South Africa’s thermal coal exporter Thungela Resources expects its full-year profit to double, it said on Thursday, as demand and higher prices for the fossil fuel offset the negative impact of poor rail performance on its export shipments.
In a trading update, Thungela said its headline earnings per share (HEPS) – the most common profit measure in South Africa – is expected to be at least 131 rand ($7.65) in the year to December 2022, 97% higher than last year’s 66.57 rand.
The company said coal prices had been driven by demand, especially from Europe, whose energy supplies have been disrupted following major fuel exporter Russia’s invasion of Ukraine. Benchmark coal prices averaged $276.57 per tonne for the year to date, compared to $124.11 per tonne last year, Thungela said.
However, Thungela said its export performance had suffered as a result of problems at state-owned rail and port operator, Transnet, which has operated below capacity because of a shortage of locomotives and spare parts as well as cable theft and vandalized infrastructure.
“Poor rail performance impacted our ability to move coal to port, with a concomitant impact on export sales,” Thungela said.
“The poor performance was further exacerbated by a 12-day strike by Transnet employees in October 2022, as well as a severe derailment on the coal corridor in early November which took 10 days to clear.”
The company expects a 15% decline in its export saleable production this year, at 12.8 million tonnes, from 15 million tonnes in 2021. This year’s export saleable production is expected to be lower than Thungela’s revised guidance range of 13 million tonnes and 13.6 million tonnes.
Transnet is scheduled to release its full-year results on March 27.
($1 = 17.1282 rand) (Reporting by Nelson Banya; editing by Barbara Lewis)