Johannesburg- and London-listed Thungela Resources delivered a resilient performance for the financial year ended December 31, 2024.

The company reports that full-year export saleable production exceeded guidance in both South Africa and Australia, with South African production having increased for the first time in three years, driven by productivity improvements and improved rail performance.

During a media call on March 17, CEO July Ndlovu said the company achieved 17.7-million tonnes of export saleable production across the group, with its South African operations having contributed 13.6-million tonnes and its Australian operations 4.1-million tonnes.

The company also noted that its key life extension projects Elders and Zibulo North shafts, in Mpumalanga, South Africa, remained on schedule and within budget.

Group revenue increased by 16% year-on-year to R35.6-billion, despite weaker prices.

The company says this increase can be attributed to Australia-based Ensham’s full-year inclusion in 2024, compared with the four-month period post-acquisition in the previous year – September 2023 to December 2023.

Adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) of R6.3-billion and a net profit at R3.5-billion were achieved, with a R676-million contribution from Ensham.

“That is very pleasing [and] shows that our diversification is beginning to pay off,” Ndlovu said during a presentation of the company’s results.

The company noted that the margin contribution from the company’s operation in Australia and the marketing business in Dubai showcase the benefits of its geographic diversification strategy.

"The 2024 results reflect our strong operational performance and disciplined execution of our strategy. Safety remains our first value and we are unconditional about protecting the lives of our employees. The group has maintained a fatality-free business for more than two years,” said Ndlovu in a media release.

Thungela’s total recordable case frequency rate (TRCFR) improved to 1.93 in 2024, from 2.80 in 2023.

The South African operations achieved a historic low TRCFR of 1.07, down from 1.40 in the prior year. In Australia, the TRCFR improved significantly from 22.63 in 2023 to 13.21, reflecting a strong focus on critical controls and leadership visibility, said Ndlovu in the release.

GLOBAL THERMAL COAL MARKET
The global thermal coal market softened in 2024 owing to milder winter conditions in the northern hemisphere, which led to subdued demand in Europe, where coal and gas stock levels remained elevated.

Australia’s thermal coal market mirrored this trend with high stock levels, driven by slower seaborne demand in key Asian coal markets, including China, India, Japan and South Korea, where coal-fired power stations are crucial for energy security.

Additionally, Thungela has noted that geopolitical tensions persist, adding uncertainty to energy markets and causing fluctuations in coal and gas supplies.

It explained that the seaborne thermal coal market's supply dynamics are susceptible to disruptions from domestic production in key emerging economies, such as China and India.

Despite these factors, the company has expressed that it remains confident in the long-term fundamentals of coal and its enduring role within the energy mix, supporting global energy demand.

Seaborne traded thermal coal demand is expected to remain close to one-billion tonnes this year.

Speaking to Mining Weekly, Ndlovu reiterated that the demand for coal remains firm.

“The prospects for South African coal, particularly for us who produce very high quality coals, remain very good, but again, you know you’ve got to be competitive on the cost curve to make money, and that really is the only challenge,” said Ndlovu during the interview.

SOUTH AFRICAN PERFORMANCE
Improved rail performance in South Africa allowed Thungela to optimise production, supporting higher export saleable production and sales volumes.

State-owned Transnet Freight Rail (TFR) achieved an 8.4% increase in volumes transported following its yearly maintenance shutdown in July 2024, reaching a run rate of 51.9-million tonnes a year for the year.

The company said this improvement enabled Thungela to leverage better rail availability.

Additionally, Thungela noted that it was making significant progress in building a long-life business across various geographies.

The group continues to invest in projects that extend the life of its operations while maintaining capital discipline and efficiency.

The company said the completion of the Elders construction phase marked a significant milestone, with production ramping up as per schedule. Once fully operational, Elders was projected to achieve an annual rate of four-million tonnes, enhancing the group’s long-term production outlook.

Simultaneously, the Zibulo North Shaft project remains on schedule for completion by 2026. The company described this project as pivotal in extending Thungela’s underground operations until 2038, ensuring sustained production capacity.

Meanwhile, the Lephalale Coal Bed Methane project, located in the Waterberg coalfield of Limpopo, presents a substantial methane gas resource under evaluation for potential development opportunities.

An estimated capital investment of about R400-million is earmarked for this year for the acquisition of a modular liquefied natural gas plant and the development of associated site infrastructure to prove the marketability of the gas.

TRANSFORMATION AND DIVIDENDS
Thungela continues to drive sustainability and inclusive growth through strategic decisions that create long-term value.

The company noted that the Rietvlei coal mine was established as a domestic-focused coal project to ensure direct economic benefits for local communities through equity shareholding.

Thungela, with an effective 34% shareholding, played a key role in supporting the mine’s sustainability, while enabling its black economic empowerment partners to develop the operation.

Now fully operational and with a domestic contract in place, Thungela said it had exited its position through the sale of its stake for a cash consideration of R186-million, transferring full ownership to its existing partners, demonstrating economic inclusion.

In line with the company’s purpose to create shared value, the Sisonke Employee Empowerment Scheme and the Nkulo Community Partnership Trust, will collectively receive R204-million in dividends.

Further, Thungela noted that it enhanced its strong financial position despite a weaker pricing environment, ending the year with net cash of R8.7-billion and adjusted operating free cash flow of R3.6-billion after capital expenditure of R3.4-billion.

The board reaffirmed its commitment to the dividend policy, committing to distribute a minimum of 30% of adjusted operating free cashflow to shareholders.

The company expressed that strong results allowed it to declare a final ordinary cash dividend of R1.5-billion or R11 a share. This takes the total dividend declared for 2024 to R13 a share.

In addition, the board has approved a share buyback of up to R300-million. In aggregate, the company said, it was returning 64% of adjusted operating free cashflow to shareholders.

“That gives confidence that we believe that our business continues to be cash generative. It is resilient and will continue to drive productivity improvement, whilst at the same time remaining absolutely focused on the safety of our people,” said Ndlovu during the presentation.

GUIDANCE
Thungela noted that it had set its 2025 production guidance for the South African operations at between 12.8-million and 13.6-million tonnes of export saleable coal.

The company explained that this guidance was informed by its continued productivity and TFR’s improved performance.

Free-on-board costs per export tonne are expected to be between R1 220/t and R1 300/t, including royalties.

Sustaining capital expenditure (capex) is expected to be between R1.4-billion and R1.7-billion, while expansionary capex is projected to range between R1.1-billion and R1.2-billion.

In Australia, the export saleable production guidance for 2025 is between 3.7-million and 4.1-million tonnes.

"We remain focused on delivering operational excellence and maintaining our cost competitiveness as we position Thungela to benefit from the long-term fundamentals supporting global coal demand.

“Similarly, we continue to prioritise disciplined capital allocation to ensure long-term shareholder value while advancing our environmental, social and governance commitments,” Ndlovu said in the release.