Independent Online

Tuesday, July 5, 2022

Like us on FacebookFollow us on TwitterView weather by locationView market indicators

Thungela Resources shows big annual profit in spite of railway woes

Thungela Resources reported a stellar full-year profit boosted by coal prices even though it lost export opportunities worth billions of rands due to Transnet’s poor rail infrastructure. Picture: Screenshot of live stream

Thungela Resources reported a stellar full-year profit boosted by coal prices even though it lost export opportunities worth billions of rands due to Transnet’s poor rail infrastructure. Picture: Screenshot of live stream

Published Mar 23, 2022

Share

Thungela Resources reported a stellar full-year profit boosted by coal prices even though it lost export opportunities worth billions of rands due to Transnet’s poor rail infrastructure.

The company posted a profit of R6.9 billion for the year ended December 31, 2021, compared with a loss of R362 million in the previous year.

Story continues below Advertisement

According to the company, which is a big coal exporter, cash generation was robust with net cash of R8.7bn as compared with a debt of R388m in 2020.

The company, which demerged in Anglo American in June last year, also declared a massive dividend of R18 per share.

Thungela said it had a high level of cash generation since listing and a healthy balance sheet.

"This means that we enter 2022 in a position of strength in a supportive environment where we expect strong thermal coal prices," it said.

CEO July Ndlovu said the strong performance showed what the company was able to accomplish after the listing, despite challenges.

"We faced several challenges, most notably Covid-19 and rail infrastructure constraints due to the under performance of Transnet Freight Rail (TFR). Despite these, Thungela has successfully transitioned from a loss-making group with a net debt position to a profitable, highly cash-generative pure-play thermal coal business," he said.

Story continues below Advertisement

According to the company, due to rail constraints, the company’s stockpiles increased 1.5 million tons (Mt) during the year to 2.8Mt as of December 31.

Of these stockpiles, about 400,000 tons were located at the port.

Thungela said the life extension projects Elders and Zibulo North shaft had been submitted for board approval in 2022 and the first quarter of 2023 respectively.

Story continues below Advertisement

"They would bear capital expenditure of R4bn over four years," it said.

Integral Asset Management mining analyst Bruce Williamson said the world pushed so hard for a green energy transition what they called GET, and investors, bankers moved away from coal, disregarded it, and they kept on focusing on renewable energy.

"Eventually they have realised that the move to renewable energy is going to be a low strong transition. There is a massive shortage of coal globally. The Russian invasion has put even more pressure," he said.

Story continues below Advertisement

According to Williamson, Thungela is going to benefit substantially from much higher prices and Transnet had indicated that instead of it exporting 58 million tons, they hope to increase their exports to 70 million tons.

"That is a 20 percent more export tonnage. Our coal exports are giving massive amounts of dollars, gold prices are higher bringing more dollars, platinum metal groups' prices have increased.

“Annual prices recovered strongly, this means our four export earners are earning more dollars. They are going to pay more taxes, and that is what is keeping South Africa alive," he said.

[email protected]

BUSINESS REPORT ONLINE

Share