JOHANNESBURG (miningweekly.com) – Diversified miner South32 has given a production guidance for its Illawarra metallurgical coal operation, where the Appin colliery was suspended for about four months this year owing to concerns about a potential gas breach.

The New South Wales-based Illawarra operation, which comprises the Appin and Dendrobium mines, is expected to produce 4.5-million tonnes in the 2018 financial year, down from 7.1-million tonnes in the 2017 financial year, ASX-, LSE- and JSE-listed South32 reported on Tuesday.

Operations at Appin were suspended at the end of June and, by October, the New South Wales regulator allowed South32 to restart one longwall at the colliery. South32 reported that it expected Appin to return to its prior two longwall configuration in the December 2018 quarter, after which Illawarra’s production will return to historical rates of more than eight-million tonnes a year.

Operating unit costs of the Illawarra operation are expected to be significantly higher in the 2018 financial year, with South32 having provided a guidance of $130/t, compared with $80/t in the 2017 financial year and $61/t in the 2016 financial year.

The mining group also lowered its sustaining capital expenditure (capex) guidance for the 2018 financial year to $470-million, from an earlier forecast of $500-million, mainly owing to the deferral of underground development at Appin. Sustaining capex for Illawarra is forecast to be $120-million in the current financial year, compared with $150-million previously forecast.

Meanwhile, South32 also reported that it was studying the potential to unlock high-quality coal resources at Dendrobium. It is assessing Area 5 and Area 6 and will complete a prefeasibility study in March next year.

Environmental and community impact assessments have already started.