South32's production at its Australian Illawarra Metallurgical Coal operation surged in the July-September quarter with its metallurgical coal volumes more than tripling, the company said on Wednesday in its quarterly activity report.
"Illawarra Metallurgical Coal enjoyed a strong start to the year as an improvement in longwall productivity underpinned an annualized production rate of 7.6 million mt in the quarter," South32's chief executive officer Graham Kerr said. IMC's total coal production stood at 1.91 million mt for the period, which is up 133% year on year from 819,000 mt and 54% higher than 1.24 million mt in the April-June quarter, the company said.
Metallurgical coal production surged 207% year on year from 494,000 mt to 1.52 million mt, showing a 39% increase from 1.09 million mt in the June quarter, it said.
Production was suspended in June last year at the Appin colliery due to elevated gas levels. It was completely offline until October last year when it was brought back online with one of its two longwalls in operation. The Appin colliery accounted for 49% of total IMC production in the past fiscal and typically contributes around 60%.
"Notwithstanding the improvement in longwall productivity at Appin, an uplift in development rates is required to sustain the operation of two longwalls in parallel from H2 FY20 [January-June 2020]," the company said. RBC Capital Markets analyst Paul Hissey said the metallurgical coal output of 1.52 million mt beat RBC's expectation of 1.08 million mt.
South32 has maintained its fiscal 2017-2018 (July-June) production guidance for the business at 6.1 million mt. Of the total, 4.9 million mt is expected to be metallurgical coal with the remained being thermal coal. The guidance compares to actual production of 4.24 million mt in the past fiscal year, which metallurgical coal production contributed 3.17 million mt to.
