By Nathan Richardson and Arnab Banerjee

August 18, 2017 - Australia's Department of Planning and Environment on Thursday lifted the suspension of operations it had imposed on South32's Appin Colliery because of elevated gas-concentration issues at the colliery around seven weeks ago, allowing the company to resume limited mining activity.

"Following an extensive compliance review of the mining operations, the Department of Planning and Environment's resources regulator has today [Thursday] allowed [resumption of] limited mining operations at South 32's Appin Colliery, provided remedial actions are taken," the state-regulator said.

The regulator had issued prohibition notices on the New South Wales mine in the southern coalfields on June 28, which followed the Illawarra Metallurgical Coal operations -- of which Appin is part -- facing a number of issues related to high gas levels in recent months.

"This is the third time that a prohibition notice has been issued for the Appin operations since October 2016 due to elevated gas levels," RBC Capital Markets analyst Paul Hissey said at the time of the suspension.

As a result of the issues, South32 in May lowered its fiscal 2016-2017 (July-June) production guidance for Illawarra Metallurgical Coal from 7.9 million mt to 7.1 million mt.

Its fiscal 2016-2017 production totalled 7.07 million mt, which was down from 8.37 million mt in the previous fiscal, the company said in its quarterly results released in July.

Metallurgical coal constituted 5.70 million mt of the total production in fiscal 2016-2017, down from 7.06 million mt in the previous fiscal, while thermal coal production climbed from 1.31 million mt to 1.38 million mt.

The Appin Colliery accounted for 49% of the total Illawarra Metallurgical Coal production in fiscal 2016-2017, and typically it contributes around 60%, South32 said.

South32 plans to give fiscal 2017-2018 guidance for Illawarra Metallurgical Coal production when it releases its fiscal 2016-2017 results later in the year.

The coal from the operations is exported from the Port Kembla Coal Terminal.

South32 Yet to Resume Mining

A spokeswoman for South32 told S&P Global Platts via email on Friday that despite the lifting of the mining prohibition, the company has yet to resume operations at the mine.

"Our initial review into Illawarra Metallurgical Coal's operating systems and practices is nearing completion," the spokeswoman said.

"We are currently working towards a staged and controlled ramp-up of operations."

She declined to comment on when the company expects full production to resume.

"A further update will be provided as part of our annual results announcement on Thursday, August 24," she said.