South32 fell 2% short of its coking coal production target of 4.4 million tonnes at its Illawarra coal operations in the 2023-24 fiscal year, ending 30 June. The company is on track to complete the sale of its Illawarra operations in New South Wales by the end of September, marking its exit from coal to focus on non-ferrous metals. The sale will leave the new owners, Golden Energy and Resources and M Resources, with reduced maintenance burdens into 2025 after South32 completed three longwall moves and started a fourth at the Appin and Dendrobium mines.
Total coal production for South32 dropped by 24% in 2023-24 compared to the previous year due to maintenance activities. Although production increased in the fourth quarter and the latter half of the fiscal year, it was still down by 15% compared to April-June 2023. The company expects its costs for 2023-24 to be around $150 per tonne, in line with revised guidance from February, up from the initial $140 per tonne.
For January-June, South32 received an average price of $275 per tonne for its metallurgical coal and $113 per tonne for its thermal coal, compared to $276 per tonne and $101 per tonne, respectively, in the previous half-year. Operating margins were $17 per tonne for thermal coal and $152 per tonne for metallurgical coal in 2022-23, with operating costs at $127 per tonne. The company will release its 2023-24 results on 29 August.
Market assessments by Argus on 19 July placed the premium hard coking coal price at $229 per tonne fob Australia, down from $334.50 per tonne on 19 January, and close to $235.50 per tonne on 19 July 2023. The high-grade 6,000 kcal/kg NAR thermal coal price was assessed at $134.87 per tonne fob Newcastle, up from $128.09 per tonne on 19 January and slightly down from $129.18 per tonne on 19 January 2023.
In 2022, South32 abandoned a $700 million expansion plan at Dendrobium after a dispute with New South Wales’ water agency over potential impacts on water quality. Dendrobium, which supplies coking coal to the Whyalla steelworks in South Australia and exports through Port Kembla, is expected to close in 2028.
