Aug 23 (Reuters) – Global miner South32 Ltd (S32.AX) said on Tuesday it would not make an initial $700 million investment to expand its Dendrobium metallurgical coal mine in New South Wales, citing low potential returns.

The decision comes more than a year after an Australian planning body blocked the planned expansion of the mine, located in the Illawarra region, due to concerns about its potential irreversible impact on Sydney’s water resources. . (https://reut.rs/3dP471k)

“Although our work on the project has demonstrated the potential to significantly extend the life of the Dendrobium mine, the expected returns … are not sufficient to support an investment compared to the alternatives being considered for the complex,” said South32 in a statement.

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The company said it will continue to optimize the Dendrobium mine and the wider Illawarra metallurgical coal complex, including the transition of its Appin mine to a single longwall from fiscal year 2025.

The Longwall configuration is a form of underground mining where a long wall of coal is mined in a single slice.

Investments at Appin include planned work worth $260 million to install additional ventilation capacity to enable mining in its section of Zone 7 until at least 2039, South32 added.

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Reporting by Shashwat Awasthi; Editing by Aditya Soni

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