South32 said production of metallurgical coal at its Illawarra operation in Australia will be hit by a suspension in work because of elevated gas concentrations.

The company said production at the site would be at least 10% lower than the previously estimated figure of 7.9 million tonnes (Mt) for the current fiscal year.

The company recently encountered elevated gas concentrations at Appin Area 7. South32 stated that it managed to safely evacuate all its personnel from the concerned area.

It had also notified the resources regulator at the New South Wales Department of Planning and Environment about the incident following which a prohibition notice was issued.

Mining was suspended at the Area 7 and Area 9 longwalls until the company carries out an investigation to find out the cause of the incident. The two longwalls are part of the operations at the Illawarra Metallurgical Coal.

A statement from South32 read: “A revised production forecast for FY17 will be provided in due course, with the decrease expected to translate directly to sales given low inventory levels. A commensurate increase in unit costs is also anticipated.”

Located in the southern coalfields of New South Wales, Illawarra Metallurgical Coal is wholly owned by South32. The coal company operates Appin and Dendrobium underground metallurgical coal mines and has coal preparation plants at Dendrobium and West Cliff.

Earlier in the month, South32 made a strategic investment in Arizona Mining by buying a 15% stake in the Canadian company for $81m.

South32 which was spinoff from BHP Billiton is a diversified mining and metals company having operations in Australia, South America and Southern Africa.