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South32: metallurgical coal production up but thermal coal down

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World Coal,

South32 has reported a small rise in Illawarra metallurgical coal production for the September 2015 quarter – sale production increased 4% to 2.49 million t. The company reported this rise to be a broad-based improvement in productivity that had offset the impact of industrial action at Dendrobium, which has since been resolved.

South Africa thermal coal saleable production came in at 8.29 million t – declining 3% from the same quarter last year. The mining group reported that this was a reflection of planned maintenance and the sequencing of activity at the Wolvekrans Middelburg complex. South32 anticipates that coal production in FY16 will decline by 7% to 31.95 million t (16.65 million t exports, 15.3 million t domestic), as planned.

The company has indicated FY16 production guidance of 8.9 million t (metallurgical coal 7.2 milliion t and thermal coal 1.7 million t) is unchanged.

There are three longwall moves scheduled for the remainder of FY16; this includes one in December quarter and two in the second part of FY16.

South32’s Appin Area 9 project is reported to be 90% complete and ahead of schedule with commissioning projected to commence in the third quarter of FY16. The company indicated that the project, which sustains Illawarra metallurgical coal production capacity, is over 20% below the original budget of US$845 million.

The mining group’s net debt reduced by US$206 million to US$196 million during the September 2015 quarter.

The company is aiming to reduce costs by at least US$350 million by the end of FY18 and expects to provide a 25% reduction in group and unallocated costs in FY16.

Edited from press release by Harleigh Hobbs

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