operations and financial condition depend on in part our ability to continue acquiring or developing suitable coal reserves.

The coalCoal reserves in our existing mines decline as we produce coal.coal is produced. Due to limitations toin significantly increaseincreasing our production capacity at existing mines, the growth ofour ability to expand our coal production capacity depends on theour development of coal reserves, we developed recently or will develop in the future, as well as our newly acquired coal reserves and resources domestically and overseas. We acquired the following coal mines and mining rights from 2009 to the date of this annual report:

The acquisition of new mines by PRC coal companies, either within China or overseas, and the procurement of related licenses and permits are subject to PRC government approvals. Delays or failures in securing or failures to secure relevantthe required PRC government approvals, licenses or permits, as well as any adverse change in government policies, may hinder our expansion plans, which may materially and adversely affect our future profitability and growth prospects. In connection with overseas acquisitions and expansion, we may encounter challenges due to our unfamiliarity with local laws and regulations, and may suffer foreign exchange losses on overseas investments or face political or regulatory obstacles to acquisitions. As a result of these challenges, our overseas expansion plans and investments may not be successful and may not achieve theirour anticipated growth.results.

In addition, the acquisition of new mines or the grant of mining leases in Australia are subject to approval under Australia’s foreign acquisition legislation and policy, including the Foreign Acquisitions and Takeovers Act 1975, which is administered by the Treasurer of Australia acting through the Foreign Investment Review Board. Such foreign investment approvals may be granted subject to conditions imposed by the Treasurer of Australia. This foreign investment regime subjects us to additional risks and uncertainties, and may adversely impact our ongoing and potential expansion plans in Australia.

Moreover, we may not be able to continue to identify suitable acquisition targets or acquire these targets on competitive terms, at an acceptable cost or in a timely manner. We may not be able to successfully develop new coal mines or expand our existing ones in accordance with our development plans, or at all. Failure to acquire suitable targets on competitive terms, develop new coal mines or expand our existing coal mines could have an adverse effect on our competitiveness and growth prospects.

Moreover, the acquisition of new mines or the grant of mining leases in Australia are subject to approval under Australia’s foreign acquisition legislation and policy, including the Foreign Acquisitions and Takeovers Act 1975 (Cth), which is administered by the Treasurer acting through the Foreign Investment Review Board. Such foreign investment approvals may be granted subject to conditions imposed by the Treasurer, including conditions requiring the divestment or sell down of existing interests in Australian mines. This foreign investment regime subjects us to additional risks and uncertainties, and may adversely impact our ongoing and potential expansion plans in Australia. In particular, the Treasurer has imposed a variety of conditions in connection with the approval of the planned Yancoal Australia and Gloucester Merger.

We may experience difficulty integrating our acquisitions, which could result in a material adverse effect on our business, results of operations and financial condition.

We may from time to time expand our business through acquisitions of other coal mining companies, assets or other coal or mining-related businesses. We are devoting significant resources to the integration of our operations in order to achieve the anticipated synergies and benefits of the acquisitions and expansion.

Acquisitions and expansion involve uncertainties and a number of risks, including:

We may have difficulties assimilating the

In the event that we are unable to efficiently and effectively to integrate newly acquired companies or coal or potash-related businesses into our Company, for whatever reason, we may be unable to achieve the objectives or anticipated benefits of such acquisitions, and such acquisitionswhich may adversely impact our business, results of operations and financial condition. In addition, we may have to write down the carrying value of the intangible assets associated with any acquired companies, which could adversely affect our earnings.

WeOur merger with Gloucester may not be able to successfully complete the Merger in time or at all. Moreover, this transaction may not significantly increase our total resource base and strengthen our coal mining operations and market profit,profile, globally and in Australia, as we expect.

In December 2011, we and our subsidiary Yancoal Australia entered into a merger proposal deed withJune 2012, Gloucester (amended in March 2012), pursuant to which Yancoal Australia intends to implement a merger by way of a scheme of arrangement under Australian law pursuant to which it or its wholly owned subsidiary will acquire all of the shares of Gloucester, and Gloucester’s shareholders will receive a combination of Yancoal Australia ordinary shares and CVR Shares, unless they elect to receive only Yancoal Australia ordinary shares.

        Upon completion of the Merger, Gloucester will becomebecame a wholly owned subsidiary of Yancoal Australia, and the Company and Gloucester shareholders will holdheld 78% and 22%, respectively, of the ordinary share capital of Yancoal Australia. However, as a condition of the foreign investment approval for the Merger,our merger with Gloucester, we are required by the Treasurer of Australia to reduce our economic ownership in Yancoal Australia to less than 70% by December 31, 2013, and our economic ownership must not exceed 70% thereafter. Upon the expected completion of the Merger and fulfillment of the relevant ASX Listing Rules,In addition, we must reduce our economic ownership in Yancoal Australia will be listed on the ASX, and its ordinary shares and CVR shares will be separately quoted for trading. As a condition of the foreign investment approval for the Merger imposed by the Treasurer, Yancoal Australia’s listing on the ASX must be completedResources’s underlying assets to no more than 50% by December 31, 2012. In addition, it is a condition of the Merger that the repayment date for two of the three repayments of Yancoal Australia loans due 2012 and 2013 that financed the acquisition of Felix be extended by at least five years and that additional debt facilities in the amount of A$700 million be obtained by Yancoal Australia. The Merger is subject to approvals of Australian regulatory agencies, PRC government and regulatory agencies, relevant stock exchanges, courts, Gloucester shareholder approvals, indebtedness limits for Yancoal Australia and Gloucester, as well as other closing conditions. Accordingly, Yancoal Australia’s ability to consummate the Merger remains subject to risk and uncertainty, and we cannot assure you that the Merger will be carried out as currently contemplated.2013.

Furthermore, prior to the Merger, certain Yancoal Australia Excluded Assets will be transferred from the Yancoal Australia group, either to the Company or our other subsidiaries, although the Excluded Assets will continue to be managed by Yancoal Australia. Most of the Excluded Assets will be subject to a right of first refusal in favor of Yancoal Australia. Under certain circumstances, two entities, namely Syntech (including Came by Downs) and Premier Coal, may also be transferred and sold back to Yancoal Australia on or shortly before December 31, 2014, either on agreed terms or at an independent valuation. Such a transaction will be subject to the relevant regulatory approvals and the approval of Yancoal Australia’s shareholders.

Moreover, althoughAlthough we believe this transaction willhas significantly increaseincreased our total resource base and strengthenstrengthened our coal mining operations and market profile in Australia and globally, we may face difficulty integrating the operations of Gloucester. The continued integration of Yancoal Resources and Gloucester into Yancoal Australia specifically may be affected by the terms and conditions of the Merger,our merger with Gloucester, as the Mergerit will result in Yancoal Australia, other than the Excluded Assets, ceasing to be a wholly owned subsidiary of our Company. As a result of this reduced control, we may not be able to influence the actions or implement the measures necessary to successfully integrate Yancoal Resources and Gloucester. See “— We may experience difficulty integrating our acquisitions, which could result in a material adverse effect on our business, results of operations and financial condition” and “– Our business, results of operations and financial condition depend on in part our ability to continue acquiring or developing suitable coal reserves.” As a result, this transaction may not significantly increase our total resource base or strengthen our coal mining operations and market profile in Australia and globally as we expect, which could result in a material adverse effect on our business, results of operations and financial condition. We also expect that should the Merger be completed, we will make significant capital expenditures to develop Gloucester’s projects and our existing indebtedness will be significantly increased, due to our assumption of existing indebtedness of Gloucester, as well as new indebtedness to be incurred in connection with the Merger.projects.

We may be required to allocate additional funds for land subsidence, restoration, rehabilitation and environmental protection.

Underground and surface mining may cause the land above mining sites to subside, andor may otherwise adversely affect the environment. We may compensate inhabitants in areas surrounding our mining sites for their relocation expenses or for any property loss or damage as a result of our mining activities. PRC regulations require us to set aside provisions to cover the costs associated with land subsidence, restoration, rehabilitation and environmental protection. An estimated provision is deducted as a cost and expense item in our income statement based on the amount of coal actually extracted. In addition, under the relevant Australian environmental regulations, rehabilitation costs are generally estimated in accordance with the expected costs of land rehabilitation. These land rehabilitation costs may exceed current estimates. Environmental legislation may also change, which could result in mandated modifications to mining operations that are costly.

In 2009, 2010, 2011 and 2011,2012, we expensed approximately RMB1,733.3 million, RMB1,532.2 million, RMB1,513.1 million and RMB1,513.1RMB1,450.6 million, respectively, of our provisions for land subsidence, restoration, rehabilitation and environmental protection as determined by our directors based on estimations of various factors, including past occurrences of land subsidence. However, the provisions that we make are only estimates and may be adjusted to reflect the actual effects of our mining activities on the land above and surrounding our mining sites. Therefore, such estimates may not be accurate and land subsidence, restoration, rehabilitation and environmental costs may substantially increase in the future. Moreover, governments may impose new fees or change the basis of calculating compensation and reclamation costs in respect of land subsidence, the occurrence of any of which could increase our costs and have a material adverse effect on our business, results of operations and financial condition.

Our business and industry may be affected by the development of alternative energy sources and climate change.

We supply coal as fuel to, among others, the PRC thermal power generation industry and, as a result, are affected by the demand and growth of the PRC thermal power industry, which in turn is affected by the development of alternative energy sources, climate change and global environmental factors. If alternative combustion technologies develop and reduce the demand for coal in electricity generation, then demand for coal in the PRC thermal power generation industry may decrease, which would materially and adversely affect its demand for our products.

In addition, while the majority of global energy consumption is from conventional energy sources such as coal, alternative energy industries are rapidly developing and are gradually gaining widespread acceptance. Coal combustion generates significant greenhouse gas and other pollutants, and the effects of climate change resulting from global warming and increased pollution levels may provide incentives for governments to promote or invest in “green” energy technologies such as wind, solar, nuclear and biomass power plants, or to reduce their consumption of conventional energy sources such as coal. While the majority of global energy consumption is from conventional energy sources such as coal, alternative energy industries are rapidly developing and are gradually gaining widespread acceptance. In particular, pursuant to the Twelfth Five-Year Plan, the PRC government plans to continue to encourage the development of non-fossil fuel energy sources, such as wind power, solar power, biomass and geothermal energy, in the next five years. As such, alternative energy industries may rapidly develop and gradually gain mainstream acceptance in the PRC and the rest of the world. If alternative energy technologies continue to develop and prove suitable for wide commercial application in the PRC and overseas, demand for conventional energy sources such as coal could gradually be reduced, which couldwould have a material adverse effect on the coal mining industry and, consequently, our business, results of operations and financial condition. See “— Our business, results of operations and financial condition may be adversely affected by present or future environmental regulations.”

