Thungela H1 HEPS halves on softer coal prices

South African exporter of thermal coal, Thungela, is anticipating a rebound in the country's shipments of the fossil fuel starting from next year, as rail bottlenecks ease. In an interview with CNBC Africa, July Ndlovu, the CEO of Thungela Group, shared insights into the company's future prospects and the challenges they are currently facing. Thungela is optimistic about the improvements being made by Transnet, the state-owned rail company, to enhance performance and address infrastructure constraints. Ndlovu acknowledged that while progress is being made, significant and impactful improvements are expected to materialize by 2025. One of the key areas of focus for Thungela is increasing the life and efficiency of its mines. The company has allocated capital for projects aimed at ensuring its long-term competitiveness in the coal market. Despite facing a softer approach from banks towards funding coal projects, Thungela remains confident in its balance sheet's robustness to support the approved investments. Ndlovu emphasized the importance of driving reforms and implementing plans effectively to unlock infrastructure constraints within South Africa's mining sector. In response to the shifting landscape of coal demand, Ndlovu highlighted the contrasting trends between the global Northwest, where coal is being phased out in favor of gas and renewables, and emerging markets like India and China, where coal demand remains strong. This dichotomy is expected to support coal prices in the short to medium term, with continued demand from key Asian markets offsetting lower uptake from the US and EU. Thungela has strategically positioned its marketing business in Dubai to access new markets and diversify its customer base. The company is actively exploring opportunities in the Middle East's fossil fuel ecosystem to facilitate easier access to capital for future investments. The office in Dubai is already operational and showing promising results in terms of market penetration and margin optimization. The mining industry in South Africa faces challenges in securing funding for coal projects amid global shifts towards renewable energy. Thungela's proactive approach to diversification and efficiency improvements underscores its commitment to long-term sustainability. As rail infrastructure enhancements progress and market dynamics evolve, Thungela is poised to navigate the changing landscape and capitalize on emerging opportunities in the coal sector.