The geological characteristics of the Company’s reserves largely determine the coal mining method that Yanzhou Coal employs. Yanzhou Coal uses two primarymethods to mine coal: underground mining and open-pit mining.

Underground mining operations in China

Yanzhou Coal’s underground mining operations in China consist of four main steps: tunnelling, coal extraction, transportation and coal preparation.

The tunnelling process is necessary for the construction of underground roadways, which are required for the installation of miningequipment. The Company conducts a majority of our tunnelling using high-powered headers and use this method whenever geological conditionspermit.

The extraction process is undertaken by a standardized and fully mechanized longwall operation, which includes shearers thatwork in conjunction with conveyers to cut and transport the coal away from the longwall work face.

The shaft hoist system equipment that the Company uses at most of our mines was imported. Coal is transported from the coal shaft either to asurface storage or directly to a coal preparation plant. In addition to the main coal shaft, our mines also have a service shaft andsupplemental roadways and rail systems within the mines that provide a means of underground transportation for workers andequipment.

After raw coal is carried to the surface, it undergoes a mechanized selection process that separates coal from other mineralmaterials. A small portion of such selected coal is directly sold to customers as raw coal, and the remainder is transported to our coalpreparation plants for further processing and classification to meet different requirements from our customers.

Ordos NengHua employs the same mining operations in its Coal Mines except for the use of conveyers to transport the coalfrom the inclined shaft instead of shaft in Coal Mines in the Company's HQs area.

Australian open-cut mining operations

The open-pit mining process in Australia involves the removal of topsoil and overburden (earth and rock covering the coal),tunnelling and extraction of coal from coal seams. The extracted coal undergoes selection and is then transported to treatment facilitiesfor preparation. After coal is removed, we restore the affected land by replacing the overburden and topsoil.

Australian mining operations

With respect to underground mines in Yancoal Australia mining operations, the Company conducts continuous tunnelling, longwalloperations and coal extraction by the fully mechanized caving method. Open-cut mining is used when coal is found relatively close tothe surface, which is the same as our domestic open-cut mining operations.