South32 shares fell 3.4% yesterday after it became clear the company’s NSW South Coast coal hard coking coal mining operations would be hit by problems at its Appin mine.
The shares close day at $2.71 after directors told the ASX that its Appin coal mine in NSW will remain closed for an “extended” period due to a safety review.
Work at the mine was suspended on June 30 because of concerns about a build up of methane, and the company today said a review is needed to ensure the operation’s safety and reliability.
"Given the scope of this review, an extended outage is now anticipated before production at Illawarra Metallurgical Coal can be restored to historic levels," South32 said.
South 32 said operations are continuing at the Illawarra Metallurgical Coal unit’s other mine, Dendrobium.
South32 said in its June 30 statement that it had withdrawn its workforce at the Appin mine as a precautionary measure and notified the NSW department of planning and environment authorities.
While the company said it had not breached gas limits in the mine, the regulator had issued a prohibition notice.
The regulator also had expressed broader concern about recent events at the Illawarra Metallurgical Coal operation – when gas limits had been exceeded – as well as its operating practices.
Production at the Appin mine was previously disrupted in September 2016 due to roofing problems at one of the longwalls, and again in November and May when methane gas levels forced temporary suspensions of operations.
There was a massive explosion in July, 1979 that saw the deaths of 14 miners.
The company’s 2016-17 operations report is due for release on July 20 and should contain more details on the impact of the closure on coal production for 2016-17 and 2017-18.
