As filed with Securities and Exchange Commission on June 24, 2011April 29, 2013

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

OR

For the fiscal year ended December 31, 20102012

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 web 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 of the Company.

“A Shares” refersare 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” refersare 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” refersare 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 Zoucheng Yankuang Beisheng Industry and Trade Co., Ltd., a limited liability company incorporated in the 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 Group.

“CAGR” are to the compound annual growth rate.

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

“CBRC” refersChina” or the “PRC” are to the People’s Republic of China, Bankingexcluding, 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 Committee.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.

“eastern China” are collectively to Shandong Province, Jiangsu Province, Anhui Province, Zhejiang Province, Fujian Province, Jiangxi Province and Shanghai Municipality; “southern China” are to Guangdong Province, Hunan Province and Guangxi Zhuang Autonomous Region; “northern China” are to Beijing Municipality, Tianjin Municipality, Hebei Province, Shanxi Province and the Inner Mongolia Autonomous Region; and “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 excluded from Yancoal Australia prior to the merger with Gloucester and currently held by Yancoal International (Holding):

“Felix” refersare to Yancoal Resources (formerly Felix Resources Limited,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 wholly owned subsidiary of Yancoal Australia Limitedcompany incorporated in Australia, which mainly engages infocuses 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” refersare 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” refersare to a firm of certified public accountants in Hong Kong, Special Administrative Region which wasoriginally practised as a former member firmpartnership under the name of Grant Thornton International LtdJingdu Tianhua and has since changed itsnow operates as a corporate practice under the name to JBPB & Co as of December 10, 2010. (original official name in Hong Kong: Grant Thornton)

“Grant Thornton Jingdu Tianhua” refers to a firm of certified public accountants in Hong Kong Special Administrative Region, which has been a member firm of Grant Thornton International Ltd since November 2010.Hong Kong Limited. This firm is the auditor for the purpose of the Hong Kong H Share listing only.

“H Shares” refersare 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 Hong Kong Stock Exchange.HKSE.

“Haosheng Company” refersare to Inner Mongolia Haosheng Coal Mining Company Limited, a 61% ownedCompany incorporated in the PRC and a 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” refersare to Yanmei Heze Nenghua Company Limited, a Company incorporated in the PRC and a 98.33% owned-owned subsidiary of the Company, thatwhich 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” refersor “HKSE” are to The Stock Exchange of Hong Kong Limited.

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

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

“JBPB” refersIndustry Guide 7” are to JBPB &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.

“Jiemei Wall Materials” are to Jining Jiemei New Wall Materials Co., Ltd., a firmlimited 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 certified public accountantsthe 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.

“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 Hong Kong Special Administrative Region formerly known as Grant Thornton in Hong Kong.Australia.

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

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

“Ordos Neng Hua” refersare to Yanzhou Coal Ordos Neng Hua Company Limited, a wholly owned subsidiary of the Company that mainly engagesincorporated in the constructionPRC that is principally engaged in the development 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” refersare to the People’s Bank of China.

“PRC” refersPRC government” are to the People’s Republiccentral, provincial or municipal government of China.the PRC.

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

“Promoter Shares” refersare 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” refersare 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.

“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.

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

“Tianchi Energy” refers to Shanxi Heshun Tianchi Energy Company Limited, an 81.31% owned subsidiary of Shanxi Nenghua that mainly engages in the operation of Tianchi Coal Mine.

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

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

“Yancoal Australia” refersare to Yancoal Australia Limited, an ASX-listed subsidiary of the Company incorporated in Australia that manages our investment projects in Australia, which is 78%-owned by the Company.

“Yancoal Canada” are to Yancoal Canada Resources Co., Ltd., a wholly owned subsidiary of the Company that manages our investment projects in Australia.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” refersare 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” refersare to Yanzhou Coal Yulin Nenghua Company Limited, a wholly owned subsidiary of the Company that mainly engagesincorporated in the PRC, which is principally engaged in the operation of a 600,000-tonne methanol project in Shaanxi Province.

“Yushuwan Coal Mine Company” refers to Shaanxi Yushuwan Coal Mine Company Limited, a joint venture among the Company, Chia Tai Energy & Chemicals Company Limited and Yushen Coal Company Limited, of which we will hold a 41% equity interest. As of the date of this annual report, the establishment of Yushuwan Coal Mine Company is still pending regulatory approval.

For purpose of this annual report, “Eastern China” refers collectively to Shandong Province, Jiangsu Province, Anhui Province, Zhejiang Province, Fujian Province, Jiangxi Province and Shanghai Municipality; “Southern China” refers to Guangdong Province and Hunan Province and Guangxi Autonomous Region; and “Northern China” refers to Beijing Municipality, Tianjin Municipality, Hebei Province, Shanxi Province and the Inner Mongolia Autonomous Region.

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, andthe lawful currency of Australia; all 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 RMB6.6000RMB6.2301 to US$1.00, being the certified exchange rate as set forth in the H.10 weekly statistical release of the Board of Governors of the Federal Reserve BoardSystem of the United States on December 31, 2012. All such translations in this annual report are provided solely for December 30, 2010. Noyour 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. 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 nonaccessibe reserves up to December 31, 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 Securities 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.

ITEM 3.

KEY INFORMATION

Historical Financial Data

The following table sets forth selected financial data as of and for the years ended December 31, 2006, 2007, 2008, 2009, 2010, 2011 and 2010.2012. The selected income statement and cash flow data for the years ended December 31, 2008, 20092010, 2011 and 20102012 and the selectedsummary balance sheet data as of December 31, 20092010, 2011 and 20102012 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 International Accounting Standards Board. Our selected income statement and cash flow data for the years ended December 31, 2006 and 2007 and our selected balance sheet data as of December 31, 2006, 2007 and 2008 have been derived from our audited consolidated financial statements for those periods and dates, which are not included in this annual report.IASB.

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.

		As of December 31,
		2008				2009				2010				2011				2012
A Shares			2,960,000,000				2,960,000,000				2,960,000,000				2,960,000,000				2,960,000,000
H Shares			1,958,400,000				1,958,400,000				1,958,400,000				1,958,400,000				1,958,400,000
ADS			18,919,105				19,403,533				19,744,158				13,933,698				12,915,380

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 June 17, 2011,April 19, 2013, the noon buying rate was US$1.00 = RMB6.4700.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 economic conditions.

