Coal production at BHP Billiton spin-off company South32's 100%-owned Illawarra Coal subsidiary in eastern Australia increased to a record 2.49 million mt over July-September, despite some industrial action at the business unit during the period, said South32 in a report Thursday.
Saleable production at Illawarra Coal in the September-ended quarter rose 4% year on year to 2.39 million mt, "as a broad-based improvement in productivity more than offset the impact of industrial action at Dendrobium [mine] which has since been resolved," said the company report.
The industrial dispute was sparked in August when 200 unionized workers at the Dendrobium mine held a seven-day strike and engaged in bans on using certain mining equipment in a dispute over company plans to increase the number of contract workers at the mine site.
Two other mines within the Illawarra Coal business unit -- Appin and West Cliff -- were not affected by the industrial action.
Metallurgical coal comprised 2.08 million mt of the Illawarra Coal business unit's September-ended quarter production, up 13% on the July-September 2014 quarter period of 1.84 million mt.
Illawarra Coal also produced 406,000 mt of thermal coal in the September-ended quarter, down 18% from 497,000 mt for the year-ago period, said the report.
The coal producer ships its coal exports through Port Waratah Coal terminal in New South Wales.
ILLAWARRA GUIDANCE
Production guidance for the fiscal year ending June 30, 2016 for Illawarra Coal which has three mines in New South Wales is 8.9 million mt, comprising 7.2 million mt of metallurgical coal and 1.7 million mt of thermal coal, said South32.
Three longwall moves are planned for at Illawarra's underground coal mines over the remaining nine months of the 2016 financial year, said the company in its operating report.
A $845 million project to sustain Illawarra Coal's production capacity for metallurgical coal -- Appin Area 9 -- is presently 90% complete and is running ahead of engineering schedules with production at the project is set to begin in the January-March 2016 quarter, said the company. SOUTH AFRICA UNIT
At South32's South African business unit that produces thermal coal, South Africa Energy Coal, thermal coal production for the September-ended quarter period was 8.3 million mt, up 3% year on year, said the company report.
Export sales were 4.1 million mt over July-September, and 11% higher than 3.7 million mt for the year-ago period, and domestic sales for the business unit were 4% lower year on year at 4.2 million mt, said South32.
Some maintenance took place in the recent quarter period at South32's Wolvekrans Middleburg mining complex, and the company's guidance for its South African thermal coal production for fiscal year 2016 is 31.9 million mt. This represents a decline of 7% on year, and sales are broadly split between the domestic and export markets.
South32 said in its operating report that company's net debt declined to $196 million at the end of September, from $402 million at the end of September 2014, including a $52 million reduction in its finance leases partly due to the depreciation of the Australian dollar currency.
The company is seeking to reduce its costs by at least $350 million by the end of June 2018, and added that it is "finalizing an in-depth review of all functional support which is expected to deliver a 25% reduction in 2016 financial year group and unallocated costs of $130 million."
