South32’s Illawarra Metallurgical Coal (IMC) division faced a challenging second half of 2023, with pre-tax earnings plummeting 67% year-on-year due to an extended outage at its Dendrobium mine and longwall moves impacting production.
Key takeaways:
- Pre-tax earnings: $111.0 million (H2 2023), down from $340.0 million (H2 2022).
- Saleable production: 2.05 million tonnes (H2 2023), down 39% compared to H2 2022.
- Revenue: $520.0 million (H2 2023), down from $801.0 million (H2 2022).
- Production guidance for FY 2024 remains at 5.0 million tonnes, with volumes expected to recover in the second half.
- Operating costs for IMC’s mines increased 35% to $167.00/t due to the longwall moves.
- Realised prices: $276.00/t for met coal and $101.00/t for thermal coal (H2 2023).
- After-tax profit for the group: $53.0 million (H2 2023), down 92% from $685.0 million (H2 2022).
Longwall moves and production:
- Two longwall moves, including an extended outage at Dendrobium, led to the production decline.
- These moves cost IMC $267.0 million in lost earnings, partially offset by lower costs elsewhere.
- South32 maintains its FY 2024 production guidance of 5.0 million tonnes, expecting a second-half recovery despite two more planned longwall moves.
Costs and prices:
- Operating costs increased due to the longwall moves, leading to a revised FY 2024 cost guidance of $150.00/t.
- Realized prices for met coal remained stable, while thermal coal prices decreased compared to H2 2022.
Outlook:
- Despite the challenges in H2 2023, South32 is confident in its FY 2024 guidance and expects production to recover in the second half.
- The company also finalized a new agreement with mining supervisors, ending an industrial dispute.
Overall, South32’s coal unit faced a difficult half-year due to production disruptions, but the company remains optimistic about its full-year outlook and production recovery in the second half.