The coal industry depends on general economic conditions, including the strengthconditions of global and local economies. In 2008 and 2009,For the past several 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 Europe remain uncertain. In 2010,this regard, following GDP growth of 9.2% in 2011 and 7.8% in 2012, according to statistics published by the average selling priceNational Bureau of Statistics of the PRC, the PRC maintained its GDP growth target for 2013 at approximately 7.5% in the face of continuing global turbulence and pressing domestic demand for economic restructuring. In the first quarter of 2013, the PRC’s GDP grew at an annualized rate of 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. Australia experienced GDP growth of 3.4% in 2012 and, according to the Reserve Bank of Australia, Australia’s GDP was expected to grow by 3.0% in 2013, lower than its actual growth in 2012. From late 2008 to mid-2009, the export prices of thermal coal in the PRC experienced fluctuations dueand Australia each decreased significantly. Since late 2009, the export prices of thermal coal in China and Australia have recovered but continue to globalfluctuate. In addition, in the period from February 2011 to April 2012, demand for semi-hard coking coal declined considerably and local economic conditions. In spitedemand for semi-soft coking coal also declined.

We expect that the export coal market and, in particular, the semi-soft coking coal segment of certainthe market, will remain weak for the balance of the current financial year. Despite policies and initiatives implemented by the PRC government to alternately stimulate and then moderate economic conditions, we cannot assure you that another recession would not occur or that a decline in overall economic conditions would notmay 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. We cannot assure you thatIn 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 government will notor Australian governments may implement tightening policies to managestimulate or slow the growth of the economy or to control an overheated economy in the future which may, in turn, affect coal prices. In the event that this occurs, our business, results of operations and profitabilityfinancial condition may be materially and adversely affected.

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

Coal sales accounted for 96.0%, 96.0% and 96.7% of our revenues in 2010, 2011 and 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 historically 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, the demand for coal decreased significantly as a result of thesluggish global financial crisis. Since 2009,economy has led to weak demand for coal in Chinaboth the PRC and worldwide, alongthe overseas markets and the average selling price of our coal products decreased as compared with coal prices, has substantially recovered.that of 2011. The average selling price of our coal products was RMB663.9, RMB529.2RMB663.5, RMB707.7 and RMB663.5RMB599.3 per tonne in 2008, 20092010, 2011 and 2010, respectively. However, we2012, respectively, representing a drop of RMB108.4 per tonne from 2011 to 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.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 on the other hand, is primarily affected by the geographicalgeographic location of coal reserves, transportation capacity, the level of domestic and international coal supplies and the type, quality and price of coal from othervarious 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.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, and results of operations.operations and financial condition.

The PRC government’s new policy on removing state-sponsored contracts and ceasing to reserve allocations of railway capacity for thermal coal transportation may materially and adversely affect our business, results of operations, financial condition and prospects.

Historically, power utilities purchased coal either on the spot 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 fulfill their contracts when market prices were higher than contract prices. In December 2012, the NDRC announced a policy to change the Chinese domestic thermal coal pricing mechanism. The stated goal of the policy is to eliminate the state-controlled annual contracts which currently govern a large share of domestic coal sales. At the same time, the NDRC has 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 power utilities to compete with other railway users and negotiate directly with local railway departments.

By removing these state-sponsored contracts, the intended 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 transportation capacity reservation is intended to encourage 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 transportation under the new policy, to sustain our historical operating results. As a result, our business, results of operations, financial condition and prospects may be materially and adversely affected.

OurWe 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. We may not be able to rely on these customers for revenue 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 dependentintensifying, 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 purchases of our products. The loss of sales to any of these customers could have a material adverse effect on short-termour business, results of operations and financial condition.

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

In 2008, 2009 and 2010, the majoritySales of our coal produced in China are made primarily on the spot market or pursuant to strategic framework agreements and to a lesser extent, pursuant to sales income (the invoiced amountcontracts. Sales of our coal sold net of returns and discounts) of coal was derived from short-term sales contracts or letters of intent. Theseproduced in Australia are made pursuant to sales contracts and lettersspot market sales. Our PRC sales contracts generally have terms of intentone 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 purchases for a termcoal, 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 not exceeding one year. Ifentered 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 sale,delivery, our revenue and profitability wouldmay be reduced.

Historically,materially and adversely affected. In addition, our customers have performed a significant majority of their purchase obligations under the sales contracts and letters of intent with us. However, a significant increase in the proportion of unperformed sales contracts and letters of intent or unrealized sales could have a material adverse impact on our results of operations ifare not automatically renewable. If we are not able to locate alternative purchasersmaintain 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 coal produced in China generally only specify the quantity and quality of coal, while the purchase price is determined in the annual or monthly sales contracts we enter into under the strategic framework agreements. As a result, we are subject to market conditions at the similar leveltime of profitability. Furthermore, any changes in the cost or availability of labor, raw materials or transportation or volatility in foreign exchange rates during the period between the formation and performance of these sales contracts andactual 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, which may also materially and adversely affect our ability to perform our contractual obligations or our profitability.business, results of operations and financial condition.

Our products may be subjectWe rely primarily on ports, highways and third party operated railway systems in the PRC and Australia to governmental price control measures,deliver our coal, any major disruption of which may adversely affect our profitability.business, results of operations and financial condition.

Although the PRC government has implemented measures to overhaul historical price and supply controls and continues to support the development of a market-orientated PRC coal market, it may intervene in the domestic coal market from time to time through the use of macroeconomic measures to stabilize the market and achieve national social and economic goals. For example, the State Council of China and the NDRC published announcements in November and December 2010, respectively, imposing price caps on coal sold pursuant to key thermal coal supply agreements imposed with reference to the coal prices of the agreements entered into by the relevant enterprises in 2010. Such price caps were reemphasized by the NDRC in announcements issued in April 2011. These price-intervention measures may limit the degree of control we have over certain aspects of our business and may have a negative impact on our operations, pricing and profitability.

We rely primarily on the PRC nationalhighways and our own railway network, as well as third party operated railway system, to deliver our products.

We rely on the PRC national railway system, as well as our railway network, to deliver coal to customers.customers in China. We generated approximately 33.6%, 32.1% and 22.7% of our sales income (the invoiced amountalso deliver small volumes of coal sold net of returnsthrough ports and discounts) ofcanals. Coal resources and production in China are mainly located in northern and northwestern China, while coal products soldconsumption is primarily in eastern and transported on the PRC state-ownedsouthern China. As a result, coal suppliers must transport coal via third party operated railway system (exclusive of coal transported on our own railway network) in 2008, 2009 and 2010, respectively.systems 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 requirement.demand resulting from regional imbalances. Even though our domestic customers are mainly located in Easterneastern China, where the railway system is relatively more developed than other regions of China, our ability to deliver coal is still restricted by the transportation capacity. Pursuant 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 Autonomous Region. However, as it will take a significant amount of time for the relevant PRC authorities to grant approvals and permits and to complete the construction of the railway, 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 cannot assure you that we willmay not be able to continue securing sufficient railway andor port capacity to deliver our coal or that we will notand may experience any material delivery delays or substantial increases in transportation costs as a result of insufficient railway capacity. For details about

In Australia, we rely substantially on third party operated railway networks to deliver coal to ports in New South Wales and Queensland, for onward shipping to our sales incomecustomers. 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 coal, please referfive to “Item 5. Operatingten years and Financial Review and Prospects — Coal Business”.

