South32 shares have dropped as much as 5.5 per cent after the diversified miner said it expects coking coal production from its Illawarra operations to be at least 10 per cent below guidance.
The company on Wednesday said it had suspended production at one of its sites to investigate potentially hazardous gas levels.
"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," South32 said in a statement to the Australian Securities Exchange.
"A commensurate increase in unit costs is also anticipated."
South32 had previously expected production of 7.9 million tonnes.
The company in April cut its full-year production guidance for several commodities after heavy rainfall at its South African thermal coal operations and an underground fire at its Cannington mine in Western Australia.
The diversified miner lifted unit production cost at Cannington's silver, lead and zinc mine to $US155 a tonne, from its previous guidance of $US141, following disruption of operations in early April.
At 1055 AEST, South32 shares were 13 cents, or 4.8 per cent, lower at $2.60.
They had earlier been as low as $2.58.
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