Coal miner Thungela Resources expects its headline earnings to almost double when it releases its 2022 financial results, thanks to higher coal prices and more demand for its product to meet energy demands in part because of the war in Ukraine.
The coal miner spun off from Anglo American expects its headline earnings per share (HEPS), a profit measure that strips out impairments and one-off items, to almost double to “at least” R131.00, it said on Thursday in a pre-close and trading statement for its 2022 financial year end-December.
This comes despite several challenges, in particular increased load-shedding, a poorer performance from Transnet Freight Rail (TFR) and more illegal mining, leading to the company, valued at R41.45bn on the JSE, expecting to miss its production guidance for 2022.
“The ongoing conflict in Ukraine resulted in Europe seeking to mitigate the impact of tighter gas stocks through increased imports of coal”, it said, adding that demand in the region is expected to remain firm into 2023 as stocks will have to be replenished after winter in the northern hemisphere.
Some European countries turned to coal as an alternative energy source after sanctions against Russia for its invasion on Ukraine meant cutting off access to the cheap gas it imported from Russia.
Thungela expects its export saleable production for its latest financial year to be 12.8-million tonnes, lower than the revised guidance range of 13-million tonnes to 13.6-million tonnes issued in August 2022, and lower than the 15-million tonnes of 2021, because of problems at TFR.
The existing problems on SA’s rail infrastructure, worsened by the 12-day strike at TFR in October and derailments on the coal corridor in early November, which took 10 days to clear, meant Thungela could move less coal to port, hitting its export sales.
“While we were able to partially mitigate the impact on our business, the duration of these events, combined with the need for TFR to rebalance the rail system following the conclusion of the strike and the derailment, resulted in a loss of approximately 600 kilotonnes of export saleable production for the 2022 financial year,” CFO Deon Smith said.
Despite efforts to mitigate the effects of the rail problems by transporting its coal on trucks, Thungela had to cut production at some operations.
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