Learn Russian: Он способный, но работает мало.

In Russian, the long-form adjective способный is used to describe a permanent characteristic or inherent trait. Here, it means he is generally a gifted or talented person. The short form (способен) is usually followed by a specific action to say what someone is capable of doing, for example, Он способен на всё which means he is capable of anything.

Why do we use но instead of а for the word but in this sentence?

We use но because there is a direct contrast or contradiction between the two parts of the sentence: being capable usually implies you will achieve a lot, but he works too little to do so. The word а is used to show a simple difference or transition, not this kind of unexpected contrast.

Could I say немного instead of мало here?

Not without changing the meaning. Мало has a negative tone, meaning too little or not enough, which fits perfectly with the contrast of him being capable. If you used немного, meaning a little or some, it would sound more neutral, just stating that he does a bit of work.

Does putting мало after the verb работает change the meaning compared to мало работает?

Both are grammatically correct, but Russian uses word order for emphasis. By putting мало at the very end of the sentence, it gets the main spoken stress. This highlights exactly what the problem is: his lack of effort.