As expected miner South32 has confirmed the damage done to its December (and 2017-18) coal production by gas problems its Appin mine, south of Sydney.
The company yesterday told the ASX in its second-quarter production report that metallurgical coal output dropped 43% due to the problems at its Appin mine.
Production of high quality steelmaking coal fell to 788,000 tonnes in the December quarter from 1.39 million tonnes a year earlier.
But was still up 60% on the September quarter following a partial restart of the Appin mine in August.
The Appin operations account for about 60% of South32’s overall production and methane gas concentrations at Appin above unsafe levels have been a problem for more than a year, leading to production cuts.
On top of that, the longwall miner passed through a fault zone at the Dendrobium mine nearby, meaning production was reduced in the quarter.
As well, output of energy (thermal) coal production fell 11% in the half-year to 14 million tonnes, thanks to lower production in South Africa and domestic sales also down
Metallurgical coal production for the December half year was down 55% on the prior half at 1.28 million tonnes, largely due to the outage at Appin.
But there was better news for shareholders from South32’s improved December quarter manganese performance, which has seen the company lift full year forecasts.
Manganese ore output rose 21.8% in the quarter from a year ago. Zinc production was down 62.3% in the period, while nickel output increased 12.2%.
South32 raised its full-year output forecast for its South African Manganese operations by 8% due to strong market demand as a result.
CEO Graham Kerr said in the quarterly report that strong demand and good performance at the South African manganese operations prompted raised production forecast.
The strong December quarter’s performance saw total first-half manganese production, jump 16% 2,830 million tonnes. Also helping was the improved performance of the company’s Australian manganese operations.
"A record quarter of performance and supportive market dynamics have allowed us to increase FY18 production guidance at South Africa Manganese by eight per cent, while production guidance for all other operations remains unchanged," Mr Kerr said.
The company repeated its previous warnings that US dollar weakness and higher commodity prices were impacting its costs, particularly for its smelting and refining operations.
Updated cost guidance will be given when the company reports its half-year results.
The company’s share of alumina production for the half was 2.54 million tonnes, down 3% on the prior corresponding period, while aluminium production was up one per cent at 495,000 tonnes.
S32 shares fell 1.5% to $3.92.
