Thungela sees rail woes continuing to curb shipments

Thungela Resources, South Africa’s largest exporter of coal burned in power stations, expects sales to drop further this year as it struggles to rail shipments to port.

State-owned rail operator Transnet is grappling with a shortage of locomotive spare parts and vandalism on the line that runs from coal mines in Mpumalanga to Richards Bay Coal Terminal on the east coast. That cut Thungela’s shipments by 10% to about 13 million tonnes last year, even as higher prices buoyed the miner’s revenue and profits.

Read: Economy would’ve hit 10% growth in 2022 but for Eskom and Transnet

“Our operations continued to be impacted by the poor and inconsistent rail performance which deteriorated materially in the second half of 2022, placing even greater strain on on-mine stockpiles which were already near capacity,” said chief executive officer July Ndlovu.

The Johannesburg-based coal miner could ship between 10.5 million tonnes and 12.5 million tonnes this year, Thungela said in a statement. The company — a spinoff from Anglo American Plc — said it has 3.2 million tonnes of coal in stockpiles at its mines and another 400 000 tonnes at the port.

“Given the degree of uncertainty regarding Transnet freight rail performance currently, we are not providing guidance for 2024,” it said.

Still, Thungela’s profit surged to about R18 billion from R6.9 billion the prior year, as European demand for coal soared after Russia’s invasion of Ukraine. That helped boost the average price of the company’s coal sales to $229 a ton in 2022.

Thungela said it will pay a total dividend of R13.8 billion, or R100 per share, as it sees coal prices remaining strong, even though they have come off record highs this year.

© 2023 Bloomberg