We may not successfully diversify our operations to include new products or successfully manage our operations in new markets.

One of our business strategies is to diversify our operations and enter into new markets. In addition to our core business of coal, we have been engaged in other operations, including coal chemical, rail transportation, methanol and electricity and heat generation. We also expanded into the potash business by acquiring the mining and exploration rights to potash resources in Canada in September 2011. Moreover, through Yancoal Australia, we conduct mining operations in Australia, and intend to further develop our operations there. However, we may not be able to successfully expand our product portfolio to include new products, such as potash, or to successfully manage our operations in new markets, such as Australia and Canada, with which we do not have significant operating experience, and as a result our competitiveness may be materially affected. In addition, our expansion into new markets includes various risks that are beyond our control. See “– We may experience difficulty integrating our acquisitions, which could result in a material adverse effect on our business, results of operations and financial condition.” As such, any of the foregoing could have a material adverse effect on our business, results of operations and financial condition.

Exploration of mineral properties and development of resources could involve significant uncertainties.

Exploration of mineral properties is speculativeWe currently have exploration projects in nature.Australia and Canada and we may have additional exploration projects in the PRC and other countries and regions in the future. The success of any mining exploration program depends on various factors including, among other things, whether mineral bodies can be located and whether the locations of mineral bodies are economically viable to mine. As a result, we cannot assure you that any of our exploration activities will result inIn addition, the discovery of valuable resources or reserves, or that reported resources can be converted into reserves in the future.

The development of these resources could face significant uncertainties. It can take several years and requireswould require capital expenditures from the initial exploration phase until production commences, during which time market fundamentals, capital costs and economic feasibility may change, and the actual results may differ from those anticipated by third-partythird party independent technical studies. Furthermore, there are a number of uncertainties inherent in the development and expansion of mining operations, including: (i) the availability and timing of necessary governmental permits, licenses and approvals; (ii) the timing and cost necessary to construct mining and processing facilities; (iii) the availability and cost of labor, utilities, and supplies; (iv) the accessibility of transportation and other infrastructure; and (v) the availability of funds to finance construction and production activities.

We currently have exploration projects in Australia and As a result, we may have additional exploration projects in the PRC, Canada and other countries and regions in the future. Exploration projects are subject to extensive environmental, health and safety laws and regulations. These laws and regulations set various standards regulating certain aspects of environmental quality and public and employee health and safety, including emissions, waste management and obligations to rehabilitate current and former facilities and locations where mining operations are or were conducted. We must undergo inspections by relevant government environmental authorities and obtain various environmental permits, licenses and approvals related to our mining operations. Any violation of these laws could lead to penalties and liabilities including a losscannot assure you that any of our exploration permitsactivities will result in the discovery of valuable resources or reserves, or that reported resources can be converted into reserves in the imposition of costly compliance procedures. It is also uncertain whether the requisite approvals will be granted. In Australia, the ability to commence mining operations will depend, among other things, the grant of appropriate mining tenure, approvals, land access and coordination agreements where petroleum tenements, including with respect to coal seam gas, are situated nearby.future.

We are exposed to fluctuations in exchange rates and interest rates.

We face risks relating to fluctuations in exchange rates for RMB against other currencies, primarily those between the Australian dollar and the U.S. dollar. China has adopted a managed floating exchange rate system to allow the value of the Renminbi to fluctuate within a regulated band based on market supply and demand with reference to a basket of currencies. In April 2012, the PRC government further enlarged the trading band. In this regard, the PBOC has allowed the Renminbi to rise or fall 1% against the U.S. dollar from the daily central parity rate, every day, effective April 16, 2012, compared with its previous 0.5% limit. It is possibleWe expect that the PRC government couldwill continue to adopt amore flexible currencyprudent monetary policy in 2013, which could result in further and more significant revaluations of the Renminbi against the U.S. dollar or any other foreign currency. We are primarily affected by exchange rate fluctuations that arise from our export sales denominated in Australian dollars and U.S. dollars, which may affect the RMB values of such export sales. In addition, exchange rate fluctuations can result in exchange losses on our foreign currency deposits and loans and other indebtedness. As of December 30, 2011,31, 2012, the exchange rate for the Australian dollar against the U.S. dollar was US$1.00 = A$1.0251,1.0393, compared with US$1.00 = A$0.98401.0251 as of December 30, 2010.2011. We recorded an exchange gain of RMB2,665.4 million for the year ended December 31, 2010 and RMB518.6 million for the year ended December 31, 2011 and RMB714.2 million for the year ended December 31, 2012, respectively. Exchange rate fluctuations can affect our cost of imported equipment and components. See “Item 3. — Key Information — A. Selective Financial Data — Exchange Rate Information.”

On April 9, 2013, with the authorization of the PBOC, the China Foreign Exchange Trade System (CFETS) launched direct trading between Renminbi and Australian dollar on the inter-bank foreign exchange market, which is based on the direct exchange rate between the two currencies. We expect that this will help lower the currency conversion costs between the two currencies. However, we cannot assure you that the new policy will decrease our currency conversion costs. The conversion costs we realized in the previous trading scheme, which used U.S. dollars, may be lower, reflecting that the U.S. dollar is more liquid than the Australian dollar.

We are exposed to interest rate risk caused by interest rate changes in relation to our bank borrowings and our other indebtedness, as well as our variable rate bank balances, term deposits and restricted cash held with banks. Our interest rate risk primarily arises from fluctuations in the PBOC benchmark interest rate in relation to our RMB-denominated borrowings, and fluctuations in the LIBOR rate in relation to our U.S. dollar-denominated borrowings. As of December 31, 2011,2012, we had approximately US$3,2434,162.0 million of borrowings denominated in U.S. dollars with the remainingand RMB13,493.5 million of borrowings denominated in RMB.A substantial majority of our borrowings denominated in RMB are linked to the benchmark lending rate published by the PBOC, which is subject to fluctuations as the PRC government will, from time to time, adjustadjusts interest rates and related policies from time to time as a matter of national economic policy.

In addition, a substantial majority of our borrowings denominated in U.S. dollars are linked to floating LIBOR rates, the fluctuation of which decreased in the second half of 2010 and first half of 2011 and then increased in the second half of 2011.are beyond our control. Our lending rates may increase in the future as a result of reasons beyond our control, and may result in an adverse effect on our business, results of operations and financial condition.

To manage uncertainty in our revenue stream and capital expenditures caused by exchange rate fluctuations, we have entered into forward foreign exchange contracts to sell or purchase specified amounts of foreign currencies at stipulated exchange rates. We have also entered into interest rate swap contracts with banks to hedge a portion of our variable interest rate borrowings. As of December 31, 2011,2012, the fair value of our derivative assets in respect of our forward foreign exchange contracts was RMB104.9RMB76.6 million, compared with the fair value liability of our forward foreign exchange contracts and interest rate swap contracts of approximately RMB222.1RMB128.1 million. See “Item 11. Quantitative and Qualitative Disclosures of Market Risks.” Our hedging arrangements may not be effective and our business, results of operations and financial condition may be materially and adversely affected by fluctuations in exchange rates or interest rates.

Our substantial indebtedness could adversely affect our business, results of operations and financial condition.

As of December 31, 2011, we had approximately RMB34,457.8 million in bank borrowings, of which approximately RMB19,588.5 million is due within a year and approximately RMB14,869.3 million is due after one year. In the first quarter of 2012, we did not enter into additional loan agreements. See “Item 5. Operating and Financial Review and Prospects — B. Liquidity and Capital Resource — Description of Material Indebtedness.” This level of debt could have significant consequences for our operations, including:

If we are not able to generate sufficient cash flow to service our debt obligations, we may need to refinance or restructure our debt, sell assets, reduce or delay capital investments, or seek to raise additional capital. If we are unable to implement one or more of these alternatives, our business, results of operations and financial condition may be materially and adversely affected.

Our business, results of operations and financial condition are subject to resource taxes and we may not be able to pass on our increased costs relating to resource taxes to our customers.

We currently pay a resource tax of RMB3.60, RMB3.20 and RMB3.20 for eachper tonne of raw coal output in Shandong Province, and Shanxi Province and Inner Mongolia Autonomous Region, respectively. The PRC government is considering changes to this tax whereby it would be based on pricing and not on volume. If such a change is adopted and the tax based on pricing is significantly higher than current tax, we may not have the flexibilityfail to pass on all of the increased costs to our customers, which could have a material adverse effect on our business, results of operations and financial condition. In addition, on March 29, 2012, the Australian MRRT becamewas passed into law, effective July 1, 2012. The MRRT is a profits-based tax that will beis charged at an effective rate of 22.5% on the assessable profits (excess of annual mining revenue over annual mining expenditures with respect to mineral interests, less certain allowances) of, among others, coal mining enterprises. At this stage,In 2012, as the extent to which the implementationresult of the foregoingMRRT, our Australian subsidiaries recognized deferred tax will affectassets, leading to a decrease in the income tax expense of our operations in AustraliaAustralian subsidiaries by RMB1,085.2 million. However, this is yet to be determined. However,a one-off tax impact and we expect the MRRT has the potential to increase the overall tax liability of Yancoal Australia.our Australian subsidiaries and adversely affect our results of operations and financial condition in the future.

Our Controlling Shareholder has significant influence over us.

As of December 31, 2011,2012, our Controlling Shareholder, the Yankuang Group, owned 52.86% of our outstanding shares and has significant influence over us. Pursuant to approval granted at the eighthannual shareholder meeting of the fifth session of the board of directors of the Company held on March 23,June 22, 2012, the Company entered into sixfive continuing connected transaction agreements with the Yankuang Group, namely the Materials Supply Agreement, the Supplya materials supply agreement, a supply of Laborlabor and Services Agreement, the Pension Fund Management Agreement, the Coal Productsservices agreement, a pension fund management agreement, a coal products and Materials Supply Agreement, the Electricitymaterials supply agreement and Heat Energy Supply Agreementan electricity and the Finance Service Agreement,heat energy supply agreement, together with the respective annual caps for such transactions from 2012 to 2014, in the ordinary course of business. The above agreements will become effective upon independent shareholders’In addition, pursuant to approval duringgranted at the shareholders’third meeting that will beof the fifth session of the Board of Directors held on April 23, 2012.August 19, 2011, the Company entered into a financial services agreement. These related party transactions were reviewed and approved according to the procedures under relevant regulations and standards of the HKSE, SSE, NYSE and SEC. However, we may continue to enter into related party transactions with Yankuang Group and, as such, any material financial or operational developments experienced by the Yankuang Group that lead to the disruption of its operations or impairs its ability to perform its obligations under the agreements could materially affect our business, results of operations and financial condition and future prospects.

