Thungela says coal prices softer but demand stays strong

By Nelson Banya

(Reuters) -South African thermal coal exporter Thungela Resources expects demand to stay strong, particularly in Asia, although prices have come off the record highs of 2022, Chief Executive July Ndlovu said on Monday.

The firm’s annual profit jumped 97% in 2022, boosted by red-hot coal prices. Its headline earnings per share, the main profit measure for South African companies, came in at 130.82 rand ($7.19) in the year ended Dec. 31, versus 66.57 in 2021.

The miner realised an average coal export price of $229.21 per tonne in 2022, more than double the $103.82 per tonne of the year before. Coal prices surged last year as Russia’s invasion of Ukraine worsened an energy crisis that started late in 2021.

A European ban on Russian coal tightened supplies and sent prices soaring, boosting the earnings of coal miners in South Africa and elsewhere.

In an interview, Ndlovu told Reuters that while prices had declined from 2022 levels to around $120 to $130 per tonne, they still remained higher than the average price of $70 per tonne during the period before COVID-19.

“The prices have softened, but if you look at the Asian region, which is the engine for demand for coal, demand continues to be strong,” Ndlovu said.

“Asia has a very young thermal power generation fleet and this is a region with a huge energy deficit. There is going to be demand for affordable and reliable energy going forward.”

While high coal prices helped Thungela’s cash generation, the company said rail constraints in South Africa cost it 3 million tonnes of potential coal exports.

At 12.17 million tonnes, Thungela’s 2022 exports were 12% lower than the 13.89 million of 2021.

Thungela has moved to diversify away from South Africa through its purchase of the Ensham coal mine in Australia in a deal worth A$340 million last month.

Thungela declared a final dividend of 40 rand a share, taking the total dividend payout for 2022 to 100 rand a share, returning 13.8 billion rand ($757.38 million) to shareholders in the year.

($1=18.2208 rand)

(Reporting by Nelson Banya; Editing by Louise Heavens and Clarence Fernandez)