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South32 Ltd announced on Tuesday it will halt plans to invest in the Dendrobium Next Domain project at its Illawarra metallurgical coal operations in Australia.
The Perth, Australia-based diversified miner said it recently completed study work and extensive analysis of alternatives to the expansion of the project.
The group will now focus on optimising Dendrobium and the broader Illawarra metallurgical coal complex to extend the mine life within approved domains.
The change of plans comes after New South Wales Independent Planning Commission in February last year declined South32's application for the Dendrobium life extension project.
South32 had been seeking approval to extend the life of the mine until the end of 2048 and extract an additional 78 million tonnes of run-of-mine coal from two new areas near Avon and Coredaux Dams.
On Tuesday, South32 said expected returns from the Dendrobium project's $700 million up-front capital expenditure estimate are not sufficient to support an investment relative to alternatives considered for the complex.
Alternatives include existing plans for Appin, where the company has been investing to support its transition to a single longwall from the financial year 2025.
Its investments at Appin include planned work to install additional ventilation capacity to enable mining in the current Area 7 until at least 2039.
Although this $260 million investment remains subject to South32 board approval, it has been incorporated in its previously announced capital expenditure guidance.
The group expects average annual saleable production of 5.5 million tonnes, with operating unit costs of $105 per tonne to $120 per tonne from the current configuration beyond the financial year 2023.
Shares in South32 were up 0.3% at 242.40 pence on Tuesday morning in London, while the stock was 0.4% lower at R 48.28 in Johannesburg.
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