As our Controlling Shareholder, the Yankuang Group has the ability to exercise control over the Company’s business and affairs, including, but not limited to, decisions with respect to:

Accordingly, our Controlling Shareholder may vote, take other actions or make decisions that conflict with our interests or the interests of our other security holders.

Our coal operations are extensively regulated by the PRC and Australian government, and government regulations may limit our activities and adversely affect our business, results of operations and financial condition.

Our coal operations in China are subject to extensive regulation by the PRC government. National governmental authorities, such as the NDRC, the MEP, the MLR, the State Administration of Coal Mine Safety (“SACMS”), the State Administration of Work Safety, the National Energy Administration and the State Bureau of Taxation, as well as corresponding provincial and local authorities and agencies, exercise extensive control over the mining and transportation (including rail and sea transport) of coal within China. Our operations in Australia are subject to similar laws and regulations of general application governing mining and processing, land tenure and use, environmental requirements, including site-specific environmental licenses, permits and statutory authorizations, workplace health and safety, trade and export, competition, access to infrastructure, foreign investment and taxation. These regulations may be implemented by various federal, state and local government departments and authorities including the Department of Resources, Energy and Tourism, the Department of Sustainability, Environment, Water, Population and Communities, and the National Native Title Tribunal. Regulatory oversight from these authorities and agencies may affect the following aspects of our operations, among others:

As a result of the foregoing regulation, our ability to execute our business strategies or to carry out or expand our business operations may be restricted. We are still in the process of obtaining or renewing some of the regulatory approvals, permits and licenses required for our business operations, and may experience substantial delays in obtaining such regulatory approvals, permits and licenses.

Our business may also be adversely affected by future changes in PRC or Australian regulations and policies that affect the coal industry. The adoption of new legislation or regulations or the new interpretation of existing legislation or regulations or changes in conditions attaching to approvals may materially and adversely affect our operations, our tax costs and cost structure or product demand. The occurrence of any of the foregoing may cause us to substantially change our existing operations, incur significant compliance costs and increase the risk of our future investment or prevent us from carrying out mining operations, which could have a material adverse effect on the profitability of our operations in Australia and our overall business, results of operations and financial condition. See “— Our business, results of operations and financial condition may be adversely affected by present or future environmental regulations” and “— Our business, results of operations and financial condition are subject to resource taxes and we may not be able to pass on our increased costs relating to resource taxes to our customers.”

We cannot assure you that we willmay not be able to obtain all necessary approvals, permits and licenses.

Pursuant to applicable laws and regulations in China, we are required to obtain or renew approvals, permits and licenses with respect to our exploration activities, mining operations and environmental protection. As of the date of this annual report, the following materialprotection for our existing operational mines and obtain more approvals, permits and licenses have expiredfor our development-stage or needexploration projects such as Zhuanlongwan, Shilawusu, Yingpanhao and Wanfu. In addition, we are required to be renewed:obtain or maintain land use rights certificates and building ownership certificates for property we own or lease properties from owners possess valid land use rights certificates or building ownership certificates.

Further, some of our PRC subsidiaries are in the process of applying for or will apply for land-use rights certificates or building ownership certificates. In addition, some PRC subsidiaries lease properties whose owners do not possess valid land-use rights certificates or building ownership certificates. We do not expect that our rights to use or occupy such properties will be challenged by third parties and as of the date of this annual report, we are not aware of any administrative or legal action with respect to these properties. However, we are prohibited from the transfer, lease, mortgage, or disposal of such properties until we obtain relevant real estate or building ownership certificates. In addition, we cannot assure you that administrative or legal action will not arise with respect to these properties, which could have a material adverse effect on our business and results of operations.

In addition to the above, a number of material Australiancertain regulatory approvals, permits and licenses are pending, outstanding, have not been applied for our coal mines, such as yet or have expired, including:

If any of these or our other mining licenses, coal production licenses, safety production licenses or other certificates, approvals or permits are revoked, not renewed or not obtained, we could be required to cease operations of the affected mine or production facility. The loss of some or all of our mining licenses, coal production licenses, safety production licenses or other certificates, approvals or permits may have a material adverse effect on our business, results of operations and financial condition.

Our business, results of operations and financial condition may be adversely affected by present or future environmental regulations.

Our coal mining operations produce waste water, gas emissions and solid waste materials. In addition, surface mining operations also produce noise pollution. As a PRC and Australian coal producer, we are subject to extensive and increasingly stringent environmental protection laws and regulations. These laws and regulations:

Due to the increasing awareness of environmental issues, the PRC government has tightened its enforcement of applicable laws and regulations and adopted more stringent environmental standards. In November 2009, the State Council announced that the PRC was committed to reducing carbon dioxide emissions per unit of GDP by 40% to 45% by 2020 from the level in 2005. In order to achieve this target, the PRC government plans to reduce reliance on fossil fuel-based energy and encourage the development of the clean energy industry and the non-fossil fuel-based energy industry. The PRC government has issued several plans relating to renewable energy development, energy conservation and emissions reduction. In particular, the PRC government has committed to increasing the proportion of total energy consumption from non-fossil fuel sources from the current level of 3% to 15% by 2020. On December 1, 2011, the State Council issued the Working Plan for the Control of Discharge of Greenhouse Gases under the Twelfth Five-Year Plan (“the Working(the “Working Plan”), pursuant to which China plans to continue to increase the proportion of non-fossil fuels used as an overall primary energy source to 11.4% by 2015 and reduce the proportion of coal used as an overall primary energy source. In addition, pursuant to the Working Plan, the PRC government aims to reduce energy consumption per unit of GDP by 17% by 2015 compared to 2010. In addition, pursuant to the administrative energy-saving and emission reduction policies carried out by the central and provincial governments in accordance with the Twelfth Five-Year Plan of Energy-Saving and Emission Reduction issued in August 6, 2012, the PRC government aims to reduce approximately 670 million tonnes of coal from 2011 to 2015, develop clean coal technology such as underground coal gasification, desulfurization and coal water fuel and improve the utilization of coal gangue.

Similarly, our Australian operations are subject to Australia’s stringent federal and state and territory environmental laws and regulations. In March 2012, the Australian government enacted a carbon pricing mechanism (or carbon tax) law, effective July 1, 2012, which will imposeimposed a charge on the amount of carbon dioxide emissions of enterprises with significant emissions with an eventual transition to a “cap and trade” carbon emissions scheme. The carbon tax law imposes a charge based on tonnage of carbon dioxide equivalent (CO2-e) emissions, which is intended to disincentivize the use of fossil fuels such as coal.

In addition, there have recently been cases in New South Wales and Queensland relating to the environmental effects of greenhouse gas emissions produced as a result of coal mining. Compliance with laws and involvement in litigation can be expensive, lengthy and disruptive to normal business operations. If this area of law develops further, more stringent regulations may be developed, particularly in relation to greenhouse gas emissions, which could increase the costs of using coal and reduce demand for coal as a fuel source, thus adversely affecting the sales volumes and prices of our coal. Moreover, Australian environmental approval processes require a technical environmental assessment to be prepared prior to granting approval, as well as public consultation. Community groups may lobby for more restrictive conditions to be imposed on approvals granted or for the approval to be declined, either of which may result in a material adverse effect on our business and results of operations.

If efforts to increase energy efficiency, control greenhouse gas emissions and enhance environmental protection result in a decrease in coal consumption, our revenue may decrease and our business may be adversely affected. In addition, our budgeted amount for environmental regulatory compliance may not be sufficient, and we may need to allocate additional funds for this purpose. If we fail to comply with current or future environmental laws and regulations, we may be required to pay penalties or fines or take corrective actions, any of which may have a material adverse effect on our business, results of operations and financial condition.

Moreover, Australian environmental approval processes require a technical environmental assessment to be prepared prior to granting approval, as well as public consultation. Community groups may lobby for more restrictive conditions to be imposed on approvals granted or for the approval to be declined, either of which may result in a material adverse effect on our business and results of operations.

Our ability to operate effectively could be impaired if we lose key personnel, including mine planners, or if we are unable to attract and retain skilled and qualified personnel.

OurIn the conduct of our operations, to a substantial extent,we rely substantially on the services of our key employees with professional skills, qualifications and experience, including mine planners. We may not be able to continue to employ our key personnel or attract and retain skilled and qualified personnel and the loss of any of these personnel could materially and adversely affect our operations.

As our mining operations expand,business expands, we believe our success will depend on our continued ability to attract and retain skilled and qualified personnel.personnel familiar with internationalized operation. Any difficulty in attracting, recruiting, training and retaining skilled and qualified personnel could materially and adversely affect our business, results of operations and financial condition.

Our operations may be affected by uncertain mining conditions.conditions and we may suffer losses resulting from mining safety incidents.

Our operations are subjectcoal mines and operating facilities may be damaged by water, gas, fire or cave-ins due to certain risks inherent in underground mining,unstable geological structures, which may affect the safety of our workforce or costas well as our costs of producing coal, including without limitation, roof collapses, deterioration in the quality or variations in the thickness of coal seams, mine water discharge and flooding, inclement weather, explosions from methane gas or coal dust, ground falls and other mining hazards. Additionally, we are exposed to operational risks associated with industrial or engineering activities, such as maintenance problems or equipment failures. Although we conduct geological assessments on mining conditions and adapt our mining plans to the mining conditions at each mine, adverse mining conditions may endanger our workforce, increase our production costs, reduce our coal output or temporarily suspend our operations. The occurrence of any of the foregoing events or conditions would have a material adverse impact on our business, results of operations and financial condition.

We may suffer losses resulting from mining safety incidents.

Our coal mines and operating facilities may be damaged by water, gas, fire or cave-ins due to unstable geological structures. In addition, operations at our mining sites involve the operation of heavy machinery and explosives. Like other coal mining companies, we have experienced accidents that have resulted in property damage and personal injuries. Although we have implemented safety measures at our mining sites, trained our employees on occupational safety and maintain liability insurance for personal injuries as well as limited property damage for certain of our operations, safety incidents may occur. Any significant accident, business disruptionThe occurrence of any of the foregoing events or safety incident could harm our reputation, result in substantial uninsured costs and the diversion of our resources, which could materially and adversely affectconditions would have a material adverse impact on our business, results of operations and financial condition.

