By Felix Njini
NAIROBI (Reuters) -Thungela Resources, South Africa’s largest shipper of coal burned in power stations, said it would push ahead with plans to acquire new assets even as lower prices and challenges moving the fossil fuel to local ports squeeze profit.
The Johannesburg-based miner’s plans to diversify geographically haven’t changed despite coal prices falling from record highs, July Ndlovu, Thungela’s chief executive officer, said.
“We are going to continue to look for assets and we have always said we wanted to grow our business, diversification in a commodity that we know makes sense,” Ndlovu told Reuters in an interview.
“If you are in commodities, cycles come and go and the best commodity investors are those who invest throughout the cycles,” the CEO added.
The thermal coal producer spun off from Anglo American in 2021 announced a deal earlier this year to buy Ensham coal mine in Australia, which Ndlovu said should be completed this month.
The CEO said Thungela has a strong cash position to pay dividends and acquire new assets even as coal prices soften.
“We are very fortunate in that we have a very flexible and robust balance sheet,” Ndlovu said.
Thungela and producers including Exxaro Resources and Kumba Iron Ore are stockpiling coal and iron ore at their mines as state-owned rail operator Transnet SOC struggles to move output to the country’s ports.
Thungela, which has about 2.7 million metric tons of coal worth about 3 billion rand stockpiled, reported a 69% drop in first-half profit on Monday.
The trajectory of Transnet’s performance and future prices “could require us to further review the size and shape of our portfolio,” Ndlovu said.
Thungela forecast output this year at between 11.5 million and 12.5 million metric tons against an annual production capacity of about 16 million tons of coal. Ndlovu declined to give production guidance for 2024.
(Reporting by Felix Njini;Editing by Emelia Sithole-Matarise, Kirsten Donovan)
