Australian miner South32 has reported a significant drop in its coking coal production and has put its nickel production under review.

On Monday the miner posted an almost 50% reduction in its December quarter metallurgical coal output, citing major works at its underground Illawarra mine in New South Wales, Australia.

Production of metallurgical coal, used to make steel, fell to 744,000 tonnes (t) in the three months to December, down 1.5 million from the same period in 2022. The company said it still expects to achieve annual total coal production of five million tonnes at the Illawarra operation.

Its quarterly manganese production also missed company estimates, down nearly 14%, with quarterly ore output ending on 1.27 million wet tonnes. The company is currently the world’s biggest producer of manganese, which is used to strengthen steel and increasingly in batteries.

The company said it will focus on costs after a slowdown in the global economy hit commodity prices. It added that it expects to report operating unit costs in the first half of fiscal year 2024 that are in line or below current guidance for the majority of its operations, citing better cost efficiencies and lower raw material input prices.

South32 shares fell around 5% after its quarterly report was released but recouped some losses shortly after.

It also said that it has begun a review of its nickel operation in Columbia to evaluate options to improve its competitive position amid a sharp downturn in the nickel market, which has seen prices slump 40% over the past year.

South32 CEO Graham Kerr called the company’s results “mixed”. He said: “Highlights for the quarter included a 20% increase in zinc and nickel and a 7% increase in silver. We also delivered record aluminium production for the half.

“However, production from Brazil Alumina, Mozal Aluminium and molybdenum output from Sierra Gorda was below plan, with flow on impacts to annual production guidance… As we enter the second half, strengthening market conditions for many of our commodities, our planned 7% production growth and ongoing cost management focus, position us well to capture higher margins.”

South32 added that business remains on track to make a final investment decision on the Taylor zinc-lead-silver deposit in Arizona in the March quarter.