South32 is still seeking a suitor for its mothballed Eagle Downs metallurgical (met) coal project in Queensland, having not received any acceptable offers to date.
Eagle Downs is a 50:50 joint venture between South32 and Aquila Resources, a subsidiary of Chinese steel company Baowu.
The major miner said it would evaluate the operation’s carrying value as part of the annual impairment cycle for its 2021–22 financial year (FY22) results. Eagle Downs has been on care and maintenance since late 2015.
South32 initially flagged its intention to divest Eagle Downs in January 2021 after a feasibility study deemed it financially unviable.
“The expected returns (from Eagle Downs) do not currently support the allocation of capital in accordance with our capital management framework,” South32 said at the time.
South32 produced 1.38 million tonnes of metallurgical coal during the June quarter, a 12 per cent drop from the quarter before but a three per cent increase from the June quarter of 2021.
Total coal production of 1.58 million tonnes decreased eight per cent compared with the corresponding quarter last year, culminating in a 15 per cent year-on-year (YoY) decline in FY22.
South32 attributed the reduced production to three longwall moves completed at its Appin and Dendrobium coal operations in New South Wales across the 12 months. More recently, the company said it was affected by adverse weather conditions and COVID-related labour restrictions.
Despite these issues, South32 enjoyed a 51 per cent increase in realised met coal prices in the second half of FY22 compared to the first six months of the financial year. Met coal prices jumped 231 per cent YoY.
Elsewhere, South32 achieved record production from its Worsley Alumina operation in Western Australia in FY22, exceeding guidance and operating above nameplate capacity.
The company’s Cannington silver-lead-zinc operation beats its previously upgraded FY22 zinc equivalent production guidance by two per cent. Cannington produced approximately 299,300 tonnes of payable zinc equivalent* material in FY22, a six per cent drop from the 2020–21 financial year.
This came as South32 transitioned the operation to 100 per cent truck haulage.
* Payable zinc equivalent production is calculated by aggregating revenues from payable silver, lead and zinc, and dividing the total revenue by the price of zinc.