(Reuters) -South African coal miner Thungela Resources’ on Monday flagged a sharp rise in costs and said persistent rail logistics problems continued to curb exports in the first half of the year, sending its shares tumbling around 9%.
Thungela’s shares fell even though the company said it expected headline earnings per share (HEPS) to jump to 58 rand ($3.61) in the first six months from 3.05 rand in the same period in 2021, thanks to high coal prices. HEPS is the main profit measure in South Africa.
In a trading update, Thungela said it had curtailed production to mitigate the impact of “inconsistent” rail service by South Africa’s state-owned logistics firm Transnet, resulting in a 14% decline in export saleable production during the first half compared to the same period last year.
Thungela’s free on board (FOB) cost per export tonne of coal, including royalties, is expected to be 44% higher at 1,124 rand ($70.03), compared with 782 rand in the first half of 2021, it said in a statement. Excluding royalties, which always rise in lockstep with coal prices, Thungela’s costs were up 22%.
Its shares were down 9.6% by 1448 GMT. The company is expected to report first-half results on August 15.
Thungela said it continues to engage with Transnet on improving rail performance.
Poor maintenance, a lack of spare parts for trains, copper cable theft and vandalism have disrupted Transnet’s freight rail services, causing coal and iron ore exports to fall.
Some South African miners have resorted to trucking coal to ports, which costs up to four times more than rail, to meet the surge in European demand since the war in Ukraine started, bypassing the deteriorating rail infrastructure they blame for costing them billions of dollars in lost revenue.
Thungela told Reuters it is not trucking coal at the moment, though it is exploring that as alternative transport.
($1 = 16.0474 rand)
(Reporting by Nelson Banya, Editing by Helen Reid and Emelia Sithole-Matarise)
