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Thungela trims guidance due to rail issues

Anglo American’s thermal coal spin-off Thungela Resources has reduced its 2021 production guidance due to ongoing rail issues in South Africa, saying some of its operations might reach stockpile capacity next month.
Thungela trims guidance due to rail issues Thungela trims guidance due to rail issues Thungela trims guidance due to rail issues Thungela trims guidance due to rail issues Thungela trims guidance due to rail issues

Thungela Resources’ Greenside underground thermal coal mine in South Africa

Ngaire McDiarmid


It cut 2021 export saleable production guidance from 15-16 million tonnes to 14.8-15.2Mt.

"Unless there is an improvement in rail performance, Thungela is expected to build additional export inventory stock levels of approximately 1.3mt during H2 2021," it said.

The news comes as thermal coal prices soar due to a series of supply issues, including floods forcing mine closures in China's Shanxi province a week ago.

Thungela said Transnet Freight Rail's (TFR) performance had "continued to deteriorate" in the second half.

South Africa's rail network has been plagued by thieves, leading to logistical and operational challenges.

Transnet last week recorded 112 cable thefts and a loss of almost 31,000m of cable, plus another 84 incidents of theft and vandalism of other infrastructure.

Thungela said it had already taken action to mitigate the impact on its business and was exploring further options.

It had reduced third-party sales, which used Thungela's rail entitlement, from 926,000t in the first half to 25,000t in the current half.

"The group has also optimised its export equity sales mix, prioritising the railing of higher margin products, at lower volumes, recognising continued rail constraints," it said.

"Thungela continues to work together with the South African coal industry and TFR to improve the levels of infrastructure availability and performance."

It said the coal industry had helped TFR to implement improved security measures, which were expected to contribute to an improved rail performance.

Thungela's shares (JSE: TGA) have increased almost four-fold since listing in June and last traded at ZAR84.10, valuing it at ZAR11.5 billion (US$0.8 billion).