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

Our coal reserve data are only estimates, which may differ materially from actual reserves. Our reserve estimates may change substantially if new information becomes available. There are inherent uncertainties in estimating reserves, which requiregenerally on a “take or pay” basis. As 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 actual results of operations may differ materially from our long-term business and operational plans, which aretransportation 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 reserve estimates.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 adjustbe able to secure sufficient transportation capacity to deliver our coal reserve estimates downward in the future and may experience material delivery delays or substantial increases in such event,transportation costs as a result of insufficient transportation capacity, which may also adversely affect our long-term productionbusiness, results of operations and the useful life of our mines may be materially and adversely affected.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. OngoingThe ongoing consolidation in the PRC and Australian coal industry has increased the level of competition we face in China.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. We cannot assure you that efforts takenEfforts by our competitors to improve the quality of their coal will not erode themay render obsolete or irrelevant any quality advantage we have over them. Continual improvements in China’s transportation infrastructure, particularly the national railway transportation network, may diminish 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 costs of transporting coalfailure to Eastern China are more significant. However, the PRC government has constructed and plans to continue constructing additional railways to transport coal from northern and northwestern China to Eastern China. The completion of these railway projects may increase the supply of coal to customers in Eastern China, increasing the effective supply of coal, whichcompete effectively may have a material adverse impact on our business, results of operations and financial condition.

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 2010, 2011 and 2012, our total capital expenditures were approximately RMB3,785.3 million, RMB23,336.4 million and RMB20,809.2 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.

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. 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 estimated in accordance with Industry Guide 7 for proven and probable reserves and the JORC Code for 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 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 recoverable coalCoal reserves in our existing mines decline as we produce coal.coal is produced. Due to the limitation on our ability tolimitations in significantly increaseincreasing our production capacity at existing mines, such as Jining II Coal Mine, Jining III Coal Mine and Tianchi Coal Mine, the increase inour 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 resources.

We acquired the mining rights of Zhaolou Coal Mine through Heze Nenghua in May 2008,reserves and commenced production at Zhaolou Coal Mine in December 2009. On December 23, 2009, we completed the acquisition of the entire equity interest in Felix, which had an equity interest in three operational minesresources domestically and three exploratory mines. In December 2009, we established Ordos Neng Hua to manage our investments in the Inner Mongolia Autonomous Region, including a coal mining project. In 2010, Ordos Neng Hua acquired a 100% equity interest in a 600,000 tonnes methanol project. We acquired the entire assets of Anyuan Coal Mine in December 2010, which has commenced production in early 2011. We also obtained a 61% equity interest in Haosheng Company as of the date of this annual report. We are also in the process of establishing an associate company for a coal mining project in Yushuwan, Shaanxi Province. For more information about the development and acquisition of our coal resources, please refer to “Item 4. Information on the Company — History and Development of Our Company” in this annual report.overseas.

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 approval.approvals. Delays or failures in securing or failure 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. We cannot assure you thatAs a result of these challenges, our overseas expansion plans and investments willmay not be successful.successful and may not achieve our anticipated results.

We cannot assure you thatIn 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 willmay not be able to continue to identify suitable acquisition targets or acquire these targets on competitive terms, andat 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 successfully 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.

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:

In the event that we are unable to efficiently and effectively integrate newly acquired companies or coal or potash-related businesses into our Company, we may be unable to achieve the objectives or anticipated benefits of such acquisitions, which 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.

Our merger with Gloucester may not strengthen our coal mining operations and market profile, globally and in Australia, as we expect.

In June 2012, Gloucester became a wholly owned subsidiary of Yancoal Australia, and the Company and Gloucester shareholders held 78% and 22%, respectively, of the ordinary share capital of Yancoal Australia. However, as a condition of the foreign investment approval for 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. In addition, we must reduce our economic ownership in Yancoal Resources’s underlying assets to no more than 50% by December 31, 2013.

Although we believe this transaction has significantly increased our total resource base and strengthened 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 uncertain mining conditions.

Our operations are subject to certain risks inherent in underground mining, which may affect the safetyterms and conditions of our workforcemerger with Gloucester, as it 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 cost of producing coal, including, without limitation, roof collapses, deteriorationimplement the measures necessary to successfully integrate Yancoal Resources and Gloucester. See “— We may experience difficulty integrating our acquisitions, which could result in the quality or variations in the thickness of coal seams, minewater discharge, 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, we cannot assure you that adverse mining conditions would not 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 impacteffect on our business, and results of operations.

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. 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, we cannot assure you that safety incidents will not occur. Any significant accident, business disruption or safety incident could result in substantial uninsured costs and the diversion of our resources, which could materially and adversely affect our business operations and financial condition.condition” and “– Our business, results of operations and financial condition depend on in part our ability to continue acquiring or developing suitable coal reserves.” We also expect that we will make significant capital expenditures to develop Gloucester’s projects.

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

Underground and surface mining may cause the land above mining sites to subside.subside, or 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 ana 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 2010, 2011 and 2012, we expensed approximately RMB693.7RMB1,532.2 million, RMB1,513.1 million and RMB1,450.6 million, respectively, of our provisions for land subsidence, restoration, rehabilitation and environmental protection was expensed. The provision for land subsidence, restoration, rehabilitation and environmental costs isas determined by our Directorsdirectors based on estimations onof 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, there can be no assurance that such estimates willmay not be accurate or that ourand land subsidence, restoration, rehabilitation and environmental costs will notmay substantially increase in the future or that the PRC government will notfuture. 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.operations and financial condition.

PRC quotas for coal exportsOur business and industry may adversely affectbe affected by the leveldevelopment of our coal export sales.alternative energy sources and climate change.

Our export sales conducted from China (not includingWe supply coal as fuel to, among others, the salesPRC thermal power generation industry and, as a result, are affected by Yancoal Australia) accounted for approximately 0.9%, 0.3%the demand and 0.03%growth of our sales income of coal in 2008, 2009 and 2010, respectively.The NDRC and the Ministry of Commerce set an annual export quota for domestic coal producers and allocate the quota among authorized coal exporters. Our export agents have historically received sufficient export quota to satisfy our export requirements. However, we are unable to predict what impact, if any, the national export quota may have on the level of our future export sales. If the national quota for coal exports is further reduced, our future export sales could be limited,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. 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 would 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.”

