JSE-listed coal miner Thungela Resources has reported good growth in production from its South African operations for the six months ended June 30, but softer coal prices weighed on its financial results for the interim period.

The miner’s South African operations recorded a 4% year-on-year increase in export saleable production to 6.4-million tonnes for the six months ended June 30.

The company attributed this to productivity improvements at the Zibulo North shafts and the Mafube coal mine, in Mpumalanga, while output at the Khwezela Colliery, also in Mpumalanga, was impacted on by abnormally high rainfall.

The free-on-board (FOB) cost, excluding royalties, for the South African operations was R1 258/t, in line with guidance.

Thungela stated that the South African coal industry continues to benefit from improved rail performance, with Transnet Freight Rail having achieved an annualised run rate of 54.3-million for the six-month period, compared with an annualised run rate of 51.9-million tonnes for 2024.

“The improved rail performance stems from the ongoing industry collaborative initiatives, as well as further optimisation projects, such as the signalling project, which are expected to improve rail performance going forward,” the company pointed out.

Meanwhile, its Ensham mine, in Australia recorded a 16% year-on-year decrease in saleable production to 1.6-million tonnes. The operation also stockpiled 280 000 t of run-of-mine coal during the six-month period.

Ensham’s FOB cost, excluding royalties, was R1 694/t – above the higher end of the guidance range as a result of the lower production denominator, which the company expects will normalise in the second half of the year.

“The global operating environment was characterised by increasing geopolitical uncertainties and tariff escalations, disrupting global supply chains and resulting in weaker coal demand. These results demonstrate our ability to control the controllables,” Thungela CEO July Ndlovu noted in a media release.

He further noted during a conference call on August 18, that the company would, nevertheless, maintain its production and cost guidance for the full-year to December 31.

“We continue to demonstrate resilience, and we continue to focus on long-term value. We [are] absolutely disciplined and laser-focussed on operational discipline, prudent capital allocation and our commitment to safety is unwavering as always,” he said.

The company has operated for two-and-a-half years without any fatalities.

FINANCIAL PERFORMANCE

Meanwhile, Thungela noted that group revenue decreased by 12% year-on-year to R14.8-billion, while adjusted earnings before interest, taxes, depreciation and amortisation decreased by 68% year-on-year to R691-million and net profit by 79% year-on-year to R248-million.

Earnings a share were 193c, compared with 952c for the first half of 2024, while headline earnings a share were 192c, compared with 952c in the prior comparable period.

Thungela said the group generated adjusted operating free cash flow of R484-million for the first half of the year, which was positively impacted by a working capital unwind of R690-million and R453-million from managing foreign currency risk.

Net cash as at June 30 was R6.3-billion after capital expenditure of R1.2-billion.

The company explained that its financial results reflect the continued pressure on coal prices, with the average realised export prices in South Africa and Australia having declined by 11% and 10%, respectively, for the six months under review.

The softer coal prices, combined with exchange rate movements, have led to a decrease in group revenue for the first half of the year.

Thungela said its robust balance sheet, nevertheless, enables it to continue to fund its investments through the cycle and continue to prioritise shareholder returns.

The company noted that the board had approved total returns to shareholders of an interim ordinary cash dividend of R2 a share and a share buyback of up to R140-million.

The company explained that total returns to shareholders were aligned to shareholder returns in the first half of 2024, despite a more challenging environment.

The Sisonke Employee Empowerment Scheme and the Nkulo Community Partnership Trust will also receive a further R31-million collectively.

Thungela said the board believed a buffer of R5-billion was appropriate given the current uncertainty globally, including commodity price and foreign exchange rate volatility.

OPERATIONAL GUIDANCE

In South Africa, Thungela said its full-year guidance for export saleable production of 12.8-million tonnes to 13.6-million tonnes remained appropriate as production was seasonally weighted towards the second half of the year.

Guidance for FOB cost, excluding royalties, of R1 210/t to R1 290/t also remains appropriate.

The company expects production at Ensham to improve in the second half of the year; however, given the geological conditions experienced, production is likely to be closer to the lower end of the guidance range of 3.7-million to 4.1-million tonnes.

Consequently, the operation’s FOB cost, excluding royalties, will be at the upper end of the full-year guidance range of R1 470/t to R1 580/t.

The company expressed that the group’s strategic projects remain imperative to the business, with the Elders project, in Mpumalanga, beginning to produce export saleable production.

Further, the Zibulo North Shaft project is making good progress and is scheduled to be completed in 2026, within budget.

The company noted that these two life extension projects are key to the long-term sustainability of the business in South Africa, as the Goedehoop mine approaches the end of its life this year.

At Isibonelo, the coal supply agreement is reaching its end of contract term, and the mine will thus come to the end of its life this year.

Thungela said it is evaluating opportunities to close these operations in a sustainable and responsible manner.

The company added that it continues to invest in the Lephalale coal bed methane project as it seeks to demonstrate the value in use of the gas.

“Today represents a significant milestone in my journey as Thungela’s CEO, as this is the last set of financial results that I will deliver. I am deeply grateful to the Thungela board, group executive committee, employees, shareholders and stakeholders for your steadfast support.

“As we welcome Moses Madondo as the CEO designate, I am confident that he will be afforded the same support that you have shown me over the years. I am proud that together, we have built a sustainable business with long-life assets across multiple geographies,” Ndlovu said in the release.