Thungela Resources Faces Massive Profit Dip Amid Global Coal Slump

South African coal exporter Thungela Resources anticipates a significant decline in half-year profits due to decreased thermal coal prices and global economic challenges. The company's earnings per share are expected to drop significantly from the previous year. Thungela is facing logistical constraints and softer demand in major markets.

Thungela Resources, South Africa's leading thermal coal exporter, has projected an 85% decline in its interim profits, the company announced on Friday. The sharp fall is attributed to lower thermal coal prices amidst global economic uncertainties affecting energy demand.

The miner expects its headline earnings per share (HEPS) for the first half of the year to fall between 1.40 and 2.10 rand, a steep drop from 9.52 rand reported during the same period in the previous year. The drop reflects reduced energy demands from key consumer markets such as China and India, who have boosted domestic coal production.

The situation is exacerbated by logistical bottlenecks caused by South Africa's state-owned logistics company, Transnet, limiting freight rail and port capacities. Average coal prices through South Africa's primary coal terminal, Richards Bay, have seen a 14% decrease, while Australian prices, where Thungela operates the Ensham mine, are down by 11% compared to last year. The company will report its half-year results on August 18, with expectations tethered to restructuring costs at its soon-to-close Goedehoop and Isibonelo operations.

(With inputs from agencies.)