Full-year production at South32’s Illawarra Metallurgical Coal operations is likely to drop sharply after operations at one of the site’s two mines remained suspended for an extended period.
The diversified miner now expects to produce 4.5 million tonnes of coal from Illawarra, where operations at the Appin mine have been repeatedly affected by a build-up of methane gas over the last 18 months.
The facility produced 7.07 million tonnes of coal last year.
Operations were partially restarted in October with the resumption of one longwall at the Appin colliery.
“We expect to return the Appin colliery to its prior two longwall configuration in the December 2018 quarter, after which we intend to ramp-up Illawarra Metallurgical Coal production safely and sustainably towards historical rates of more than eight million tonnes per annum,” chief executive Graham Kerr said in an investor briefing.
The operating unit cost at Illawarra is expected to jump to $US130 a tonne this financial year, compared to $US80 a tonne in FY17.
South32 also lowered its sustaining capital expenditure to $US470 million for the current year, down from an earlier target of $US500 million.
About two thirds of the reduction related to lower planned expenditure at Illawarra, due to underground development at the Appin mine being deferred.
The miner reaffirmed its 2017/18 production guidance for all its other operations.
South32 shares gained 12 cents, or 3.7 per cent, to $3.38 in a weaker market.