We face price volatility and intense competition in our methanol operations.

We entered the PRC methanol market and commenced production of coal-based methanol at Tianhao Chemicals and Yulin Nenghua in September 2008 and August 2009, respectively. In 2009, 2010, 2011 and 2011,2012, we generated revenue of RMB258.9 million, RMB629.3 million, RMB1,059.3 million and RMB1,059.3RMB1,118.0 million from sales of methanol, respectively, which represented 1.3%1.9%, 1.9%2.3% and 2.3%1.9% of our total revenue for the same periods, respectively. However, we ceased production of coal-based methanol at Tianhao Chemicals in April 2012 due to the shortage of raw materials and are in the process of disposing of its methanol assets.

The methanol business is a cyclical and competitive commodity industry with rapidly changing supply and demand fundamentals. In recent years,addition, there is currently significant overcapacity in the domestic methanol industry, suffered from significant overcapacity following a period of rapid expansion. In addition, stagnant market demand for methanol further exacerbated the oversupply. Although the PRC methanol benchmark price continuedwhich is not expected to increase from 2009 to 2011,change, and the market demand of methanol is not expected to grow significantly in the short term, primarily because the conventional methanol downstream market shrinks and the emerging methanol downstream market are subject to policy and technology constraints.term.

We expect our methanol prices to be affected by a number of factors, including, without limitation:

As of the end of 2011,2012, we had a total annual methanol production capacity of 700,000600,000 tonnes. In addition, we are currently constructing a 600,000-tonne methanol project in Ordos City, Inner Mongolia Autonomous Region, which we expect to become operational in the second half of 2013. We may not be able to optimize the utilization of our new facilities as planned. For example, Tianhao Chemicals has not been able to procure a steady supply of key raw material from its sole supplier of coke oven waste gas and has not been able to maintain steady operations, which significantly curtailed its production in 2010 and 2011. We are currently seeking to secure a supply of key raw material from different suppliers. However, we may not be able to successfully do so, which could affect our operations and result in decreased production in 2012. In addition, we are currently constructing a 600,000-tonne methanol project in Ordos City, Inner Mongolia, which we expect to become operational in 2013. If our projections for the domestic methanol market prove incorrect or if we are unable to otherwise compete effectively, we may not recover the capital and resources we have invested in our methanol operations and may not realize the intended benefits of our business expansion.expansion into this industry. In either event, our business, results of operations and financial condition will be adversely affected.

Our insurance will not cover all the potential risks associated with our operations.

Our business is subject to a number of risks and hazards generally, including adverse environmental conditions, industrial accidents, labor disputes, unusual or unexpected geological conditions, ground or slope failures, changes in regulatory environment and natural phenomena such as inclement weather conditions, floods, earthquakes and fires. Such occurrences could result in damage to mineral properties or production facilities, personal injury or death, environmental damage to our properties or properties of others, delays in development or mining, monetary losses and possible legal liability. Customary to what we believe to be industry practice, we have maintained insurance to protect against certain risks in such amounts we consider to be reasonable. However, our insurance may not cover all potential risks associated with our operations. We may also be unable to maintain insurance to cover these risks at economically feasible premiums and may not be able to pass on any increased costs relating to insurance to our customers. If such costs exceed the levels which we expect, there could be a material adverse effect on our business, results of operations and financial condition.

We may not be able to protect our patents or other intellectual property rights, which could have a material adverse effect on our business.

From 20092010 to 2011,2012, we completed 166306 technology improvement projects, and obtained 64103 patents and over 150 technology-advancement10 technology advancement prizes, which have enhanced our coal mining and related business operations. Further, we own other intellectual property such as proprietary technologies procedures and processes. We believe our patents and other intellectual property rights are important to our success. Existing laws in China offer limited protection for our intellectual property rights. We rely upon a combination of patents, confidentiality policies and agreements, nondisclosure and other contractual arrangements to protect our intellectual property rights. We cannot assure you that we will be able to detect any unauthorized use of, or take appropriate, adequate and timely actions to enforce, our intellectual property rights. Consequently, we may not be able to effectively prevent unauthorized use of our patents in other countries where such patents are not registered.

Historically, China has not protected intellectual property rights to the same extent as has the United States and Hong Kong.

The measures we take to protect our intellectual property rights may not be adequate, and monitoring and preventing unauthorized use is difficult. The protection of our intellectual property may be compromised as a result of (i) expiration of the protection period of our registered intellectual property rights, (ii) infringement by others of our intellectual property rights; and (iii) refusal by relevant regulatory authorities to approve our pending patent applications. Furthermore, the application of laws governing intellectual property rights in China and abroad is uncertain and evolving, and could involve substantial risks to us. If we are unable to adequately protect our intellectual property rights, our reputation may be negatively impacted and our business may be materially and adversely affected.

The audit report included in this annual report is prepared by an auditor who is not inspected by the Public Company Accounting Oversight Board and, as such, you are deprived of the benefits of such inspection.

Auditors of companies that are registered with the SEC and traded publicly in the United States, including our independent registered public accounting firm, must be registered with the United States Public Company Accounting Oversight Board (the “PCAOB”) and are required by the laws of the United States to undergo regular inspections by the PCAOB to assess their compliance with the laws of the United States and professional standards in connection with their audits of financial statements filed with the SEC. Because we have substantial operations within the Peoples’ Republic of China and the PCAOB is currently unable to conduct inspections of the work of our auditors as it relates to those operations without the approval of the Chinese authorities, our auditor’s work related to our operations in China is not currently inspected by the PCAOB.

This lack of PCAOB inspections of audit work performed in China prevents the PCAOB from regularly evaluating the audits performed by Grant Thornton and its quality control procedures. As a result, investors are deprived of the full benefits of PCAOB inspections of auditors.

The inability of the PCAOB to conduct inspections of audit work performed in China makes it more difficult to evaluate the effectiveness of our auditor’s audit procedures as compared to auditors in other jurisdictions that are subject to PCAOB inspections on all of their work. Investors may lose confidence in our reported financial information and procedures and the quality of our financial statements.

Risks Relating to the PRC

Changes in China’s economic, political and social conditions as well as governmental policies could affect our business, results of operations and financial condition.

China’s economy differs from the economies of more developed countries in many aspects,respects, including the structure of the economy, level of government involvement, level of development, growth rate, control of capital investment, control of foreign currency and allocation of resources. China’s economy has been in transition from a planned economy to a more market-oriented economy. For the past three decades, the PRC government authorities have implemented economic reform measures to emphasize market forces in economic development. The PRC government authorities from time to time implement various macroeconomic and other policies and measures from time to time, including contractionary and expansionary policies and measures at times of, or in anticipation of, changes in China’s economic conditions. Economic reform measures, however, may be adjusted, modified or applied inconsistently from industry to industry or across different regions of the country. As a result, we may not continue to benefit from all, or any, of these measures. We cannot predict whether changes in the PRC’s political, economic and social conditions, laws, regulations and policies will have any adverse effect on our current or future business, results of operations and financial condition.

Uncertainties with respect to theInterpretation of PRC legal system could limit the protections available to us.laws and regulations involves uncertainty.

The PRC legal system is a civil law system based on written statutes. Prior court decisions may be cited for reference but have limited precedential value. Since 1979, PRC legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China. However, since manydue to the fact that these laws rules and regulations are relatively new,have not been fully developed, and asbecause of the limited volume of published cases and the non-binding nature of prior court decisions, interpretation of PRC legal system continues to evolve rapidly, the interpretationslaws and regulations involves a degree of many laws, regulations and rules are not always uniform. Enforcementuncertainty. Under certain circumstances, some of these laws regulations and rules involve uncertainties, which may limit legal protections available to us. For example, we may have to resort to administrative and court proceedings to enforce legal protections under law or contract. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate and predict the outcome of PRC administrative and court proceedings and the enforceability of rights in China as compared to more developed legal systems. These uncertaintieschanged without being immediately published or may impede our ability to enforce contractsbe amended with future partners, service providers and suppliers.retroactive effect. We cannot predict the effect of future developments in the PRC legal system, particularly with regard to the coal mining industry in China, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the preemption of local regulations by national laws. These uncertainties could limit the legal protections available to us. In addition, any litigation in China may be protracted and result in substantial costs and diversion of our resources and management attention.

Government control of currency conversion and future movements in exchange rates may adversely affect our business, results of operations and financial condition.

A portion of our Renminbi revenue may need to be converted into other currencies to meet our substantial requirements for foreign currencies, including debt service on foreign currency denominated debt, overseas acquisitions of mining properties, purchases of imported equipment, and payment of dividends declared in respect of shares held by international investors.

Foreign exchange transactions under the capital account, including principal payments with respect to foreign currency denominated obligations, are subject to the approval requirements of SAFE. In addition, the value of Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in China’s political and economic conditions. Fluctuations in the exchange rate of the Renminbi against the U.S. dollar, the Australian dollar and certain other foreign currencies may adversely affect our business, results of operations and financial condition. For further information, please see “Item 11. Quantitative and Qualitative Disclosures of Market Risks — Foreign Currency Exchange Rate Risk.”

Our subsidiaries are subject to restrictions on the payment of dividends to us.

Our ability to meet our payment obligations under the Guarantees partially depends on the dividends that we receive from our subsidiaries. The ability of our subsidiaries to pay dividends to their shareholders is subject to, among other things, distributable earnings and restrictions contained in the articles of association of our subsidiaries. The ability of our subsidiaries, restrictions contained in the PRC to pay dividends to us is subject todebt instruments and the requirements of PRC laws and regulations. For example, certain loan agreements of our subsidiaries contain covenants that limit their ability to pay dividends to us if there is a default in such loan agreements, or unless certain thresholds are satisfied or, in certain cases, limit their ability to pay dividends to us if their after-tax profits are nil or negative. PRC laws and regulations permit payment of dividends only out of accumulated profits as determined in accordance with PRC accounting standards and regulations. Such profits differ from profits determined in accordance with IFRS in certain significant respects, including the use of different bases of recognition of revenue and expenses. Our PRC subsidiaries are also required to set aside a portion of their after-tax profits according to PRC accounting standards and regulations to fund certain reserves that are not distributable as such dividends.

Risks Relating to Australia

Coal mining operations in Australia have inherent title risks associated with renewal and native title rights.

