The coal company Anglo gave an expiry date is now shopping for mines. When Anglo American cut its South African coal mines loose in 2021, those mines had roughly eight years of digging left in them, and coal was the thing every investor was trying to get away from. Fast forward to today and Thungela has just declared its tenth dividend in a row, and its chief executive is out looking for more mines to buy.
"Thungela redefined its own story," finance chief Deon Smith told Business Day. "It said we will not die in eight years."
Thungela digs thermal coal, the kind burned to make electricity, out of Mpumalanga and one mine in Queensland, and puts it on ships at Richards Bay. Almost half of what it sold in the first half went to India. Three things decide whether that is a good business: how much it can dig, whether Transnet's trains turn up, and what the coal fetches.
The 461% that flatters
Profit for the six months to June rose 461%, to R1.39 billion. Hold the champagne, though, because two things are propping that up. Last year's figure was small enough that almost any recovery looks spectacular beside it, and about R1 billion of this year's total is a paper gain from selling the Kleinkopje mining right rather than cash that arrived.
The cleaner measure, core earnings per share, rose 150% to R4.80. Revenue barely moved, up 2% to R15.2 billion, because the rand traded 11% stronger and took a bite out of every dollar of coal sold. Shareholders get R5.50 a share, R773 million in all, and the market liked it enough to push the stock up 11% in a day.
The trains finally showed up
For years the problem was never finding the coal. It was getting it to the coast. Transnet's coal line ran at an annualised 59.9 million tonnes over the half, up from 56.8 million, and that is now enough to carry everything Thungela's mines can produce. Smith's word for the business is unconstrained. Production rose 6% to 8.5 million tonnes, and the Australian mine bought in 2023 lifted its own output by more than a third.
So Madondo is shopping, and not for a commodity or a country: for assets Thungela already knows how to build. What he cannot control is who still wants the coal. Prices ran 15% higher in South Africa and 25% higher in Australia this half, lifted by five months of conflict in the Middle East and renewed nerves about energy security. India is where it gets awkward. Thungela's own results announcement concedes that a weak currency, higher freight rates and price-sensitive buyers have capped what South African coal can charge there. Madondo told Bloomberg that Indian demand "is going to be massive". Almost half the revenue is riding on which of those two holds.
