UNDERGROUND

Appin FY22 longwall moves to bring 16% spike in production costs

The company's total coal production came to 7.6 million tonnes for FY21.

 The company’s total coal production came to 7.6 million tonnes for FY21.

The company’s total coal production came to 7.6 million tonnes for FY21.

However, fewer planned sales of low-margin coal wash material, higher price-linked royalties, incremental maintenance activity and longwall moves are expected to make that blow out 16% to $101/t in FY22.

The company's total coal production came to 7.6 million tonnes for FY21.

South32's total metallurgical coal volumes are expected to increase 2% in FY22 to 6.3Mt, despite the extra longwall move being scheduled at Appin in that period on top of the two already planned.

The company is expected to produce 7.5Mt of coal in FY23 with metallurgical coal volumes increasing a further 5% to 6.6Mt.

Total saleable coal production is expected to decline 5% to 7.3Mt in FY22 with fewer planned sales of low-margin coal wash material.

Safe and reliable capital expenditure decreased US$30 million in FY21 to US$151 million as South32's rate of spend on underground development and the investment made to support a return to a three longwall configuration returned to historical levels.

"Safe and reliable capital expenditure is expected to increase by US$64 million in FY22 to US$215 million as we invest in additional coal clearance and ventilation infrastructure to support the transition to a single longwall mine plan at our Appin mine from FY25," the company said.

"Improvement and life extension capital expenditure increased by US$19M to US$37M as we incurred pre-commitment spend on studies and critical path items for the DND [Dendrobium Next Domain] project."

During the third quarter of FY21 the NSW Independent Planning Commission refused the company's application for the DND project and it scaled back its activity.

"We expect to provide a further update before the end of the calendar year, with improvement and life extension capital expenditure expected to decrease to US$15 million in FY22 as we slow our activity on the project," South32 said.

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