THUNGELA Resources raised the prospect of impairing assets following a year of lower coal prices in 2025, and despite a strong production and cost performance.
Commenting in his financial year pre-close comments on Tuesday, Thungela CFO Deon Smith said the matter “requires significant judgement” given the uncertain future for coal prices and exchange rates “… which are currently at levels that does not support the carrying value of our PPE (property, plant and equipment) balances”.
With about a month of its financial year left to run, Smith expected Thungela would produce 13.7 million tons of export saleable coal which is above its guidance range of 12.8mt to 13.6mt. In doing so, Thungela overcame “challenging” geological conditions at its Ensham mine in Australia and smart trading by its Dubai-based marketing team.
Nonetheless, the market weighed heavily. Thungela received $75.89 per ton for coal from Richards Bay in 2025 compared to $91.56/t last year, a discount of 17%. The discount narrowed year-on-year for the firm’s Australian coal exports but was still $20/t lower at $104.82/t.
As outlined by rival Exxaro Resources on December 2, demand from India and China was under pressure this year as they relied more on domestic supply while cheap steel imports to India also blunted coal demand.
Smith said there were signs of market improvements such as “initial restocking” at import hubs and “a gradual recovery in sentiment”. Coal futures were currently in contango (higher than spot) in 2026 and 2027, suggesting rising competition for supply.
Thungela turned in a strong cost performance for 2025.
The cost per export ton (freight-on-board) of South African exports, including royalties, is expected to be below the guidance range of R1,220 to R1,300/t. Similarly, cost of sales from Australia will be in the lower half of R1,650 to R1,780/t guidance.
Thungela has sold its Kleinkopje mining right, connected to its Khwezela Colliery. This follows its disposal of Goedehoop North for R50m upfront (and R650m depending on future production). These actions are part of a portfolio restructuring, combined with capital projects to bring fresh production on line.
Thungela spent R1.8bn on the Elders extension project (now called Annea) which is in ramp-up and R2.4bn of its R2.5bn Zibulo North shaft project (R100m to be spent in 2026). Given this change-in-motion, South African production would be about 500,000 tons lower in 2026 than in 2025.
Smith said the group would stick to its dividend policy of 30% of adjusted operating free cash flow, but most likely no more as it weighed another “cash buffer”, intended to tide the group over or pay for capital projects or M&A.
Thungela also said annualised coal deliveries into Richards Bay was at 56.6mt, a 9% year-on-year improvement (2024: 51.9mt). Exxaro had a similar forecast (56.4mt) but its marketing manager Sakkie Swanepoel held out hopes for 57Mt by year-end as there had been some months railing at a tempo of 60Mt a year since July.