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

We currently have exploration projects in 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. In addition, the development of these resources could face significant uncertainties. It can take several years and would 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 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. As a result, we cannot assure you that any of our exploration activities will result in the discovery of valuable resources or reserves, or that reported resources can be converted into reserves in the 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 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, effective April 16, 2012, compared with its previous 0.5% limit. We expect that the PRC government will continue to adopt prudent 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 31, 2012, the exchange rate for the Australian dollar against the U.S. dollar was US$1.00 = A$1.0393, compared with US$1.00 = A$1.0251 as of December 30, 2011. We recorded an exchange gain of 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, 2012, we had approximately US$4,162.0 million of borrowings denominated in U.S. dollars and 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 adjusts 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 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, 2012, the fair value of our derivative assets in respect of our forward foreign exchange contracts was RMB76.6 million, compared with the fair value liability of our forward foreign exchange contracts and interest rate swap contracts of approximately RMB128.1 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 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 per tonne of raw coal output in Shandong Province, 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 fail 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 was passed into law, effective July 1, 2012. The MRRT is a profits-based tax that is 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. In 2012, as the result of the MRRT, our Australian subsidiaries recognized deferred tax assets, leading to a decrease in the income tax expense of our Australian subsidiaries by RMB1,085.2 million. However, this is a one-off tax impact and we expect the MRRT has the potential to increase the overall tax liability of our Australian subsidiaries and adversely affect our results of operations.operations and financial condition in the future.

Our Controlling Shareholder has significant influence over us.

We do not have an export permit and cannot directly exportAs of December 31, 2012, our coal. AllControlling Shareholder, the Yankuang Group, owned 52.86% of our export sales must be made through intermediary export agentsoutstanding shares and has significant influence over us. Pursuant to approval granted at the annual shareholder meeting of the Company held on June 22, 2012, the Company entered into five continuing connected transaction agreements with the Yankuang Group, namely a materials supply agreement, a supply of labor and services agreement, a pension fund management agreement, a coal products and materials supply agreement and an electricity and heat energy supply agreement, together with the respective annual caps for such transactions from 2012 to 2014, in the ordinary course of business. In addition, pursuant to approval granted at the third meeting of the fifth session of the Board of Directors held on 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 Chinathe NDRC, the MEP, the MLR, the State Administration of Coal Mine Safety (“SACMS”), the State Administration of Work Safety, the National Coal Industry ImportEnergy Administration and Export Corporation, Chinathe 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 Minerals ImportNative Title Tribunal. Regulatory oversight from these authorities and Export Company Limited and Shanxi Coal Import and Export Group Company. The termsagencies may affect the following aspects of our export salesoperations, 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 determined collectivelystill 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 export agentsrisk 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 overseas customers. Although we have appliedoverall 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 the PRC central government for direct export rights with the assistance of the Shandong provincial government,resource taxes and we may not be able to pass on our increased costs relating to resource taxes to our customers.”

We may not be able to obtain all necessary approvals, permits and licenses.

Pursuant to applicable laws and regulations in China, we are required to renew approvals, permits and licenses with respect to our exploration activities, mining operations and environmental protection for our existing operational mines and obtain more approvals, permits and licenses for our development-stage or exploration projects such as Zhuanlongwan, Shilawusu, Yingpanhao and Wanfu. In addition, we are required to 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.

With respect to our operations in Australia and Canada, we are also required to obtain a number of material regulatory approvals, permits and license. We are in the process of obtaining or renewing certain regulatory approvals, permits and licenses for our coal mines, such as the open-pit project at Moolarben Coal Mine and the Southeast open-pit project at Ashton Coal Mine.

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 to continue relyinga material adverse effect on export agents to export our coal from China.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:

Our coal

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. 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 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. OurIn March 2012, the Australian government enacted a carbon pricing mechanism (or carbon tax) law, effective July 1, 2012, which imposed a charge on the amount of carbon dioxide 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.

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.

In March 2011, the NDRC promulgatedconduct of our operations, we rely substantially on the main targetsservices of resources conservationour key employees with professional skills, qualifications and environment protection for 2011, which setexperience, 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 goals to decrease the amountloss of energy consumed per unitany of GDP by 3.5%these personnel could materially and to reduce the emission of certain major pollutants by 1.5% in 2011 compared with that in 2010. If efforts to increase energy efficiency, control greenhouse gas emissions and enhance environmental protection result in a decrease in coal consumption,adversely affect our revenue may decrease andoperations.

As our business expands, we believe our success will depend on our continued ability to attract and retain skilled and qualified 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 adversely affected.affected by uncertain mining conditions and 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, which may affect the safety of our workforce as 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. 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. 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 face pricingprice 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 2010, 2011 and 2012, we generated revenue of RMB629.3 million, RMB1,059.3 million and RMB1,118.0 million from sales of methanol, respectively, which represented 1.9%, 2.3% and 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 dynamicrapidly changing supply and demand fundamentals. From 2006 to 2010,In addition, there is currently significant overcapacity in the domestic methanol industry, suffered from significant overcapacity following a period of rapid expansionwhich is not expected to change, and increased investment, which were stimulated by speculation on the developmentmarket demand of methanol downstream applications andis not expected to grow significantly in the overheated coal chemical industry. Stagnation in market demand for methanol as a result of difficulty in promoting the utilization of methanol downstream products caused the over capacity issue to further deteriorate. We expect methanol prices in domestic market to remain sluggish due to the above mentioned conditions. In March 2011, the PRC benchmark methanol price increased to RMB2,670 per tonne from RMB2,590 per tonne in March 2010, representing a 3.1% increase.short term.

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

As of the end of 2010,2012, we had a total annual methanol production capacity of 700,000600,000 tonnes. As with developing any new business,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 as of the date of this annual report, which significantly curtailed its production in 2010.

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 profitabilityfinancial condition will be adversely affected.

Our electric power business is heavily regulated, which may affectinsurance will not cover all the potential risks associated with our results of operations.

We generated RMB185.5 million of revenue from electric power sales, which represented approximately 0.5% of our total revenue in 2010. The majority of electricity that we produced was for our internal use and we sold the remaining portion to external customers. To the extent that we do sell electricity, any decrease in the government-set grid power prices, the price at which power grid operators purchase electricity from power plants, including our power plants, may reduce our profitability and adversely affect our results of operations.

The operation of coal-fired power plantsOur business is subject to increasingly stringent emission standardsa 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 PRC government, in particular, the resources conservationlevels which we expect, there could be a material adverse effect on our business, results of operations and environmental protection standards for 2011 set forth by the NDRC, which stipulated the standards for air pollutant emissions for the power plants. As a result, our compliance costs will likely increase and the profitability of our electric power business may be reduced.financial condition.

