26th Jun 2025 11:14
(Alliance News) - Thungela Resources Ltd said on Thursday it expects challenging geological conditions in Australia and heavy rains in South Africa to hurt production for the first half of 2025, at a time when coal prices are falling.
The South Africa-based thermal coal exporter said the threat of higher tariffs has caused disruptions among the largest economies, constraining global economic growth and hitting energy markets.
Conflicts in Eastern Europe and the Middle East also continued to disrupt the global supply chain and contribute towards the volatility in commodity prices, it said.
Coal prices continued to soften, with the Richards Bay benchmark coal price averaging USD91.74 per tonne for the five months to May 31, down 13% from USD105.30 a year earlier. Newcastle benchmark coal fell by a quarter to an average USD101.71 from USD134.85.
Thungela expects export saleable production in South Africa to inch up to about 6.4 million tonnes for the first half of this year from 6.2 million a year before.
The increase in production is mainly due to improved rail performance and incremental production at its underground operations. But production at the opencast operations, it said, was hurt by higher rainfall earlier in the year.
Thungela said Transnet Freight Rail's performance for the five-month period rose 7% to 55.5 million tonnes on an annualised basis from 51.9 million in 2024, and was up 17% compared to the first half last year.
Transnet's signalling project is expected to commence in the second half of the year, and this should further improve rail performance in 2026, Thungela said.
In Australia, export saleable production at the Ensham coal mine is expected to drop to about 1.6 million tonnes in the first half from 2.1 million tonnes, due to "more challenging" geological conditions.
Thungela said it continues to prioritise shareholder returns through a combination of dividends and share buybacks.
The share buyback announced in March was completed for a total consideration of ZAR328 million, and dividends of ZAR1.4 billion were distributed to shareholders in first half of 2025.
Thungela expects to continue to reserve approximately ZAR800 million at the end of June 2025 for completion of its life extension projects, as well as the Lephalale Coal Bed Methane project.
Thungela said it is pleased with the improvements that Transnet has demonstrated during the first half, and it remains optimistic on the expected improvements in the second half of the year.
Full-year production guidance for South Africa is unchanged. Thungela expects production in South African to range between 12.8 million and 13.6 million tonnes.
Thungela expects to release interim financial results on August 18.
Shares in Thungela were down 0.8% to 362.10 pence on Thursday in London, but they were up 0.6% to ZAR87.58 in Johannesburg.
By Artwell Dlamini, Alliance News reporter
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