Thungela Resources Ltd on Monday warned it expects interim earnings to tumble as weak demand causes a sharp drop in global coal prices.
The Rosebank-based coal miner guided for earning per share of between R 17.00 and R 23.00 for the six months ending June 30, down by more than two thirds from R 67.23 a year before.
Headline EPS it expected to slump to a range within R 17.00 and R 23.00 from R 67.23.
The coal producer said the benchmark coal price averaged $135.47 per tonne in the first five months of 2023, down 50% from $270.87 in 2022.
Seaborne coal prices had receded from record highs in 2022 and have fallen sharply since the start of the year as a result of a milder winter in Europe, coupled with softer gas prices, Thungela said.
European coal and gas stocks continued to be elevated, resulting in the redirection of coal volumes to Asia, it said. ‘This added significant supply to Asian markets, which also showed signs of weaker demand, especially from China.’
Russian coal also continued to flow into the region at discounts, it said.
Thungela expects export saleable production for first half of 2023 to be 5.8 million tonnes, in line with the guidance range of 10.5 million to 12.5 million for the full year issued back in March. At the interim stage in 2022, export saleable production was 6.1 million tonnes.
The company said its board has approved the R 2.4 billion Zibulo north shaft life-extension project. Zibulo is in Mpumalanga.
Thungela also said continued to face rail underperformance by Transnet Freight Rail in South Africa.
By early May, TFR performance had stabilised at about 48 million tonnes per annum for the industry following a very weak start to the year.
‘For Thungela to achieve the upper end of our export saleable production guidance range (ie 12.5 million tonnes) we require an industry run rate of 53 million tonnes per annum in the second half of the year,’ it said.
Thungela said it was not materially affected by Eskom’s inability to provide a consistent supply of electricity in South Africa.
Thungela shares were up 1.0% to 604.20 pence early Monday in London. They were down 0.5% at R 138.74 in Johannesburg.
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