Interests in tenements in Australia are governed by the respective State and Territory legislation and are evidenced by the granting of licenses or leases. Each license or lease is for a specific term and carries with it annual expenditure and reporting commitments, as well as other conditions requiring compliance. Consequently, we could lose title to or our interest in tenements if license or lease conditions are not met or if insufficient funds are available to meet expenditure commitments.

It is also possible that, in relation to tenements which we have an interest in or will in the future acquire, there may be areas over which legitimate native title rights of Aboriginal Australians exist. If native title rights do exist, our ability to gain access to tenements (through obtaining consent of any relevant landowner), or to progress from the exploration phase to the development and mining phases of operations, may be adversely affected. The tenements in which we have an interest are subject to applications for renewal. There is a risk that these applications will not be granted or transfers not approved.

All of the granted tenements in which we have or may earn an interest in will be subject to applications for renewal or grant (as the case may be). The renewal or grant of each tenement or license is usually at the discretion of the relevant government authority which will consider various factors, including our compliance with any conditions placed on an existing license, when making its decisions. It is possible that the government authority may reject our applications for renewal or grant, in which case, our operations in Australia may be adversely affected.

Additionally, tenements are subject to a number of specific legislative conditions including payment of rent and meeting minimum annual expenditure and reporting commitments. Our inability to meet these conditions could affect the standing of a tenement or restrict its ability to be renewed. If a tenement is not renewed, we may suffer significant damage through loss of the opportunity to discover and/or develop any mineral resources on that tenement.

Coal mining operations in Australia are subject to certain domestic operational risks.

Our coal mining operations in Australia are subject to certain domestic operational risks, which include the following.

Land access. The granting of mining tenure does not remove the need to enter into land access arrangements with third-partythird party land holders (where the land underlying the mining tenure is owned by a third party). In some cases, the underlying land may be owned by a competitor, pastoralist or other third parties. In addition, elements of the agricultural industry and other groups are opposed to the future development of land for mining or mining-related purposes. These groups are actively lobbying the relevant government entities or seeking public support in an effort to limit the amount of land available for mining, and to make access arrangements for mines more difficult.

Coordination agreements. Coal mining tenure in Australia is frequently granted over land over which coal seam gas tenure has or may be granted. Where coal mining and coal seam gas tenures overlap, it is necessary for the coal miner and coal seam gas producer to enter into a coordination agreement. Where overlapping tenure exists, mining operations cannot commence without a coordination agreement. In some cases, the interests of the coal miner and coal seam gas producer may not be aligned and accordingly, mining operations may be delayed or adversely affected.

Environmental conditions and action groups. Before any mining tenure is granted in Australia, it is required that a comprehensive public environmental assessment on the impact of the proposed mining operations be undertaken. Such an assessment involves a public consultation process, which often involves encountering organized environmental or community groups that seek to restrict or block contemplated mining operations. Generally, where environmental approvals are granted, conditions are frequently imposed that materially affect mining operations.

The risks associated with our joint ventures in Australia may have a material adverse effect on our business, results of operations and financial condition.

Yancoal Australia, through Yancoal Resources, holds majority equity interests in joint ventures including the Moolarben joint venture, Ashton joint venture and Athena joint venture. Following the Merger, Yancoal Australia, through Gloucester, will also have an approximately 50% interest in the Middle mount joint venture, and Yancoal Australia’s interest in the Athena joint venture will be transferred to the Company or another subsidiary. We may continue to seek opportunities to form additional joint ventures with third parties to develop business. Risks associated with joint ventures include the possibility that the joint venture partners, which in certain cases may be our competitors, may:

Any of the foregoing may have a material adverse effect on our business, results of operations and financial condition. In addition, the termination of any joint venture agreements, if not replaced on similar terms, could have a material adverse effect on our business, results of operations and financial condition.

Overview

Yanzhou Coal Mining Company Limited was established on September 25, 1997 as a joint stock company with limited liability under the Company Law of the PRC (the “Company Law”). The predecessor of our Company, Yanzhou Mining Bureau, was established in 1976. With the approval of the former State Economic and Trade Commission and the former Ministry of Coal Industry in 1996, the predecessor was incorporated under the name Yanzhou Mining (Group) Corporation Limited and subsequently renamed Yankuang Group Corporation Limited after undergoing a reorganization in 1999.

In 1999, the Minister of Foreign Trade and Economic Cooperation, the predecessor of the Ministry of Commerce, approved our conversion into a Sino-foreign joint stock company with limited liability under the Company Law and the Sino-Foreign Joint Venture Law of the PRC.

Our contact information is:

Acquisitions

We have beenwere involved in severalthree acquisitions in 2011,2012, a description of which is as follows:

Inner Mongolia XintaiAcquisition of Equity Interests in Haosheng Company

Ordos Neng Hua acquired 80%On May 22, 2012, upon approval obtained at the general manager working meeting, we completed the acquisition of 9.45% of the equity interests in Inner Mongolia Xintai for a total consideration of RMB2,801.6 million in November 2011. Inner Mongolia Xintai operates Wenyu Coal Mine. For details of Wenyu Coal Mine, see “— D. Property, Plant and Equipment — Coal Mines and Coal Production Facilities — Wenyu Coal Mine.”

Syntech Resources Pty Ltd and Syntech Holdings II Pty Ltd in Australia

AustarHaosheng Company acquired the entire equity interest in Syntech Resources Pty Ltd. and Syntech Holdings II Pty Ltd.,held by Jinchengtai Chemical for a consideration of A$201.6 millionRMB863.86 million. This amount represented approximately 15.5% of the Group’s audited total profits under CASs of RMB5.5604 billion in August 2011.2012. Upon the completion of the acquisition, our equity transfer, Austarinterests in Haosheng Company owns Cameby Downs Coal Mine and operates the Syntech Project. For details of the Cameby Downs Coal Mine and Syntech Project, see “— D. Property, Plant and Equipment — Coal Mines and Coal Production Facilities — Cameby Downs Coal Mine.”

Wesfarmers Premier Coal Limited and Wesfarmers Char Pty Ltd in Australia

Austar Company acquire the entire equity interest in Wesfarmers Premier Coal Limited and Wesfarmers Char Pty Ltd., for a consideration of A$296.8 million in December 2011. Wesfarmers Premier Coal Limited is engaged in the exploration, production and processing of coal and Wesfarmers Char Pty Ltd. is engaged in research and development of the technology and procedures relatingincreased to processing coal char from low grade coal. Upon the completion of the equity transfer, Austar Company will own Premier Coal Mine. For details of Premier Coal Mine, see “— D. Property, Plant and Equipment — Coal Mines and Coal Production Facilities — Premier Coal Mine.”74.82%.

19 Potash Mineral Exploration Permits in Canada

The Company acquired 11 potash mineral exploration permits and eight potash mineral exploration permits, for a total consideration of US$260 million in September 2011. For details of these potash mining rights, see “— D. Property, Plant and Equipment — Mining Rights —19 potash mineral exploration permits in Canada.”

Establishment of Yancoal International (Holding)

We established Yancoal International (Holding) in Hong Kong on July 13, 2011 as the management platform for our overseas business and assets. Yancoal International (Holding) established three wholly owned subsidiaries in Hong Kong on July 20, 2011, namely Yancoal International Trading Co., Limited, Yancoal International Technology Development Co., Limited and Yancoal International Resources Development Co., Limited. Yancoal International (Holding) established another wholly owned subsidiary, Yancoal Luxembourg Energy Holding Co., Limited, in Luxembourg on September 16, 2011 and Yancoal Luxembourg Energy Holding Co., Limited established its wholly owned subsidiary, Yancoal Canada in Canada on August 18, 2011.

Gloucester Acquisition

In December 2011, we and our subsidiary Yancoal Australia entered into a merger proposal deed with Gloucester (amended in March 2012), pursuant to which Yancoal Australia intends to implementimplemented a merger by way of a scheme of arrangement under Australian law pursuant to which it or its wholly owned subsidiary will acquireacquired all of the shares of Gloucester, and Gloucester’s shareholders will receivereceived a combination of Yancoal Australia ordinary shares and CVR Shares, unless they electelected to receive only Yancoal Australia ordinary shares.

Upon completionapproval obtained from the SASAC of the Shandong Provincial Government, the NDRC and the MOC and approval or permission obtained from the Treasury of Australia, the ASX, Gloucester Shareholders and the Supreme Court of Victoria, Australia, the Merger was completed in June 2012 and Yancoal Australia was listed on the ASX on June 28, 2012. Gloucester will becomeis currently a wholly owned subsidiary of Yancoal Australia, andwhich is a 78%-owned subsidiary of the Company and Gloucester shareholders will hold 78% and 22%, respectively, of the ordinary share capital of Yancoal Australia. However, as a condition of the foreign investment approval for the Merger, we are required by the Treasurer to reduce our economic ownership in Yancoal Australia to less than 70% by December 31, 2013, and our economic ownership must not exceed 70% thereafter. Upon the expected completion of the Merger and fulfilment of the relevant ASX Listing Rules, Yancoal Australia will be listed on the ASX, and its ordinary shares and CVR Shares will be separately quoted for trading. As a condition of the foreign investment approval for the Merger imposed by the Treasurer, Yancoal Australia’s listing on the ASX must be completed by December 31, 2012. In addition, it is a condition of the Merger that the repayment date for two of the three repayments of Yancoal Australia loans due 2012 and 2013 that were used to finance the acquisition of Felix be extended by at least five years and that additional debt facilities in the amount of A$700 million be obtained by Yancoal Australia. The Merger is expected to be completed in June or July 2012, and is subject to approvals of Australian regulatory agencies, PRC government and regulatory agencies, relevant stock exchanges, courts, Gloucester shareholder approvals, indebtedness limits for Yancoal Australia and Gloucester as well as other closing conditions. Accordingly, Yancoal Australia’s ability to consummate the Merger remains subject to risk and uncertainty, and we cannot assure you that the Merger will be carried out as currently contemplated.

Moreover, prior to the Merger, certain Yancoal Australia Excluded Assets will be transferred from Yancoal Australia, either to the Company or our other subsidiaries, although the Excluded Assets will continue to be managed by Yancoal Australia. Most of the Excluded Assets will be subject to a right of first refusal in favor of Yancoal Australia. Under certain circumstances, two entities, namely Syntech (including Cameby Downs) and Premier Coal, may also be transferred and sold back to Yancoal Australia on or shortly before December 31, 2014, either on agreed terms or through independent valuation. Such a transaction will be subject to the relevant regulatory approvals and the approval of Yancoal Australia’s shareholders.

