Thungela Resources on Monday reported a sharp drop in first-half earnings as weaker coal prices and rising costs squeezed margins.
However, the company still declared an interim dividend and announced a new share buyback programme.
For the six months to end-June, the SA export coal producer with operations in SA and Australia reported a 79% drop in net profit to R248m. Despite the slump, the board said it would return 87% of adjusted operating free cash flow to shareholders, supported by a “strong cash position and disciplined capital allocation”, the company said.
Revenue for the period fell 12% to R14.8bn from a year earlier, driven by weaker export coal prices in SA and Australia, and pressure from a softer rand against the dollar.
Adjusted earnings before interest, taxes, depreciation and amortisation (ebitda) fell 68% to R691m and headline earnings per share (HEPS) dropped 80% to 192c.
Thungela said operating pressures were aggravated by higher production costs, particularly at the Ensham mine in Australia, where difficult mining conditions and bad weather drove export costs up 25% and reduced first-half output by 16%.
The company bought back shares valued at R328m earlier this year and has approved buybacks up to R140m more, subject to market conditions.
“We are navigating a strategic transition amid prolonged market uncertainty,” said outgoing CEO July Ndlovu, who is preparing to hand over leadership to Moses Madondo.
Thungela declared an interim dividend of R2 per share, backed by a net cash position of R6.3bn.
Beyond the numbers, Ndlovu — who has long been regarded as one of the coal industry’s most outspoken defenders — said global sentiment towards coal has shifted, with growing recognition that it will remain part of the energy mix longer than previously expected.
He pointed to the International Energy Agency’s revised outlook, moving from a forecast phase-out by 2030 to acknowledging that global energy demand has plateaued, leaving coal with a continued role.
Still, he cautioned that the sector faces headwinds as financial institutions withdraw funding and insurers pull back, pressures that he said are less marked in demand centres such as Southeast Asia and China, where sentiment remains more favourable.
On leadership in the coal industry, Ndlovu described the sector as undergoing an “existential transformation” that demands leaders who can advocate for coal in a “credible and authentic” way.
“The leadership challenge in coal is not very different from other industries undergoing transformation,” he said. “The difference is that coal faces an existential transformation — one perceived as negative. Ultimately, the story of coal is a human story.”
He argued that the commodity has historically lifted billions out of poverty by enabling industrialisation and remains important for countries still pursuing economic development.
Ndlovu dismissed the idea that SA must choose strictly between coal and renewables, calling it a “false choice”.
He said the priority should be affordable, secure energy to support economic development and he argued that SA has the right to pursue whichever technologies best meet those needs, even if that includes coal. “It is our sovereign right as a country to invest in the generation sources that are most affordable,” Ndlovu said.
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