South32 warns on Illawarra Metallurgical Coal production

Diversified miner South32 said production at its Illawarra Metallurgical Coal operation in Australia will be affected by the temporary suspension of its Appin Area 9 longwall and lower rates of production at the Appin Area 7 longwall.

The company -- whose shares were up 4.03% to 161.25p at 10:35 GMT -- said a saleable production loss of about 500kt was anticipated, and would translate directly to sales given low inventory levels.

Appin mine received a prohibition notice from the New South Wales Department of Industry, Resources and Energy last week, having reported elevated gas concentrations at Appin Area 7.

Longwalls 7 and 9 were subsequently suspended to enable an investigation to be completed. S32 said the elevated gas concentrations resulted from the failure of a ventilation fan which was promptly rectified.

"Having restarted the longwall at Area 9, it became apparent that the outage exacerbated challenging ground conditions and production has now been suspended to complete remedial work," the company said in a statement.

"These works are expected to be completed within four weeks and this outage accounts for the majority of lost production.

"In addition, the Appin Area 7 longwall will run at a reduced rate before ramping up to full capacity once the necessary tests confirm that we can maintain methane gas concentrations at a safe level."