We are exposedmay not be able to fluctuations in exchange rates and interest rates.

We mainly face risks relating to RMB fluctuations and risks stemming from exchange rate fluctuations between the Australian dollar and 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. The primary effect of exchange rate fluctuations on us is due toprotect our exports denominated in U.S. dollars and Australian dollars. As a result, exchange rate fluctuations can affect our export sales. In addition, exchange rate fluctuations can result in exchange losses on our foreign currency deposits and loans. As of December 31, 2010, the exchange rate for the Australian dollar against the U.S. dollar was 1.0163 (A$1.00 = US$1.0163), compared with A$1.00 = US$0.8985 as of December 31, 2009. Yancoal Australia recorded an exchange gain of RMB2,688.2 million during the reporting period. Exchange rate fluctuations can affect our cost of imported equipment and components.

To manage uncertainty in our revenue stream and capital expenditures caused by exchange rate fluctuations, we have entered into forward foreign exchange contracts to sellpatents 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, 2010, the fair value of our derivative assets in respect of our foreign exchange contracts was RMB239.5 million, compared with the fair value of our derivative liabilities in respect of our forward contracts and interest rate swap contracts of approximately RMB166.2 million. See “Item 11. Quantitative and Qualitative Disclosures about Market Risks — Foreign Currency Exchange Rate Risk” for details on our hedging activities. We cannot assure you that our hedging arrangements will remain effective or that our results of operations will be not negatively affected by fluctuations in exchange rates or interest rates.

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

As of December 31, 2010, we had approximately RMB23,015.8 million in bank borrowings, ofother intellectual property rights, which approximately RMB614.9 million is due within a year, approximately RMB22,356.8 million is due after one year but within five years and approximately RMB44.0 million is due after more than five years. This level of debt could have significant consequences on our operations, including:

In addition, Yancoal Australia obtained a syndicated loan amounting to approximately US$3,040.0 million attributable to the Felix acquisition in December 2009, which is guaranteed by us and secured by a counter guarantee from Yankuang Group. Failure by us to satisfy our repayment obligations could result in an event of a default that, if not cured or waived, could have a material adverse effect on us.our business.

IfFrom 2010 to 2012, we completed 306 technology improvement projects, and obtained 103 patents and over 10 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 ableregistered.

The measures we take to generate sufficient cash flowprotect 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 serviceapprove our debt obligations, we may needpending 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 refinance or restructure our debt, sell assets, reduce or delay capital investments, or seek to raise additional capital.us. If we are unable to implement one or more of these alternatives,adequately protect our results of operationsintellectual property rights, our reputation may be negatively impacted and financial conditionour 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 Controlling Shareholderauditors 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 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 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. 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.

Interpretation of PRC laws and regulations involves uncertainty.

The PRC legal system is a significant impactcivil 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, due to the fact that these laws and regulations have not been fully developed, and because of the limited volume of published cases and the non-binding nature of prior court decisions, interpretation of PRC laws and regulations involves a degree of uncertainty. Under certain circumstances, some of these laws may be changed without being immediately published or may be amended with 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.

As of December 31, 2010, our Controlling Shareholder, the Yankuang Group, owned 52.86%The ability of our outstanding sharessubsidiaries to pay dividends to their shareholders is subject to, among other things, distributable earnings and exertsrestrictions contained in the articles of association of our subsidiaries, restrictions contained in the debt 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 influencerespects, including the use of different bases of recognition of 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 us. We may continuewhich legitimate native title rights of Aboriginal Australians exist. If native title rights do exist, our ability to enter into a numbergain access to tenements (through obtaining consent of connected transactions withany relevant landowner), or to progress from the Yankuang Group. Pursuantexploration phase to the regulationsdevelopment 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 Hong Kong Stock Exchange andgranted tenements in which we have or may earn an interest in will be subject to applications for renewal or grant (as the Shanghai Stock Exchange on continuing connected transactions, we completecase may be). The renewal or grant of each tenement or license is usually at the necessary review and approval procedures before entering into continuing connected transactions. We have entered into five continuing connected transaction agreements with the Yankuang Group, namely the Materials Supply Agreement, Supply of Labor and Services Agreement, Pension Fund Management Agreement, Coal Products and Materials Supply Agreement and Electricity and Heat Energy Supply Agreement, each of which has a term from 2009 to 2011. In the fourth quarter of 2008, our shareholders approved the amendment and renewaldiscretion of the five foregoing continuing connected agreements. On April 23, 2011, we also entered intorelevant 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 Finance Services Agreement with Yankuang Group Finance Company Limited, a joint venture established by the Yankuang Group, China Credit Trust Co., Ltd and us. Any material financialgovernment authority may reject our applications for renewal 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 affectgrant, in which case, our operations and future prospects.in Australia may be adversely affected.

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:

Our operations are affected by a number of risks relating to the PRC.

Because a significant majority of our assets and operations are located in China, weAdditionally, tenements are subject to a number of risks relatingspecific legislative conditions including payment of rent and meeting minimum annual expenditure and reporting commitments. Our inability to conducting business in China, including, butmeet these conditions could affect the standing of a tenement or restrict its ability to be renewed. If a tenement is not limited to, the following:

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

Our coal operations in China are subject to extensive regulation by the PRC government. National governmental authorities, such as the NDRC, the Ministry of Environmental Protection, the Ministry of Land and Resources, the State Administration of Coal Mine Safety 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 lawscertain 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 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 regulationsother groups are opposed to the future development of general application governingland 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 processing,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 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 regulationshas or may be implemented by various federalgranted. Where coal mining and state government departmentscoal seam gas tenures overlap, it is necessary for the coal miner and authorities includingcoal 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 Department of Resources, Energy and Tourism, the Department of Environment, Water, Heritage and the Arts and the National Native Title Tribunal.

Regulatory oversight from these authorities and agencies may affect the following, among others, aspects of our operations:

        As a resultinterests of the foregoing regulation, our ability to execute our business strategies or to carry out or expand our businesscoal miner and coal seam gas producer may not be aligned and accordingly, mining operations may be restricted. We may experience substantial delaysdelayed or adversely affected.