After the Merger, Yancoal Australia is expected to continue offering diversified coal products through the development of seven operating mines in Australia and attributable coal reserves of 701 million tonnes (817 million tonnes on a 100% basis), not including the Excluded Assets⁽¹⁾. Yancoal Australia will be supported by its interests in infrastructure holdings, including in Newcastle Infrastructure Group and the parent company of the developer of the Wiggins Island Coal Export Terminal, and its ability to utilize the port facilities of New South Wales and Queensland, Australia. We also believe this transaction will significantly increase our total resource base and strengthen our coal mining operations and market profile in Australia and globally.

Acquisition of Coal Mines From Yankuang Group

On April 23, 2012, Yankuang Group and its wholly owned subsidiary, Beisu Company, and our Company entered into an Assets Transfer Agreement,assets transfer agreement, pursuant to which we will purchasepurchased from Yankuang Group and Beisu Company all of the assets and liabilities of Beisu Coal Mine and Yangcun.Yangcun Coal Mine. The assets we will purchase includeminingincluded mining rights, building ownership certificates, mining and related equipment and other fixed assets, as well as certain equity investments of Beisu Coal Mine and Yangcun Coal Mine and in Beisheng Industry and Trade, Shengyang Wood and Jiemei Wall Materials. EnteringOur entry into the Assets Transfer Agreement constitutesassets transfer agreement constituted a connected transaction of our Company under Chapter 14A of the Hong Kong Listing Rules.

The consideration for the Target Assets was determined by the appraised net asset value of the Target Assets,target assets, or RMB824,142,300,RMB824,142,000, as appraised by Beijing China Enterprise Appraisal as of the valuation date, or August 31, 2011. The appraisal value was approved by the SASAC of the Shandong Provincial Government on April 16, 2012. We completed the acquisition in May 2012.

Assets Disposal of Tianhao Chemicals

Tianhao Chemicals methanol project has ceased production since April 2012, due to a shortage of raw materials supply. At the 2012 first extraordinary general meeting of Tianhao Chemicals, the shareholders approved to publicly sell the methanol assets. According to Shandong Zhongxin Assets Appraisal Co., Ltd., the valuation of Tianhao Chemicals’ assets was RMB268 million as of April 30, 2012. The consideration will be paid for in cash upontransaction is currently undergoing a sale procedure on the commencement of delivery of the Target Assets to our Company.Shandong Property Right Exchange Center.

Bond Offerings

The Proposed RMB Bond Offering

At ourIn August 2012, First Extraordinary General Meeting held on February 8, 2012, our shareholders passed a resolution approvingwe completed the issuance of an RMB-denominated corporate bondRMB5 billion aggregate principal amount of up to RMB15 billionguaranteed notes in a public offering in the PRC, domestic market (thecomprising one tranche of RMB1 billion notes due 2017 bearing interest of 4.20% per year, and one tranche of RMB4 billion notes due 2022 bearing interest of 4.95% per year (together, the “RMB Bond Offering”). The notes are guaranteed by the Yankuang Group will provide an irrevocable and joint liability guarantee in respect ofGroup. The notes were listed on the RMB-denominated bonds. On March 23, 2012, the Issuance Examination Committee of the CSRC approved our application for the first tranche of the RMB Bond Offering equivalent to RMB5 billion.SSE on August 15, 2012. As of the date of this annual report, we have utilized all of the net proceeds of approximately RMB4.95 billion for working capital purposes.

The RMB Bond Offering has not yet been completed andinclude covenants that, in the terms and conditionsevent of the RMB Bond Offering have not been finalized.Company’s default in payments, limit our ability to, among other things: distribute dividends to Shareholders, make material investments, merge with or into other companies, pay salaries and bonus to Directors and senior management and transfer major responsible staff to other positions.

The Proposed US$ Bond Offering

At ourIn May 2012, Second Extraordinary General Meeting held on April 23, 2012, a resolution was passed approving our US$-denominated bonds offeringwe completed the issuance of up to US$1 billion for a termaggregate principal amount of not exceeding ten yearsguaranteed notes through Yancoal International Resources Development Co., Limited, aour second-tier wholly owned subsidiary in a private placement exempt from registration under the Securities Act, comprising one tranche of US$450 million notes due 2017 bearing interest of 4.461% per year and one tranche of US$550 million notes due 2022 bearing interest of 5.730% per year (together, the Company incorporated in Hong Kong (the “US$ Bond Offering”). The Company will provide a guarantee fornotes are guaranteed by our Company. The notes were listed on the US$ Bonds to be issued, which will cover the principal amount, the interests payable and related expenses incurred by the creditors for enforcing the principal amount. Pursuant to applicable PRC laws and regulation, the guarantee to be provided by the Company is subject to approval by SAFE. On April 24, 2012, the Company obtained approval from SAFE to guarantee indebtedness of Yancoal International Resources Development Co., Limited incurred outside the PRC in connection with the US$ Bonds for a principal amount of up to the equivalent of US$1 billion and all interest and relevant expenses incurred in relation to the US$ Bonds.HKSE on May 17, 2012. As of the date of this annual report, we have utilized all of the detailsnet proceeds of approximately US$991.2 million for working capital purposes.

The indenture of the US$ Bond Offering have not been finalized.includes covenants that limit our ability to, among other things: use assets as securities in other transactions, enter into sale and leaseback transactions and sell certain assets or merge with or into other companies. If we experience a change of control (as defined in the indenture), we will be required to offer to purchase the notes at a purchase price equal to 101% of the principal amount , plus accrued and unpaid interest.

Capital Expenditures

Our principal source of cash in 20112012 was cash generated from our operating activities, the RMB Bond Offering, the US$ Bond Offering and bank borrowings. Our capital expenditures in 20112012 were primarily for operational capital expenditures, purchase of properties, machinery and equipment, payment of dividends, and considerationsconsideration paid for our acquisitions of assets and equity interest.interests.

The following table sets forth a summary of our capital expenditures in the periods indicated:

Our planned capital expenditures for 20122013 are in the amount of approximately RMB11,810.3RMB12,004.6 million. For more information, see “Item 5. Operating and Financial Review and Prospects — B. Liquidity and Capital Resources — Capital Expenditures” in this annual report.

Potential Takeovers by Third Parties

There were no indications of any public takeover offers by third parties in respect of our common shares in 2011.

We are one of the primary coal producers in China and Australia, with rapidly growing coal mining operations in China and Australia.operations. We primarily engage in the mining, washing, processing and distribution of coal through railway transportation. We offer a wide variety of coal products including thermal coal, semi-hard coking coal, semi-soft coking coal, pulverized coal injection (“PCI”)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. Since 2004, we have expanded our operations to include the production of coal chemicals and the generation of electricity and heat and theheat. We also commenced our potash exploration business.business in 2011.

As of December 31, 2012, we were 52.86% owned by our parent, the Yankuang Group, which is wholly owned by the Shandong Provincial Government under the control of the SASAC of the Shandong Provincial Government. The Yankuang Group was founded in 1973 to focus on coal mining and sales, the coal chemical industry, power generation, aluminum production, machinery manufacturing and financial investments. We were established in 1997 and listed on the SSE, HKSE and NYSE in 1998. In addition, our subsidiary, Yancoal Australia, was listed on the ASCX in 2012. Our revenue increased from RMB33,944.3 million in 2010 to RMB47,065.8 million in 2011 and further to RMB58,146.2 million in 2012, representing a CAGR of 30.9%.

As of December 31, 2012, we owned and operated 1621 coal mines across regions with abundant and quality coal resources, including Shandong and Shanxi Provinces and the Inner Mongolia Autonomous Region in China, as well as Queensland, and New South Wales and Western Australia in Australia. In addition, as of December 31, 2011,2012, we had eightnine developmental-stage projects in China and Australia and 17a number of exploration tenements in Australia that might be potentially developed.

We directly own and operate six coal mines in the PRC, namely, Nantun, Xinglongzhuang, Baodian, Dongtan, Jining II and Jining III, which produced in the aggregate approximately 61.1%48.8% of our total coal output in 2011.2012. As of December 31, 2011, the Six Coal Mines2012, these six mines had approximately 1,762.81,729.43 million tonnes of in-place proven and probable reserves. Through our subsidiaries,In addition, we directly own and operate Beisu and Yangcun Coal Mines. We also hold equity interests in a number of coal mines in China.China through our subsidiaries. Shanxi Nenghua operates Tianchi Coal Mine, which holds approximately 26.625.7 million tonnes of recoverable reserves, andreserves; Heze Nenghua operates Zhaolou Coal Mine, which holds approximately 103.6102.2 million tonnes of recoverable reserves. Since December 1, 2010,reserves; and Ordos Neng Hua has operatedoperates Anyuan Coal Mine and Wenyu Coal Mine, which have approximately, in aggregate, 81.7 million tonnes of basic reserves.Mine. In addition, we had four projects under development in China that were under development as of December 31, 2011.2012.

The map below shows the approximate locations of the Domestic Coal Mines.our coal mines and project in China.

We conduct our operationoperations in Australia primarily through our subsidiary,subsidiaries, Yancoal Australia.Australia and Yancoal International (Holding). Yancoal Australia currently operates tensix coal mines in Australia. These include the operational coal minesAustralia including Austar, Yarrabee, Ashton, Moolarben, Gloucester and Moolarben,Donaldson which collectively held approximately 473.6 million tonnes of JORC-compliant reserves as of June 30, 2011, Cameby Downs, which held approximately 409.0 million tonnes of JORC-compliant reserves as of December 1, 2011, and Premier Coal Mine which held approximately 141.0703.7 million tonnes of JORC-compliant reserves as of December 31, 2010,2012. In addition, Yancoal Australia owns approximately 50% of the equity interest in the joint venture that owns and operates Middlemount Coal Mine, which held approximately 96.0 million tonnes of JORC-compliant reserves as of December 31, 2012. Yancoal Australia also holds a developmental-stage project, Monash. Yancoal International (Holding) currently owns Cameby Downs and Premier Coal Mines, which collectively held approximately 590.2 million tonnes of JORC-compliant reserves as of December 31, 2012, as well as the developmental-stage projects Athena, Harrybrandt, Wilpeena and Wilga. In addition, we had 17a number of exploration tenements in Australia with potential for developments as of December 31, 2011.2012.

The map below shows the approximate locations of the Australian Coal Mines.

