Higher coal prices boost Thungela’s half-year earnings

Thungela Resources, a company spun off from Anglo-American, has reported a significant increase in headline earnings per share, marking its first financial report as an independent entity. The surge in earnings has been attributed to higher coal prices, which have bolstered the company's performance. In a recent interview with CNBC Africa, Thungela Resources CEO, July Ndlovu, discussed the company's outlook and performance for the rest of the year. Since its listing on June 7th, Thungela's share price has been on a steady upward trajectory, gaining 8% most recently. Ndlovu expressed optimism about the company's future prospects, citing the attractiveness and cost competitiveness of its assets, as well as favorable market fundamentals. He highlighted Thungela's commitment to delivering attractive returns to investors and reiterated the company's focus on productivity and cost control. Despite potential risks such as price fluctuations and exchange rates, Ndlovu remains confident in Thungela's ability to meet its targets. One key area of interest is Thungela's export trade, particularly in China, amid geopolitical tensions affecting coal imports from Australia. While India remains a key market for Thungela, the company is exploring opportunities in China following recent developments in the market. Ndlovu described China as an exciting prospect for South African coal and expressed intentions to pursue opportunities in the region. Concerns regarding COVID-19 related disruptions, such as the recent suspension of a major port in China, were also addressed. Ndlovu reassured stakeholders that Thungela's diversified market approach would help mitigate any potential impacts on export trade. Additionally, he emphasized the ongoing risk posed by the pandemic and its variants, underscoring the need for continued vigilance. In a strategic shift, Thungela revealed a revised outlook on capital expenditure, signaling a lower end of the previously guided range. Ndlovu explained that the company had reevaluated its capital allocation strategy to align with its unique position as a single commodity entity operating in a single country. This reevaluation led to a more conservative approach to capital expenditure, with projected spending likely to fall closer to the lower end of the guidance. Overall, Thungela Resources' strong half-year performance and optimistic outlook underscore its resilience in the face of market challenges and global uncertainties. The company's focus on efficiency, diversification, and prudent financial management positions it well for sustained growth and value creation in the coal industry.