PERTH (miningweekly.com) – Diversified miner South32 on Tuesday announced that it would not pursue the near $700-million Dendrobium Next Domain (DND) project at its Illawarra metallurgical coal operations, in New South Wales.

The miner told shareholders that while recently completed study work and analysis of alternatives had demonstrated the potential to meaningfully extend the life of the Dendrobium mine, the expected returns from investment were not sufficient to support an investment relative to alternatives considered for the complex.

“Our decision today follows an extensive analysis of the alternatives for Dendrobium together with the anticipated returns from the up-front capital investment which would be required,” said South32 CEO Graham Kerr.

“Over the past 18 months we have made significant progress actively reshaping our portfolio and this decision increases our capacity to direct capital towards other opportunities. This includes our world class development options in North America that have the potential to underpin a significant growth profile to produce metals critical to a low carbon future, servicing strategically important supply chains.”

Instead, South32 will now focus on continuing to optimise Dendrobium and the broader Illawarra metallurgical coal complex to extend the mine life within approved domains. This work includes existing plans for Appin, where the miner has been investing to support its transition to a single longwall from 2025, bringing further operating and capital efficiencies.

Looking forward, South32’s investments at Appin include planned work to install additional ventilation capacity to enable mining in the current Area 7 until at least 20391. Although this near $260-million investment remains subject to board approval, it has been incorporated in the company’s previously announced 2023 and 2024 capital expenditure guidance.

Average yearly saleable production of 5.5-million tonnes, with operating unit costs of between $105/t and $120/t is expected from the current configuration beyond 2023, with further improvements to be targeted to sustainably bring unit costs to the bottom of the range.