As of December 31, 2011, we were 52.86% owned by our parent, the Yankuang Group, which is wholly owned by the Shandong Provincial Government under the control of SASAC of the Shandong Provincial Government. The Yankuang Group was founded in 1973 to focus on coal mining and sales, the coal chemical industry, power generation, aluminum production and machinery manufacturing. We were established in 1997 and listed on the SSE, HKSE and NYSE in 1998.

Our revenue increased from RMB20,677.1 million in 2009 to RMB33,944.3 million in 2010 and further to RMB47,065.8 million in 2011, representing a CAGR of 50.9%. Our profit attributable to our equity shareholders increased significantly from RMB4,117.3 million in 2009 to RMB9,281.4 million in 2010 but slightly decreased to RMB8,928.1 million in 2011.

Our Competitive Strengths

We believe we have the following competitive strengths.

We are one of the leading coal mining companies in the PRC with a successful operating track record and strong industry reputation.

We commenced operations in the PRC in 1997, and expanded overseas to Australia in 2004 and Canada in 2011. We were the third-largest listed coal producer in the PRC in terms of total coal reserves and coal production in 2011. We have built a successful operating track record and have experienced significant growth since our inception. Our revenue increased from RMB20,677.1 million in 2009 to RMB33,944.3 million in 2010 and further to RMB47,065.8 million in 2011, representing a CAGR of 50.9%. Our profit attributable to our equity shareholders increased significantly from RMB4,117.3 million in 2009 to RMB9,281.4 million in 2010 but slightly decreased to RMB8,975.6 million in 2011. We have received several significant awards and recognitions, including:

We have an abundant and diversified portfolio of coal reserves and resources strategically located in key areas in the PRC and Australia.

We are one of the primary coal producers in the PRC, with rapidly growing coal mining operations in Australia and China. Our mines have significant coal reserves and resources. As of December 31, 2011, in China, we had total proven and probable reserves of 1,762.8 million tonnes, recoverable reserves of 130.2 million tonnes and basic reserves of 81.7 million tonnes. Our total raw coal production in 2011 was 55.7 million tonnes. As of December 31, 2011, we owned directly or indirectly through our subsidiaries ten operational coal mines and four developmental-stage projects in China across regions with abundant and high quality coal resources totalling 5,318 million tonnes, according to our internal estimates. We directly operate the Six Coal Mines and have control of, and mining and exploration rights to, four operational coal mines and four developmental-stage projects in Shandong, Shanxi and Inner Mongolia through our operating subsidiaries in China. We have expanded and upgraded our mining operations by deploying advanced technologies developed from multiple sources, including those from our research and development initiatives, in the coal production process. We are positioned to take advantage of coal demand in the PRC as our mines in Shandong and Shanxi are strategically located in close proximity to end customers that are situated in economically developed areas of Eastern China where there is strong demand for thermal and coking coal. In addition, the developed infrastructure of the region, with railways, ports and roads, self-owned railways, and abundant port capacity, provides valuable access to transport and enables us to quickly respond to customer demand while controlling our transportation and logistics costs. At the same time, our growing operations in Inner Mongolia are expected to provide us with increased access to markets in Northern China.

In addition, as of December 31, 2011, we have control of, and mining and exploration rights to, six operational coal mines and four developmental-stage projects in Australia through our operating subsidiaries. Our operational coal mines Austar, Yarrabee, Ashton and Moolarben collectively held approximately 473.6 million tonnes of JORC-compliant reserves as of June 30, 2011, Cameby Downs held approximately 409.0 million tonnes of JORC-compliant reserves as of December 1, 2011, and Premier held approximately 141.0 million tonnes of JORC-compliant reserves as of December 31, 2010. In addition, we had 17 exploration tenements in Australia that might be potentially developed as of December 31, 2011. Our Australian coal mines are strategically located in close proximity to ports where we have secured sufficient long-term port capacity for our exports. Yancoal Australia owns a 15.4% interest in Newcastle Infrastructure Group (“NCIG”), a joint venture responsible for constructing and operating the third export terminal at Newcastle Port, the largest coal export port in New South Wales, and will have an annual port capacity of 8.3 million tonnes through NCIG’s facility when it reaches its full design capacity. Yancoal Australia also has an annual port capacity of 5.3 million tonnes at Newcastle Port through Port Warratah Coal Services (“PWCS”) facility in 2012 pursuant to the agreement between Yancoal Australia and PWCS and 5.7 million tonnes per year starting from 2013. Upon the completion of the development of PWCS terminal 4 in 2016, Yancoal Australia is expected to obtain additional allocated annual port capacity through that new terminal. In addition, Yancoal Australia owns a 5.6% interest in Wiggins Island Coal Export Terminal Holdings Pty Limited, which is the parent company of the developer of the Wiggins Island Coal Export Terminal, and has been allocated an annual port capacity of 1.5 million tonnes in 2014 through that terminal at Gladstone Port. We believe these allocated port capacities will support our current export sales and our future growth for the next five years.

We have a strong track record of acquisitions and expansions domestically and overseas to secure and grow our coal reserves and business scale.

We have successfully expanded our domestic and overseas operations through acquisitions and expansions of our coal mine operations. Our acquisitions have transformed our Company from a regional Chinese coal company to an international enterprise with a well-diversified assets portfolio in the PRC and Australia. We have organically grown through the development of our domestic coal mines and projects mining technologies, research and development and commitment to quality control. From 2006 to 2011, we successfully increased our raw coal production from 36.0 million tonnes to 55.7 million tonnes. These measures have enabled us to build a strong base from which we have expanded overseas. In addition, the success of our expansion activities has also been facilitated by our consistent execution of our acquisition strategy. The first component of this strategy has been to expand our operations in the PRC. Beginning in 2006, we have completed a number of acquisitions of coal mine and mining-related assets in the PRC, including Shanxi Nenghua and Heze Nenghua. In 2010, we acquired 51% of the equity interest in Haosheng Company and acquired an additional 10% equity interest in 2011. In 2010, we established Ordos Neng Hua, our investment management platform for coal mining, coal chemicals and a coal power project in Inner Mongolia, which in 2010 acquired 100% of the equity interest in a 600,000 tonne per annum methanol project and all the assets of Anyuan Coal Mine in the same year. In January 2011, Ordos Neng Hua obtained the mining rights of Zhuanlongwan coalfield through public bidding and in July 2011 acquired 80% of the equity interest in Inner Mongolia Xintai, which operates the Wenyu Coal Mine.

In addition to our PRC acquisitions, we have rapidly expanded our operations in Australia to secure the region’s abundant high-quality coal reserves. In this regard, in 2004, we had the insight and execution capability to become the first PRC coal company to acquire and operate an overseas coal mine, the Austar Coal Mine. We subsequently acquired Felix in 2009, which had equity interests in three operational mines with total JORC-compliant reserves of 429.4 million tonnes as of June 30, 2011 and three exploration mines in Australia. We successfully brought Moolarben, one of the three exploration projects, into production in 2010. In 2011, we acquired Cameby Downs which held approximately 409.0 million tonnes of JORC-compliant reserves as of December 1, 2011 and Premier Coal Mine which held approximately 141.0 million tonnes of JORC-compliant reserves as of December 31, 2010. We and our subsidiary Yancoal Australia also entered into a merger proposal deed in December 2011 with Gloucester, which currently has control of, and equity interests in three operational mines and an exploratory project in Australia and holds 343.7 million tonnes of JORC-compliant reserves as of February 23, 2012. After the completion of the Merger, Yancoal Australia is expected to be the largest listed Australian pure-play coal mining enterprise in terms of saleable coal production in 2011. To further diversify our product portfolio and grow our business operations, we acquired 19 potash mineral exploration permits in Canada in 2011.

We have strong support from the PRC government.

We were established by the Yankuang Group, a wholly owned subsidiary of SASAC of the Shandong Provincial Government, upon approval by the Ministry of Coal Industry in 1997. From then, the majority of our directors and senior management have maintained close professional relationships with the PRC government decision-makers, regulatory authorities and industry experts. The majority of directors and officers of Yankuang Group are jointly appointed by the Organization Department of the Communist Party of China and SASAC of the Shandong Provincial Government.

As a significant state-owned enterprise based in Shandong Province, we receive and have benefited from various forms of government support. In 2011, our total assets and revenue were both the fourth largest in Shandong Province, and our total profit was the second-largest among all PRC coal enterprises. As a result of our strong domestic performance, the PRC government has encouraged our overseas development through its “Go Out” policy, which has facilitated our overseas expansion and acquisitions. We have received priority foreign investment review and “green channel” arrangements from the relevant government entities, which allow us to enjoy substantially shortened governmental review and approval periods for our expansion and acquisition plans, enabling us to quickly respond to acquisition opportunities as they arise. These policies have facilitated our overseas growth, as we expanded to Australia through the establishment of Yancoal Australia in 2004 and the acquisition of Felix in 2009, and further to Canada, through the acquisition of the mining and exploration rights to potash resources in Canada in 2011. Upon the expected acquisition of Gloucester, Yancoal Australia will likely become the largest coal mining company in Australia in terms of saleable coal production in 2011. Upon the expected acquisition of Gloucester, we would further expand our operations in Australia.

In addition, we have received government support for our domestic operations and foreign expansion, including financing arrangements at reduced costs, preferential tax and foreign exchange treatment and governmental subsidies for our foreign investment projects. These measures have enabled us to rapidly grow and to maintain our competitiveness, while reducing our investment and acquisition costs, which enable us to increase our profits.

We have industry-leading research and development capabilities.

We maintain our competitiveness, increase the efficiency of our mining operations and reduce costs through technology and innovation. In line with our development strategy with a focus on technology innovation, we have established a multi-layer development system consisting of various entities, including technology and professional committees and technology centers, as well as cooperation with external research institutions and organizations with specialized technology-development capabilities. We have accumulated extensive experience and expertise in coal mining and coal processing, particularly with respect to underground raw coal mining technology. For example, we have patented our independently developed technology for longwall top caving mining in the PRC, Australia and South Africa and received the State Scientific and Technological Progress Award (Second Place) by the National Office for Science and Technology Awards of the PRC in 2009. Our longwall top caving mining method has been adopted by various international coal mining enterprises, such as DBT. In addition, Bucyrus International, one of the largest coal mining equipment suppliers worldwide, entered into a technology license agreement with us in 2010 to manufacture and implement our longwall top caving coal mining equipment in Australia. Furthermore, Peabody, one of the world’s largest coal companies, entered into a license agreement in 2011 with us to develop and commercialize longwall top caving coal mining equipment. From 2009 to 2011, we completed 166 technology improvement projects, and obtained 64 patents and over 150 technology-advancement prizes, which have enhanced our coal mining and related business operations. We believe our achievements in, and capabilities with respect to, research and development, will enable us to continue increasing our production efficiency and utilization rates of our coal resources, while reducing our operating costs.

