Thungela Resources Limited, a leading South African thermal coal exporter led by July Ndlovu, has reported a record-high profit of R9.63 billion ($585.3 million) in the first six months of its 2022 fiscal period, driven by the impact of the Russia-Ukraine crisis on coal prices.
Thungela is a market leader in the production and export of high-quality, low-cost thermal coal. It operated as a branch of Anglo-American until June 6, 2021, when it demerged from the behemoth, resulting in a separate listing on the Johannesburg and London stock exchanges.
According to the group’s half-year report, profit in the first half of 2022 increased by 4,427 percent from R351 million ($21.3 million) in the same period in 2021 to R9.63 billion ($585.3 million), driven by a triple-digit percent increase in revenue from R10.05 billion ($611.3 million) to R26.18 billion ($1.6 billion).
The strong financial performance, which was driven by a 161-percent increase in revenue, comes on the heels of a surge in coal prices that reached an all-time high, averaging $277 per tonne in the first half of 2022. The surge was sparked by the Russia-Ukraine conflict, which led to a global energy security crisis and supply constraints in thermal coal-producing regions.
However, Thungela’s ability to fully capitalize on the strong price environment in the first half of 2022 was hampered by Transnet Freight Rail’s continued underperformance, as the leading rail, port, and pipeline company terminated long-term coal transportation agreements due to a lack of locomotives, large-scale copper cable theft, and infrastructure vandalism.
According to Ndlovu, CEO of Thungela Resources, “the first half of 2022 has been one of good progress on a number of fronts, as the group continued its relentless pursuit of operating a fatality-free business and has not recorded a loss of life in the last 12 months.”
“We delivered another set of exceptional financial results in a volatile operating environment, driven by elevated benchmark coal prices, as demand for affordable energy sources escalated amid the energy security crisis, which was exacerbated by the escalation of the Russia-Ukraine conflict,” he added.
As a result of the company’s strong financial performance, the board of directors declared an interim ordinary dividend of R8.2 billion ($499.5 million) or R60 ($3.65) per share.
This equates to 92 percent of adjusted operating free cash flow, which is significantly higher than the group’s policy of aiming for a minimum payout of 30 percent.
