South32 has lowered its annual coal output forecast, citing a double whammy from a workers’ strike over pay and an extended longwall move at its Appin mine in the flagship Illawarra metallurgical coal project in New South Wales.
Staff at Appin had initially threatened a partial strike for a week in August as they negotiated higher pay at a time of rising prices for coal. New industrial agreements have now been agreed to at Appin.
As a result, the company’s output of the coal product, used to make steel, fell to 1.3 million tonnes in the three months to September, compared with 1.6mt a year earlier.
South32 expects to produce 7mt in total coal production for the year to June 2023, compared with its prior forecast of 7.4mt.
The company left all its other production guidance for fiscal 2023 unchanged.
On the aluminium front, South32 said production increased by 9 per cent in the September 2022 quarter, as its Southern African smelters worked to maximum technical capacity and the Brazil aluminium smelter was successfully restarted.
Planned calciner maintenance at Worsley Alumina in Western Australia and Brazil Alumina was also successfully achieved.
South32 chief executive officer Graham Kerr said the aluminium result was a highlight of the reporting period, matched by an 11 per cent increase in copper equivalent production at the Sierra Gorda copper mine in Chile, and a six per cent increase in manganese ore production at GEMCO in Groote Eylandt.
“We maintain a strong outlook with 13 per cent production growth expected in FY23,” he said.
“During the quarter, we announced that we would not proceed with an investment in the Dendrobium Next Domain project at Iflawarra Metallurgical Coal, increasing our capacity to direct capital towards other opportunities, including our world class development options in North America.
“We returned $US50 million to shareholders via our on-market share buy-back and finished the quarter with a net cash position of $US446m, with a further $US784m returned in October 2022 via fully-franked ordinary and special dividends.
“Our strong balance sheet and disciplined approach to capital management enables us to continue to make returns to shareholders while investing in our portfolio of growth options focused on metals critical to a low-carbon future.”