Thungela Resources, the coal miner spun off from Anglo American in 2021, has established a new entity to manage the group’s export marketing function.
Thungela Marketing International will be based in Dubai from where it will oversee coal marketing for the company’s SA and Australian mining assets.
Its location in the Middle Eastern business hub will give Thungela direct access to seaborne markets, said CEO July Ndlovu.
“Our presence in Dubai is testament to the steps we are taking to realise geographic diversification and becoming a key player in the international market,” he said.
Thungela produces high-quality thermal coal from seven coal mines in SA, and as part of its diversification drive, it acquired Ensham coal mine in Australia through a new company, Sungela, in 2023.
Speaking to Business Day on the sidelines of the McCloskey Southern African Coal Conference in Cape Town on Thursday, Thungela’s head of marketing, Bernard Dalton, said the decision to establish the marketing entity comes as the group’s exclusive offtake agreement with Anglo American Marketing nears its end.
“Part of our diversification plan was always to build our own export marketing capabilities.”
The expansion into Dubai, said Ndlovu, was evidence of Thungela’s intention to “deliberately” position the company as a coal producer with a global footprint.
They planned to open the Dubai offices in April, Dalton said.
The decision to base the marketing business in the United Arab Emirates was based, partly, on its proximity to Thungela’s main export markets.
According to Dalton, through the new marketing business, Thungela had plans “down the line” to look at trading third-party coal.
Coal markets have been volatile for a few years. The API4, the benchmark price reference for SA coal exports rallied from about $80 per tonne in January 2022 to $280 per tonne in August that year as the Russia-Ukraine war disrupted global energy markets.
Since then, the price has dropped back to a level of $90-$120 per tonne. This price volatility was one of the reasons Thungela wanted its own export marketing team, said Dalton.
“It will allow us to be more agile in the way we react to volatility in the market.”
The geopolitical tension also saw more SA coal exported to Europe, China and Japan, but they were now seeing their product flow return to traditional markets such as India, Korea and Vietnam, he said.
In its latest market report for global coal demand and consumption trends, the International Energy Agency (IEA) said global demand for coal is set to increase 1.4% in 2023, surpassing the 8.5-billion tonnes mark for the first time.
However, the major expansion of renewable energy capacity is expected to start leading to a reduction in global coal consumption over the next three years.
The IEA expects coal demand to fall by 2.3% in 2023-26.
Consumption was already falling sharply in most advanced economies including record drops in the EU and US of about 20% in 2023.
This was offset by increasing coal demand in China — the biggest user of coal in the world — and India, where demand increased by 5% and 8% respectively.
Dalton said despite expected demand pressures post-2023 they remained optimistic about marketing opportunities in their traditional markets.
Updated: February 1 2024
This article has been updated with additional information.
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