South African coal producer Thungela Resources took a battering at the hands of headwinds from all directions in 2023, leaving profit at the group down almost 75 per cent.
The firm, which is spun out of FTSE 100-listed miner Anglo American after a demerger in 2022, said today that profit for the year fell from R18.2bn (£761m) to R4.9bn (£204.9m) while revenue came in 40 per cent lower than 2022, at R30.6bn (£1.2bn).
The business said it managed to navigate significantly weaker benchmark coal prices, in particular thermal coal, which declined much faster than market observers expected at the start of 2023.
This was driven by a mild winter in the northern hemisphere, coupled with high coal and gas reserves – a result of the scramble to secure energy stocks in 2022, following the start of the Russia-Ukraine conflict.
Also hampering the company, it said, are the continued problems facing the South African state-operated rail network, Transnet Freight Rail, which it said has “once again” significantly hampered the South African coal mining industry.
The rail company transported 47.9m tonnes of coal in 2023, compared with the already lower-than-expected 50.3m tonnes in 2022.
Thungela said it has “curtailed” its production to try and avoid further impingement at the hands of the rail system, however it will extend its agreement to keep transporting coal via the trains until March 2025 before the contract is re-negotiated.
To add to the list of infrastructure woes, seven of the company’s coal-carrying vessels arrived late in December, which it said contributed to the “slippage” of around 550,000 tonnes of sales between December and January.
July Ndlovu, the group chief executive said that challenges aside, 2023 was “transformative” for Thungela, as the company closed a number of expansion projects, including the purchase of the Ensham coal mine in Australia and approval of an extension to the life of the group’s flagship Zibulo mine.