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August 23, 2022

South32 abandons $700m Dendrobium mine expansion project

The decision follows analysis of the mine alternatives, along with the anticipated returns from investment.

Global miner South32 had decided to ditch its plans for the $700m expansion of its Dendrobium metallurgical coal mine in New South Wales, Australia, due to limited potential returns.

The decision comes more than a year after the planned extension project was blocked by an Australian planning body citing concerns over its potential irreversible impact on water resources in Sydney.

In a press statement, South32 said: “While our work on the project demonstrated the potential to meaningfully extend the life of the Dendrobium mine, expected returns from the ~$700m upfront capital expenditure estimate are not sufficient to support an investment relative to alternatives considered for the complex.”

Through the Dendrobium Next Domain (DND) project, South32 intended to extend the life of the Dendrobium mine until the end of 2048.

The firm planned to produce additional 78 million tonnes of run-of-mine coal from two new underground mining areas near the Avon and Cordeaux dams.

South32 CEO Graham Kerr said: “Over the past 18 months, we have made significant progress actively reshaping our portfolio and this decision increases our capacity to direct capital towards other opportunities.

“This includes our world-class development options in North America that have the potential to underpin a significant growth profile to produce metals critical to a low carbon future, servicing strategically important supply chains.”

The Australian miner now plans to continue to optimise the Dendrobium mine and the Illawarra metallurgical coal complex. Work includes the transition of the Appin mine to a single longwall from 2025.

South32 plans to invest $260m at the Appin mine to install additional ventilation capacity to allow mining in Area 7 section until at least 2039.

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