Environmental conditions and action groups. Before any mining tenure is granted in obtaining regulatory approvals, permits and licenses for our business operations. Our business may also be adversely affected by future changes in PRC or Australian regulations and policiesAustralia, it is required that affecta comprehensive public environmental assessment on the coal industry. The adoption of new legislation or regulations, or the new interpretation of existing legislation or regulations, may materially and adversely affect our operations, our cost structure or product demand. The occurrence of anyimpact of the foregoing may cause usproposed mining operations be undertaken. Such an assessment involves a public consultation process, which often involves encountering organized environmental or community groups that seek to substantially change our existing operationsrestrict or incur significant compliance costs. For example, the Australia federal government announced proposals to implement a 40% Resource Super Profits Tax generated from non-renewable resources byblock contemplated mining companies, which is currently scheduled to come into effect on July 1, 2012. The tax payable of coal producers will increase substantially should this tax proposal become effective. The newly elected prime minister of Australia, Julia Gillard, later announced certain modifications to the Resource Super Profits Tax proposal, including, without limitation, reducing the number of affected companies, decreasing the applicable tax rate and increasing the range of tax credit available tooperations. Generally, where environmental approvals are granted, conditions are frequently imposed that materially affect mining companies. Notwithstanding the substantial modifications, the new tax proposal will still increase the taxation obligation of coal producers. In addition, we are subject to various uncertainties in relation to the foregoing tax proposal which has not yet been approved by the Australian government, including, without limitation, the final arrangement and the time of implementation. We expect the implementation of the foregoing tax proposal will have a material adverse effect to the profitability of our operations in Australia.operations.

ITEM 4.

INFORMATION ON THE COMPANY

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:

Establishment of Ordos Neng Hua and Acquisition of Coal Chemical ProjectAcquisitions

We established Ordos Neng Huawere involved in the Inner Mongolia Autonomous Regionthree acquisitions in December, 2009. Ordos Neng Hua will act2012, a description of which is as our investment management platform for coal mining, coal chemicals and a coal power project in Inner Mongolia. Asfollows:

Acquisition of the date of this annual report, the registered capital of Ordos Neng Hua was RMB3.1 billion.

Subsequently, the Company and Ordos Neng Hua successively completed the following related acquisitions: acquisition of 100% of the equity interests in a 600,000-tonne methanol project, the acquisition of a 61% equity interestEquity Interests in Haosheng Company the acquisition of the entire assets of Anyuan Coal Mine and obtaining the mining rights of Zhuan Longwan coal mine field through public bidding. These acquisitions should assist us in acquiring coal resources in Ordos City, further participating in coal resources development in the Inner Mongolia Autonomous Region and enhancing the sustainable development ability and core competitiveness of the Company.

Acquisition of 100% equity interest in the 600,000-tonne methanol project

Pursuant toOn May 22, 2012, upon approval grantedobtained at the general manager working meeting, held on December 1, 2009, Ordos Neng Hua acquired 100%we completed the acquisition of the equity interests held by Kingboard Chemical Holdings Limited in Inner Mongolia Rongxin Chemicals Co., Ltd, Inner Mongolia Daxin Industrial Gas Co., Ltd and Inner Mongolia Yize Mining Investment Co., Ltd, for a consideration of RMB190 million out of its own resources. The relevant procedures for the share ownership transfer procedures were completed on April 16, 2010. The above companies are responsible for the establishment of the first phase of the 600,000-tonne methanol project.

Acquisition of Inner Mongolia Haosheng Coal Mining Company Limited

Currently, Haosheng Company is primarily responsible for the approval application for the mining project and the grant of the mining rights of Shilawusu Coal Mine field Project in the Inner Mongolia Dongsheng Coal Field.

Pursuant to approval granted at the fifteenth meeting of the fourth session of the Board held on August 20, 2010, we entered into the equity transfer agreement of Haosheng Company and its supplementary agreement on September 6, 2010 and October 19, 2010, respectively. Under such agreements, we acquired 51% of equity interests in Haosheng Company originally held by Shanghai Huayi (Group) Company (“Huayi”), Ordos Jinchengtai Chemical Co., Ltd (“Jinchengtai”) and Shandong Jiutai Chemical Industrial Technology Company Limited (“Jiutai Technology”) in Haosheng Company for a consideration of approximately RMB6,649 million. The Company and other shareholders of Haosheng Company are obligated to inject further capital on a pro-rata basis in order to increase the registered capital from RMB50 million to RMB150 million.

The initial payment of the consideration and capital increase in Haosheng Company in a total amount of approximately RMB2,045.8 million was paid by us on October 20, 2010 and the share ownership transfer procedures were completed on November 4, 2010. We are obligated to pay a second installment of approximately RMB2,659.6 million within 15 working days when any of the following requirements has been met: (i) Haosheng Company obtains the exploration rights license of Shilawusu Coal Mine field; (ii) the mining zone delineation of Shilawsu Coal Mine Zone or other applications related to mining rights have been approved by the Ministry of Land and Resources (the main body to have obtained the mining zone delineation or other mining rights must be Haosheng Company). The third installment of approximately RMB1,994.7 million shall be paid within 10 months after completion of the second payment.

As of March 31, 2011, we entered into an equity transfer agreement of Haosheng Company with Ordos City Jiutaimanlai Coal Mining Company Limited (“Jiutaimanlai”) and Jiutai Technology to acquire 10%9.45% of the equity interests in Haosheng Company held by Jiutaimanlai and Jiutai TechnologyJinchengtai Chemical for a consideration of RMB863.86 million. This amount represented approximately RMB1,313.8 million. We paid the initial payment of approximately RMB394.1 million (representing 30%15.5% of the Group’s audited total amount) on April 7, 2011. Currently, we are processingprofits under CASs of RMB5.5604 billion in 2012. Upon the share ownership transfer procedures. Upon completion of the transfer, we will hold 61% of theacquisition, our equity interests in Haosheng Company. We are obligatedCompany increased to pay the second74.82%.

Gloucester Acquisition

In December 2011, we and third installments upon the same conditions as the payment arrangementsour subsidiary Yancoal Australia entered into a merger proposal deed with Gloucester (amended in our acquisitionMarch 2012), pursuant to which Yancoal Australia implemented a merger by way of 51%a scheme of arrangement under Australian law pursuant to which it or its wholly owned subsidiary acquired all of the equity interests.shares of Gloucester, and Gloucester’s shareholders received a combination of Yancoal Australia ordinary shares and CVR Shares, unless they elected to receive only Yancoal Australia ordinary shares.

