The company is cutting operating costs to mitigate the impact of lower prices. In addition to a reduction in staff, South32 will also reorganize the mining complex, which is composed of three mines in New South Wales, into two operations and remove the layers of management and functional support. The company also plans to increase the longwall utilization at the Appin and Dendrobium mines and complete the Appin Area 9 project, which is anticipated to be done in March and will increase production to 9.5 million metric tons.
South32 Chief Executive Officer Graham Kerr said, “The continued optimization of our high quality operations will strengthen underlying cash flow in what remains a challenging environment.”
He added, “The refinement of our regional operating model allows us to remove additional layers of management while further aggregating functional support. As a result, we expect another significant increase in labor productivity and a corresponding reduction in cash costs.”
In an 18-month period ending in December, the Illawarra mining operation reduced its staff by 100 and decreased operating unit costs, including sustaining capital expenditure and underground development, by 34%. Operating unit costs, including sustaining capital expenditure and underground development, will be reduced by 37% in fiscal year 2017.
South32 is a spinoff of BHP Billiton and South32 has operations in Australia, southern Africa and South America.