JOHANNESBURG, Aug 19 (Reuters) – Thungela Resources, a South African exporter of thermal coal burned in power stations, expects the country’s shipments of the fossil fuel to rebound from next year as rail bottlenecks ease, CEO July Ndlovu said on Monday.
The country’s coal shipments fell to a three-decade low of about 47 million tons per year in 2023 as state-owned ports and rail company Transnet struggled to move sufficient volumes to ports due to lack of locomotives and spares, as well as cable theft and vandalism of infrastructure.
Coal shipments could rise to more than 50 million tons per year from 2025, Ndlovu said. Transnet’s rail unit moved about 76.47 million tons of the fossil fuel in 2017.
“The worst is probably behind us,” Ndlovu said on a media call. “The building blocks are in place, therefore it stands to reason that there will be improvement.”
South Africa’s rail crisis has curbed coal shipments for companies including Thungela, Exxaro Resources and Glencore, forcing some miners to truck the fossil fuel by road and to use alternative ports in neighboring Mozambique.
The lack of rail capacity has also hit earnings for producers at a time when prices for the fuel have softened. Thungela said its profit in the six months through June plunged 61% to 1.2 billion rand ($67.34 million).
Thungela could lift shipments from South Africa to more than 12.5 million tons next year if the rail network improves, Ndlovu said. Exxaro CEO Nombasa Tsengwa last week that the rail crisis had “bottomed out”.
Thungela is weighing plans to invest in new coal production around its Ensham mine in Australia, which it acquired last year and where the CEO sees “additional potential given the size of the resource”.
While most banks and financiers are now shunning funding new coal production, Ndlovu said the company was able to fund its development projects.
“If we do identify attractive opportunities, and we believe that they are more value accretive and enhance shareholder returns, we should be able to fund those,” Ndlovu said.
($1 = 17.8195 rand)
(Reporting by Nelson Banya and Felix Njini; Editing by Conor Humphries)
