THUNGELA Resources has some serious catch up to do if it’s to meet year end export coal production guidance from its South African division.
The R13.4bn miner reported 6.2 million tons in thermal coal production from local mines during the six months ended June – a decline of 100,000 tons year-on-year. It means it will have to mine 7.1Mt in order to meet the mid-point of its guidance range of 13 to 13.6Mt.
Commenting in a pre-close statement for the six months, Thungela CFO Deon Smith said conveyor problems at Zibulo colliery in Mpumalanga had hit production. He expected the “difficulties” at Zibulo to be resolved once operations had been shifted to Zibulo North in terms of Thungela’s previously announced plans.
However, Thungela dipped into stockpiles to sell into an improved export coal market, assisted by the Middle East conflict dating from February’s attack by the US and Israel on Iran. Thungela’s sales ex-Richards Bay during the period totalled 7.5Mt, nearly a million tons more than in the previous six months.
“The higher export sales was enabled by improved Transnet Freight Rail performance at an annualised run rate of approximately 60.8Mt as well as the utilisation of rail from coal export producers who did not have sufficient coal available to fully utilise their rail allocation,” said Smith in his pre-close statements.
Export coal prices per API4, the Richards Bay benchmark, increased to $104.25 per ton compared to $89.53/t previously. Thungela averaged $87.60/t for its coal, higher than $74.67/t in the previous period but a hefty 16% discount nonetheless. The discount was driven by a lower quality sales mix given material was railed from stockpiles.
There was a strong recovery in production from Ensham, Thungela’s Queensland coal operation, acquired in 2023. It rose 25% to two million tons in the six months after overcoming geological problems in the previous period. Thungela has guided to full year production of 3.9Mt to 4.2Mt from Ensham.
Thungela wasn’t able to fully cash in on the improved Newcastle benchmark coal price, however, as fixed tonnage contracts had been agreed before February’s hostilities began. Thungela registered an average realised export price of $107.50/t from Ensham compared to $104.93/t previously. Set against the Newcastle average, this amounted to a 13.9% discount for the year to date, compared to a discount of 0.4% in its 2025 financial year, and a 6.6% premium in the corresponding six month period.