We have established strong relationships with our diversified and stable customer base.

As a result of our superior product quality and competitive position, we have established strong long-standing relationships with our diversified customer base, which comprises power plants, metallurgical mills, chemical manufacturers and construction material manufacturers with strong market reputations and good credit quality. As of December 31, 2011, our top five customers were Huadian Power International Corporation Limited (“Huadian International”), Baoshan Iron & Steel Co., Ltd., POSCO, Yankuang Meihua Gongxiao Co., Ltd. and Linyi Yehua Coking Co., Ltd. We have cooperated with these customers for an average of nine years. For the year ended December 31, 2009, 2010 and 2011, our sales income to our top five customers accounted for 28.7%, 24.7% and 19.4%, respectively, of our total sales income. In addition to the stable revenue base founded on the long-standing relationships with our top five customers, we also have a large, diversified customer base in the PRC. Outside of China, we substantially increased revenues generated in Japan and South Korea from 3.6% of overall revenues in 2009 to 13.2% in 2011. We believe the secure, long-term nature of our relationships with key customers, as well as our diversified revenue generation sources across China and the Asia region, will help manage market and cyclical fluctuations and support stable growth.

We have a strong and experienced management team with a proven track record.

Our senior management team has extensive industry knowledge and management experience. LI Weimin, the Chairman of our Company and WANG Xin, the Vice-Chairman of our Company, both have approximately 30 years of experience in the coal mining and engineering industries, and have been instrumental to our achievements and development to date. Other members of our senior management team provide strong strategic direction and leadership for our Company, which we believe will sustain our success and position us for continued growth. A majority of our senior management team have over 20 years of experience in the coal, coal mining and engineering industries and general business management. Our day-to-day operations are managed by a capable team with significant operational experience and management ability. We have a strong on-the-ground management team at Yancoal Australia, which has enabled us to grow our Australian operations. We have a highly skilled and loyal workforce comprising individuals with significant industry experience.

Our Business Strategies

Our long-term objective is to maintain our leading position in the PRC and global coal industry and diversity our operations to sustain our growth. The principal components of our strategy are to:

Maintain our leading domestic industry position and expand our operations overseas by increasing our coal reserves and resources and developing our projects.

In accordance with our twelfth five-year development strategy, we plan to continue to expand our coal reserves and resources through organic growth by taking advantage of the exploration potential under our existing coal mines and exploration permits. In the PRC, in addition to stabilizing coal production within Shandong Province and increasing production outside of Shandong Province, we are dedicated to further exploring and developing new coal resources and constructing or upgrading projects to optimize our coal production. We are currently developing four projects in China: Wanfu, Shilawusu, Zhuanlongwan and Yingpanhao. In addition, we are currently applying to the relevant PRC government authorities for new exploration permits to exploit new coal reserves.

Since 2004, we have acquired six new coal mines, four developmental-stage projects as well as 17 exploration tenements that might be potentially developed in Australia. We plan to continue to expand our coal reserves, resources and production scale through organic growth by pursuing exploration potential, developing and constructing new projects and upgrading our existing mines. In the PRC, we are dedicated to bringing our four development projects, Wanfu, Shilawusu, Zhuanlongwan and Yingpanhao, into successful production. According to our internal estimates, as of December 31, 2011, Wanfu, Zhuanlongwan, Shilawusu and Yingpanhao held approximately 291 million tonnes, 548 million tonnes, 2,168 million tonnes and 2,311 million tonnes of coal resources, respectively. We also plan to increase and optimize production at our existing mining operations. In addition, we are currently applying to the relevant PRC government authorities for new exploration permits to identify and exploit new coal reserves.

In Australia, we intend to execute our strategy by fully developing our significant portfolio of high-quality assets containing abundant reserves and resources. Upon the expected completion of the Merger, and not including the Excluded Assets, Yancoal Australia is expected to be the largest listed Australian pure-play coal mining enterprise in terms of saleable coal production in 2011, on an equity basis. Assuming the Merger proceeds and not including the Excluded Assets, we expect to increase our total annual saleable coal production to 16 million tonnes in 2012, as well as ramp-up production at Moolarben and optimize production profiles at other mines. Leveraging our increased economies of scales and stronger internal cash flow generation capabilities, we plan on developing the resource potential at our four projects: Athena, Harrybrandt, Wilpeena and Wilga, through additional exploration and ongoing project development. Upon completing the Merger, we will include the ASX as the fourth stock exchange on which the securities of our Company or a subsidiary of our Company are listed, which currently include the SSE, HKSE and NYSE. In addition, we anticipate that being listed on four stock exchanges in four separate jurisdictions will enhance our ability to raise capital and our market profile. Furthermore, we intend to construct the necessary facilities and plan the commencement of operations of four coal projects in Australia: Athena, Harrybrandt, Wilpeena and Wilga. We believe our organic growth will enable us to enhance our market profile.

Continue to explore, evaluate and pursue future acquisition opportunities.

We plan to expand our asset portfolio through exploring and pursuing future mergers and acquisitions in China and Australia in a disciplined manner. To further increase our coal reserves and strengthen our competitiveness in China, we plan to capture opportunities provided by coal industry trends and government initiatives to evaluate opportunities to acquire and integrate small-scale coal mines. By leveraging our scale, management and technological strengths, we believe we can efficiently integrate and optimize these acquisitions.

Building on the proposed Merger with Gloucester, we plan to leverage our strong market position and industry experience to continuously identify and selectively evaluate available acquisition opportunities. We intend to pursue the acquisition of additional coal mines in Australia at a well-managed pace to complement our organic growth strategies, while expanding production at our existing coal mines, which we believe will enable us to achieve greater economies of scale. We are also currently applying to the relevant Australian government authorities for new exploration permits to exploit new coal reserves.

Continue to enhance our operating efficiency to lower our costs.

We believe improving our efficiency and cost control measures are critical elements for maximizing our profitability and maintaining our competitiveness. We intend to continue our research and development efforts to improve our coal production systems, processing technologies and coal mine designs, which will allow us to increase our resource utilization rates and production efficiency while reducing our costs. To this end, we expect to continue deploying advanced mining facilities and technologies, such as our mechanized top caving coal mining equipment and other advanced mining techniques. We also intend to continue enhancing the management efforts of, and conduct periodic reviews of, certain coal mines to improve productivity and reduce costs.

Continue to leverage our technical and industry expertise to pursue product improvement and enhance our competitive position domestically and abroad.

Since our inception in 1997, we have accumulated extensive technical and industry expertise through our internal research and development efforts, which have yielded award-winning mining technologies that have improved coal recoverability, mining efficiency and operational safety. We plan to build upon these achievements by continuing our internal research and development efforts and cooperating with third parties to bolster our methods and technology. We expect to leverage our technical and industry expertise to improve the mining recovery rates of our mines, which will allow us to generate additional income. In the domestic and international markets, we plan to explore cooperative opportunities including providing our technical and industry expertise to other coal mining companies in the PRC and Australia that have mining operations characterized by thick coal seams.

Continue to diversify our operations.

To grow our business and maintain our competitiveness, we expect to further diversify our operations. Currently, we are able to offer our customers thermal coal and metallurgical coal products as a result of our diversified coal resources. We intend to develop and introduce new coal products to meet market demand. In addition to our coal products, we have diversified our operations in recent years to include railway transportation, methanol operations and electricity and heat operations. We also intend to further expand our methanol operations and develop new products and services such as coal liquefaction. In addition, we have recently acquired potash mineral exploration permits in Saskatchewan Province in Canada. We expect to further develop these potash assets and bring to market selected potash products in the near future, which we believe will further diversify our product offerings, and enable us to secure a new source of revenue. We believe that by enhancing our product portfolio and maintaining our competitive pricing and value-added coal processing services, we will be able to continue building strong relationships with diverse customers. In addition, a more balanced product portfolio will also enable us to minimize the effects of market fluctuations of certain products and stabilize our sales, while allowing us to adjust our product portfolio as necessary, which will enable us to take advantage of favorable pricing trends of specific products.

Strengthen our existing customer relationships while diversifying our customer base.

Our long operating history, industry reputation, product quality and strategic location in Shandong have allowed us to build stable, long-standing relationships with a strong customer base in the PRC. We intend to preserve this competitive advantage by strengthening our existing customer relationships through, among other efforts, evaluating and entering into long-term supply agreements. We expect our senior management’s industry network and customer connections with large coal end users in the PRC and customer and supplier enterprises overseas in Australia and Canada to complement and further support our customer relationship enhancement strategy.

With the strengthening of Yancoal Australia’s production profile, we have and will continue to explore export opportunities to key coal-consuming nations across the Asia-Pacific region. Leveraging our existing market reach and industry position in markets to which we currently sell, we intend to further diversify our revenue sources by developing relationships with selected new coal end user customers with market reputations and credit profiles consistent with our existing customer base.

Continue to prioritize production safety and environmental protection in our domestic and overseas operations.

We are committed to production safety and protecting the environment. In our PRC operations, we have implemented a safety control program to achieve the targets set in our internal guidelines for safety and risk control management and to maintain compliance with the PRC Coal Industry Law and the National Mining Safety Law in China. In Australia, we have been continuously reviewing and evaluating safety control and performance. We will continue our efforts in this regard by enhancing our internal safety measures and ensuring that our employees are familiar with occupational safety and health guidelines. We will continue to enhance our internal control systems and regularly inspect our mining operations to ensure they comply with the relevant mining laws and regulations of the jurisdiction where the mining operation is located. In addition, we are committed to conducting our operations in a manner that fully complies with environmental laws and regulations. While mining processes inherently generate certain pollution and wastes, we will continue to implement measures, such as environmental remediation and other clean-up measures, to mitigate the adverse effect of our operations on the environment.

Coal Business

We are primarily engaged in the production of coal, which involves the mining, washing, processing and distribution of coal. Historically, our coal operations were primarily based in the PRC, but we began our operations in Australia in 2004 after we acquired the Austar Coal Mine, and have rapidly expanded our Australian coal operations since the fourth quarter of 2009 when we acquired Felix.Felix and in June 2012 when we completed the merger with Gloucester. Our products consist primarily 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. The following table sets forth the specifications and principal applications of our coal products.

The following table sets forth our principal coal products by sales volume and sales income of coal for the periods indicated. For the purposes of the table below, the figures of sales income and sales volume include inter-segment sales.