Australian-listed miner South32 Thursday cut fiscal 2017-18 (July-June) production guidance for its Illawarra Metallurgical Coal business by 9% as it continues to grapple with issues at its Appin mine.
"Given a greater focus on coal clearance and ground rehabilitation activities at the Appin colliery... and with two longwall moves planned before the end of the financial year, we now expect Illawarra Metallurgical Coal to produce 4.1 million mt of salable coal in FY18 versus prior guidance of 4.5 million mt," South32 said in a statement.
The earlier guidance was already lower than the 7.07 million mt of coal Illawarra produced in the previous fiscal year.
The guidance was reduced after the suspension of the Appin coal mine due to elevated gas levels in late June last year, which saw it taken completely offline until October, when one longwall was brought back online.
Appin accounted for 49% of Illawarra's production in fiscal 2016-17, and typically contributes around 60%.
South32 wholly owns the Illawarra operations in the Australian state of New South Wales, which produces all of its metallurgical coal output.
Illawarra produced 794,000 mt of met coal over January-March, down 45% year on year and up 1% from the previous quarter, South32 said in its latest quarterly results.
Met coal sales fell 55% year on year to 760,000 mt in the period, and were up 16% from the December quarter, the company said.
Illawarra's total coal production, including thermal coal, stood at 1.15 million mt in the March quarter, down 29% year on year and up 10% from the December quarter.
As a result of the issues at Appin, South32 is expecting Illawarra's operating costs to remain elevated in fiscal 2017-18 at $150/mt, against prior guidance of $135/mt, before benefiting from increased production in the next fiscal year, the company said.
South32 said it was expecting "more productive longwall and development performance" to underpin a recovery in production to more than 6 million mt in fiscal 2018-19 and a return to historical rates of production above 8 million mt in January-June 2020.
Illawarra operates in the southern coalfields of New South Wales and exports its output via Port Kembla Coal Terminal.