Upon approval 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 is currently a wholly owned subsidiary of Yancoal Australia, which is a 78%-owned subsidiary of the Company

Acquisition of AnyuanCoal 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, pursuant to which we purchased from Yankuang Group and Beisu Company all of the assets and liabilities of Beisu Coal Mine

Pursuant to approval granted at the general manager working meeting held on November 12, 2010, Ordos Neng Hua entered into Anyuan and Yangcun Coal Mine. The assets included mining rights, building ownership certificates, mining and related equipment and other fixed assets, as well as certain equity investments of Beisu Coal Mine Transfer Agreement and its supplementary agreement on November 20, 2010 and January 20, 2011, respectively, to acquire the total assets of AnyuanYangcun Coal Mine for a consideration of approximately RMB1,435 million. Pursuant toand in Beisheng Industry and Trade, Shengyang Wood and Jiemei Wall Materials. Our entry into the assets transfer agreement Ordos Neng Hua acquiredconstituted a connected transaction of our Company under Chapter 14A of the Anyuan Coal MineHong Kong Listing Rules.

The consideration was determined by the appraised net asset value of the target assets, or RMB824,142,000, as appraised by Beijing China Enterprise Appraisal as of August 31, 2011. The appraisal value was approved by the SASAC of the Shandong Provincial Government on December 1, 2010, but still subjectApril 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 relevant governmental approval. Since December 1, 2010, Ordos Neng Hua owns alla shortage of raw materials supply. At the coal produced2012 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 transaction is currently undergoing a sale procedure on the Shandong Property Right Exchange Center.

Bond Offerings

The RMB Bond Offering

In August 2012, we completed the issuance of RMB5 billion aggregate principal amount of guaranteed notes in a public offering in the PRC, comprising one tranche of RMB1 billion notes due 2017 bearing interest of 4.20% per year, and earnings derived from Anyuan Coal Mine.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. The notes were listed on the SSE on August 15, 2012. As of the date of this annual report, approximately RMB1,290 million has been paid by Ordos Neng Hua, and the balancewe have utilized all of the consideration is expected to be paidnet proceeds of approximately RMB4.95 billion for working capital purposes.

The RMB Bond Offering include covenants that, in July 2011.

Anyuan Coal Mine, located in Ejin Horo Banner of Ordos City, is an underground coal mine. Anyuan Coal Mine covers an area of 9.26 km² and with coal reserves of 40.51 million tonnes and recoverable coal reserves of 20.47 million tonnes. Its designed annual production capacity is 600,000 tonnes of raw coal. The Department of Coal Industry of Inner Mongolia Autonomous Region has approved the increase in annual production capacityevent of the mineCompany’s default in payments, limit our ability to, 1.2among 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 US$ Bond Offering

In May 2012, we completed the issuance of US$1 billion aggregate principal amount of guaranteed notes through Yancoal International Resources Development Co., Limited, our second-tier wholly owned subsidiary in a private placement exempt from registration under the Securities Act, comprising one tranche of US$450 million tonnes. Currently, its expansionnotes due 2017 bearing interest of 4.461% per year and acceptance inspection proceduresone tranche of US$550 million notes due 2022 bearing interest of 5.730% per year (together, the “US$ Bond Offering”). The notes are in progress.

Bidding for Mining Rights of Zhuan Longwan Coal Mine Field

Pursuant to approval granted atguaranteed by our Company. The notes were listed on the nineteenth meetingHKSE on May 17, 2012. As of the fourth sessiondate of this annual report, we have utilized all of the Board held on January 28, 2011, Ordos Neng Hua successfully bidnet proceeds of approximately US$991.2 million for the mining rights of Zhuan Longwan coal mine field of Dongsheng Coal Field in Inner Mongolia Autonomous Region for a consideration of RMB7,800 million. Ordos Neng Hua paid the first installment of RMB3,120 million (representing 40%working capital purposes.

The indenture of the total consideration) on February 25, 2011. Ordos Neng Hua is obligatedUS$ Bond Offering includes covenants that limit our ability to, payamong 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 second installment of RMB2,340 million (representing 30%indenture), we will be required to offer to purchase the notes at a purchase price equal to 101% of the total consideration) in full by November 30, 2011principal amount , plus accrued and the third installment of RMB2,340 million (representing 30% of the total consideration) in full by November 30, 2012.

Pursuant to the Announcement in relation to Public Auction of the Mining Rights of Zhuan Longwan Coal Mine Field of Dongsheng Coal Field issued by the Department of Land and Resources of the Inner Mongolia Autonomous Region, the coal mining field of Zhuan Longwan coal mine covers an area of 43.50 km² and with reserves of 548 million tonnes. Extra large mines with a designed production capacity of 5 million tonnes per year can be constructed in the coal mine field.

The Department of Land and Resources of the Inner Mongolia Autonomous Region was entrusted by the Ministry of Land and Resources of the PRC to conduct the auction. At present, Ordos Neng Hua is undertaking the application procedure for the mining rights of Zhuan Longwan coal mine zone. The bidding was approved at the 2010 annual general meeting of the Company held on May 20, 2011.

Acquisition of Ashton Coal Mine Joint Venture in Australia

Pursuant to approval granted at the seventeenth meeting of the fourth session of the Board held on December 30, 2010, White Mining (NSW) Pty Limited, a wholly-owned subsidiary of Yancoal Australia, started the process of acquiring 30% of the equity interests in the Ashton Coal Mine Joint Venture originally held by Austral-Asia Coal Holdings Pty Ltd, a wholly-owned subsidiary of Singapore IMC Group, for a consideration of US$250 million. Upon the completion of this acquisition in May 2011, our ownership in the Ashton Coal Mine Joint Venture increased from 60% to 90%.

Ashton Coal Mine, located in Hunter Valley, New South Wales, Australia, consists of an open-cut coal mine and an underground coal mine, with annual designed production capacity of 5.20 million tonnes of raw coal. According to an assessment based on the Australian JORC Code, the aggregate coal reserves of Ashton Coal Mine amounted to 96.50 million tonnes. The types of coal are semi-soft coking coal and premium thermal coal with characteristics of low ash and high calorific value.

Disposal of equity interests in Minerva Coal Mine Joint Venture in Australia

Pursuant to approval granted at the seventeenth meeting of the fourth session of the Board held on December 30, 2010, Felix, a wholly-owned subsidiary of Yancoal Australia, disposed its 51% equity interests in the Minerva Coal Mine Joint Venture to Sojitz Coal Resources Pty Ltd, a wholly-owned subsidiary of Sojitz Corporation in Australia, for a consideration of A$201 million. Upon completion of the disposal, we have no interest in the Minerva Mine Coal Joint Venture.

Minerva Coal Mine, located in Bowen Basin, Queensland, is an open-cut coal mine, with annual production capacity of 2.80 million tonnes of raw coal. According to an assessment based on the Australia JORC Code, the aggregate coal resources of Minerva Coal Mine amounted to 76 million tones, with reserves of 23.6 million tonnes. The type of coal is thermal coal.

