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The company revealed it intends to make savings to reduce it sustaining capital expenditure by 10% in FY20 and 18% in FY21.
Sustaining capital expenditure in South32's Illawarra Metallurgical Coal division increased US$49 million in H1 FY20 to $105 million as it continued to invest in infrastructure improvements and increased underground development rates at Appin to support a planned return to a three longwall configuration.
The company had planned to increase its expenditure from $85 million to $100 million for underground development to reflect the higher rate of spend in H1 FY20 of $51 million.
In its last half yearly report Illawarra Coal predicted its total FY20 sustaining capital expenditure guidance would be unchanged at $185 million.
If this is to be revised downwards by 10% that would mean the yearly spend would need to come to $166.5 million.
The company would only have $44.1 million for use at Appin instead of $49 million.
The company also invested $7 million in H1 FY20 to progress studies for its Dendrobium Next Domain project.
The project has the potential to extend the mine life of Dendrobium to approximately FY36, with a final investment decision anticipated in H2 FY21.
Major capital expenditure of $21 million was expected in FY20 as the company progressed study and permitting work and invest in critical path activities, however, that figure is now in doubt.
