South32 reported a 9% year-on-year coal production increase at its Illawarra Metallurgical Coal (IMC) complex in New South Wales with the return to a three-longwall configuration, which will deliver greater production efficiencies. IMC’s saleable production increased 639,000 metric tons (mt) to 7.6 million mt during fiscal year 2021. The company reported that the three longwalls were more efficient than the dual longwalls at the Appin mine and they also reported they sold more low-margin washed coal.
While this product attracts considerable grade and product-type discounts to the API5 (5,500 Kcal) index for energy coal sales, the incremental volume benefits operating costs by eliminating coal waste emplacement. The company also said its FY2021 operating unit costs are expected to be moderately higher than the its guidance $83/mt as a result of lower than planned total coal volumes.
Metallurgical coal production decreased 15% during the June 2021 quarter as the company encountered challenging geology and completed a planned longwall move at the Appin mine. Three more longwall moves are scheduled for FY2022.
In related news, the company reported a pre-tax impairment charge of $728 million, reflecting the increased approval uncertainty created by the NSW Independent Planning Commission’s decision to refuse the application for the Dendrobium Next Domain life extension project (DND Project) and the resulting impact on the economics of the broader IMC complex.