Establishment of Yankuang Group Finance Company Limited

Pursuant to approval granted at the thirteenth meeting of the third session of the Board held on August 3, 2007, we established a joint venture company, Yankuang Group Finance Company Limited (“Yankuang Finance”) on September 13, 2010, jointly with Yankuang Group and China Credit Trust Co., Ltd. The registered capital of Yankuang Finance is RMB500.0 million, of which we have contributed cash of RMB125.0 million representing 25% of the equityunpaid interest. Yankuang Finance commenced operation on November 1, 2010, with its principal business including making the bill acceptance and discount for the members and accepting deposits from and lending funds to members.

At the fourteenth meeting of the fourth session of the Board held on April 23, 2010, we entered into the Financial Services Agreement with Yankuang Finance on January 7, 2011. Under the financial service agreement, Yankuang Finance agreed to provide deposit service, loan service and miscellaneous financial services to us with transaction caps for 2010 and 2011. Pursuant to the agreement, the fees charged by Yankuang Finance for the financial services to be provided to us shall be in accordance with the relevant benchmark rates determined by the PBOC or the CBRC (if any), which shall not exceed those charged by the major commercial banks in the PRC for the same kind of financial services provided to us. The agreement also provided risk control measures on funds for both parties to secure the safety of funds.

Establishment of Shaanxi Future Energy Chemical Corp. Ltd

Pursuant to approval granted at the seventeenth meeting of the fourth session of the Board held on December 30, 2010, we established Shaanxi Future Energy Chemical Corp. Ltd (“Future Energy”) jointly with Yankuang Group and Shaanxi Yanchang Petroleum (Group) Corp. Ltd on February 25, 2011. The registered capital of Future Energy is RMB5,400 million, of which we will contribute RMB1,350 million in cash, representing an equity interest of 25%. The registered capital will be paid in full in three installments by August 2012. Future Energy will mainly engage in investment and participation in the coal liquefaction project in Shaanxi Province as well as the preparation for development of ancillary coal mines.

Increasing Investments in Ordos Neng Hua

Pursuant to approval granted at the eighteenth meeting of the fourth session of the Board held on January 17, 2011, we increased our capital investment in Ordos Neng Hua by RMB2,600 million with our own funds. On January 24, 2011, the registered capital of Ordos Neng Hua increased from RMB500 million to RMB3,100 million.

Increasing Investments in Yancoal Australia

Pursuant to approval granted at the seventeenth meeting of the fourth session of the Board held on December 30, 2010, we increased the capital investment in Yancoal Australia by A$909 million (approximately RMB5,900 million) with our own funds. Upon completion of the capital injection, our capital investment in Yancoal Australia increased from A$64 million to A$973 million. The capital increase has been approved by the Foreign Investment Review Board of Australia and the NDRC and the procedures for remitting the capital increase are currently in progress.

Capital Expenditures

Our principal source of cash in 20102012 was cash generated from our operating activities, the RMB Bond Offering, the US$ Bond Offering and bank borrowings. Our capital expenditures in 20102012 were primarily for operational capital expenditures, purchase of properties, machinery and equipment, payment of dividends, the acquisitionand consideration paid for our acquisitions of 51%assets and equity interests in Haosheng Company, the acquisition of Anyuan Coal Mine and investment in Yankuang Finance.interests.

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

Our planned capital expenditures for 2011 is2013 are approximately RMB5,103.1RMB12,004.6 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 2010.

The Company isWe are one of the primary coal producers in China and Australia, with rapidly growing coal mining operations in Australia.operations. We primarily engage in the mining, preparationwashing, processing and saledistribution of coal as well as thethrough railway transportation of coal. In recent years, we have expanded our operations to include the productiontransportation. We offer a wide variety of coal chemicals and generation of electricity and heat.

The Company directly owns and operates six coal mines: Nantun, Xinglongzhuang, Baodian, Dongtan, Jining II and Jining III (collectively, the “Six Coal Mines”), which produce a substantial majority of our total coal output. As of December 31, 2010, the Six Coal Mines had an estimated collective in-place proven and probable reserve base of approximately 1,797.3 million tonnes.

Through our subsidiaries, we also hold equity interests in a number of coal mines in China and Australia. Yancoal Australia operates Austar Coal Mine, Yarrabee Coal Mine, Minerva Coal Mine, Ashton Coal Mine and Moolarben Coal Mine, which collectively hold approximately 547.3 million tonnes of recoverable coal reserves. Shanxi Nenghua operates Tianchi Coal Mine, which holds approximately 26.7 million tonnes of recoverable reserves, and Heze Nenghua operates Zhaolou Coal Mine, which holds approximately 105.0 million tonnes of recoverable reserves. Since December 1, 2010, Ordos Neng Hua operates Anyuan Coal Mine, which holds approximately 20.5 million tonnes of recoverable coal reserves.

Our main products in our coal business areincluding thermal coal, semi-hard coking coal, semi-soft coking coal, PCI coal and ¹/3 coking other mixed coal products which are sold to power plants, metallurgical mills, chemical manufacturers, construction material manufacturers and fuel trading companies in Eastern China and other countries, such asincluding 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. We also commenced our potash exploration 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 21 coal mines across regions with abundant coal resources, including Shandong and Shanxi Provinces and the Inner Mongolia Autonomous Region in China, as well as Queensland, New South Wales and Western Australia in Australia. In addition, as of December 31, 2012, we had nine developmental-stage projects in China and Australia and a 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 48.8% of our total coal output in 2012. As of December 31, 2012, these six mines had approximately 1,729.43 million tonnes of in-place proven and probable reserves. 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 through our subsidiaries. Shanxi Nenghua operates Tianchi Coal Mine, which holds approximately 25.7 million tonnes of recoverable reserves; Heze Nenghua operates Zhaolou Coal Mine, which holds approximately 102.2 million tonnes of recoverable reserves; and Ordos Neng Hua operates Anyuan Coal Mine and Wenyu Coal Mine. In addition, we had four projects under development in China as of December 31, 2012.

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

We conduct our operations in Australia primarily through our subsidiaries, Yancoal Australia and Yancoal International (Holding). Yancoal Australia currently operates six coal mines in Australia including Austar, Yarrabee, Ashton, Moolarben, Gloucester and Donaldson which collectively held approximately 703.7 million tonnes of JORC-compliant reserves as of December 31, 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 a number of exploration tenements in Australia with potential for developments as of December 31, 2012.

The map below shows the approximate locations of our coal mines and projects in Australia.

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 and in June 2012 when we completed the merger with Gloucester. Our products consist principallyprimarily of thermal coal, semi-soft coking coal, and semi-hard coking coal, PCI coal and other mixed coal products which are suitable for power generation and metallurgical production, respectively.production. The following table sets forth the specifications and principal applications of our coal products.