Thungela Resources Reports Robust First-Half Financial Performance

Thungela Resources Limited, a leading coal mining company, has announced its first-half earnings for 2026, showcasing a strong financial performance despite market uncertainties. The company’s adjusted EBITDA nearly doubled to ZAR 1.3 billion, with adjusted operating free cash flow rising to ZAR 1.9 billion. Thungela’s net cash position reached ZAR 6.1 billion, enabling the company to declare an interim dividend of ZAR 5.50 per share, representing a ZAR 773 million distribution to shareholders.

Source: s.yimg.com

Thungela’s CEO, Moses Madondo, attributed the company’s success to improved export volumes, stronger benchmark coal prices, and lower operating costs. The company’s export sellable production increased 6% year-over-year to 8.5 million tons, while export equity sales rose 7% to 8.9 million tons. The improvement in rail performance in South Africa and higher sales from the Ensham operation in Australia contributed significantly to the gains.

Production and Sales Performance

Thungela’s production and sales performance were driven by improved rail performance in South Africa and higher sales from the Ensham operation. The company’s export sellable production in South Africa was broadly unchanged from the prior-year period, despite the closure of Goedehoop North at the end of 2025. However, Khwezela’s first-half production was 1 million tons above the prior period, while Zibulo production declined due to underground infrastructure challenges. Madondo described the Zibulo issues as temporary, stating that the mine was transitioning toward the Zibulo North Shaft.

At Ensham, production increased 37%, contributing to lower unit costs. The company’s FOB cost, including royalties, declined to ZAR 1,466 per export ton from ZAR 1,904 per ton in the first half of 2025. The reduction reflected higher production, improved operating leverage, efficiency measures, and the stronger rand’s effect on translated costs.

Prices and Currency Impact

Coal benchmarks strengthened during the first half following volatility linked to conflict in the Middle East and energy-security concerns. The average Richards Bay benchmark coal price increased 15% from the prior-year period, while the average Newcastle benchmark price rose 25%. However, a stronger South African rand reduced the benefit of higher dollar-denominated coal prices for the company’s South African operations. The average exchange rate moved to ZAR 16.41 per U.S. dollar from ZAR 18.39 in the first half of 2025, reducing reported revenue by approximately ZAR 1.7 billion.

Revenue nonetheless increased modestly to ZAR 15.2 billion, as higher export prices contributed about ZAR 2 billion in additional revenue and increased export volumes added close to ZAR 1 billion. Domestic revenue declined following the closure of Isibonelo and Goedehoop.

Outlook and Longer-Term Priorities

Thungela maintained its full-year guidance for production, costs, and sustaining capital. The company’s CEO, Moses Madondo, stated that South African production was tracking below the bottom end of its annual range based on the year-to-date run rate, but management expects a stronger second half as underground production challenges ease. Ensham production was trending above the upper end of its guidance range, although the company maintained its stated full-year range. Ensham sustaining capital expenditure is expected to be between ZAR 500 million and ZAR 700 million.

Management remains constructive on medium- and long-term coal fundamentals but cautious about near-term conditions. Chief Financial Officer Deon Smith cited increased domestic coal supply in China and India, purchasing preferences in those markets, freight costs, and uncertainty in currency markets. He stated that management expected U.S. dollar weakness to continue in the near term, while coal prices could retain a higher floor due to strong demand and limited supply.