The Coal Trader

Thungela: CFO’s Pre-Close Statement for year ending December 2023

Editors Note: the following is a summary of the Chief Financial Officer’s Pre-Close Statement for the financial year ending 31 December 2023. You can find the statement in its entirety here.

Thungela’s CFO reports that despite rail challenges, the company is on track to meet its full year 2023 guidance, with higher production at Ensham. Key points include:

  1. Lower energy demand in Europe, China, and Asia due to a mild winter and high coal/gas stock levels, leading to increased focus on the Asian-Pacific market.
  2. Softened benchmark coal prices in 2023, with the Richards Bay and Newcastle Benchmark prices averaging lower than in 2022.
  3. Stable discounts to the Richards Bay Benchmark price and premiums for Ensham to the Newcastle Benchmark price due to fixed price sales.
  4. Slightly higher-than-expected export production from South African operations and Ensham, despite production curtailment due to rail issues.
  5. FOB costs per export tonne expected to be at the lower end of guidance ranges for both South African operations and Ensham.
  6. Stable export equity sales year-on-year for South African operations, with Ensham expected to contribute significantly.
  7. Capital expenditure for South African operations at the lower end of guidance, with significant investment in Elders and Zibulo North Shaft projects.
  8. Net cash position strong, with strategic management of rail performance issues and efficient use of physical infrastructure.
  9. The Ensham acquisition marked geographic diversification and access to new markets, with a higher-than-expected cash benefit reducing the purchase price.
  10. Thungela’s capital allocation strategy focuses on balance sheet flexibility, maintaining a cash buffer, and shareholder returns according to dividend policy.

Overall, Thungela has demonstrated operational agility and strategic progress amid challenging conditions, maintaining its commitment to creating value for shareholders.