South32 shares have closed lower after the diversified miner said its Appin coal mine in NSW will remain closed for an "extended" period due to a safety review.
Work at the metallurgical coal mine was suspended at the end of June because of concerns about a build up of methane, and the company on Monday said a review is needed to ensure the operation's safety and reliability.
"Given the scope of this review, an extended outage is now anticipated before production at Illawarra Metallurgical Coal can be restored to historic levels," South32 said in a statement to the ASX.
South32 shares fell 9.0 cents, or 3.2 per cent, to $2.72 on Monday, making it one of the weakest players in a resources sector that underperformed the rest of the market.
Operations are continuing at the Illawarra Metallurgical Coal unit's other mine, Dendrobium.
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Royal Bank of Canada analyst Paul Hissey said, although South32 flagged it had suspended work at the Appin mine last month, the market will likely view the company's latest announcement negatively.
"Whilst we remain constructive on S32 overall due to the strength of the balance sheet and potential for shareholder returns, we appreciate that investors may be starting to lose patience with the company's recent operational issues," Mr Hissey said in a statement.
South32 said on June 30 it had withdrawn its workforce at the Appin mine as a precautionary measure and notified the NSW department of planning and environment authorities.
While the company said it had not breached gas limits at the site, the regulator had issued a prohibition notice.
The regulator also had expressed broader concern about recent events at the Illawarra Metallurgical Coal operation - when gas limits had been exceeded - as well as its operating practices.
Production at the Appin mine was previously disrupted in September 2016 due to roofing problems at one of the longwalls, and again in November and May when methane gas levels forced temporary suspensions of operations.
