Press Releases

KEY FEATURES

• Total Recordable Case Frequency Rate (TRCFR) remained at 1.40 for the South African operations.
• Profit of R5.0 billion, includes R448 million contribution from Ensham for the four months since completion of the transaction. 
• Strong cash generation and balance sheet position maintained, with adjusted operating free cash flow of R6.8 billion and net cash of R10.2 billion.
• Declared final dividend of R10.00 per share, bringing total dividend for the year to R20.00 per share, amounting to R2.8 billion in dividends relating to 2023.
• Share buyback of up to R500 million announced, bringing total returns to shareholders to R3.3 billion.
• Delivering on our commitment to share value with a total distribution of R312 million to the Nkulo Community Partnership Trust and the Sisonke Employee Empowerment Scheme for 2023.

Thungela Resources Limited (“Thungela” or the “Group”), a leading South African thermal coal exporter with an international footprint, has announced its financial results for the twelve-month period ended 31 December 2023. Thungela has demonstrated a resilient performance that underpinned strong cash generation and a robust net cash position, which supports total returns to shareholders of R3.3 billion relating to 2023, equivalent to 49% of adjusted operating free cash flow, significantly higher than the minimum of 30% per the dividend policy.

Commenting on the results, July Ndlovu, CEO of Thungela, said: “Safety is our first value. Although we have maintained a consistent TRCFR for our South African operations, we cannot waiver in our commitment to operating a business free from fatalities and injuries. As reported previously, our colleague Breeze Mahlangu regrettably passed away in February 2023.”

“In 2023, Thungela experienced significant transformation with the acquisition of Ensham in Australia, a key milestone in the Group’s geographical diversification pathway, the approval of an extension to the life of our flagship Zibulo Colliery, and the continued execution of the Elders project. These advancements have set Thungela on a path towards a more competitive portfolio, and a longer-life business.”

“Our financial performance reflects agility in responding to market challenges, including weaker coal prices and continued rail under performance. Despite these challenges we have generated an adjusted EBITDA of R8.5 billion, adjusted operating free cash flow of R6.8 billion, and ended the year with a net cash position of R10.2 billion.”

“Since listing, the Group has consistently fulfilled its promise to distribute a minimum of 30% of our adjusted operating free cash flow to shareholders. The board has declared a final ordinary cash dividend of R10.00 per share. Together with the interim dividend of R10.00 per share, this brings our total dividend distribution to R2.8 billion for the year. When taking into account the R500 million share buyback, this means that we are returning 49% of adjusted operating free cash flow to our shareholders, affirming Thungela’s commitment to delivering attractive shareholder returns.”

Building a sustainable and long-life business across multiple geographies

The acquisition of a controlling interest in the Ensham business is a significant step in Thungela’s geographic diversification strategy, extending its footprint beyond South Africa and enhancing its coal resource base by approximately one billion tonnes. This move opens-up new markets, notably Japan and Malaysia, diversifying the customer base and providing exposure to the Newcastle benchmark coal price.

Thungela has further solidified its international presence by establishing Thungela Marketing International (TMI) in Dubai. This move is designed to market the coal produced by its South African and Australian assets; it also gives Thungela direct access to seaborne markets. Through TMI, the Group is set to enhance its relationships with customers, reflecting its intention to stay attuned to their needs, the global commodities market, and to position itself as a coal producer with an international footprint.
Maximising value from existing assets will also be critical to shaping the future business. Through the Elders and Zibulo North Shaft projects, Thungela is transforming into a long-life business with a competitive portfolio measured by all-in sustaining cost.

Our ESG performance

Building on the momentum generated by its strategic initiatives, Thungela continues to spike on the social component of ESG. We have made further contributions of R156 million to the Nkulo Community Partnership Trust and the Sisonke Employee Empowerment Scheme, bringing total contributions to these trusts for the year to R312 million.

In parallel, addressing environmental stewardship, the Group has undertaken remediation efforts, including the commissioning of a fish breeding facility, to restore aquatic life following the unfortunate environmental incident at the Kromdraai site in February 2022. Thungela has committed to executing remediation measures and averting a reoccurrence, with an end goal of achieving full ecological revival that reflects a return to pre-incident biodiversity and water quality levels.

Managing the impact of continued poor rail performance

Inconsistent and constrained performance by Transnet Freight Rail (TFR) has again severely affected the South African coal mining industry. In 2023, TFR railed 47.9Mt of thermal coal to the Richards Bay Coal Terminal (RBCT), marking a 4.8% decline compared to 2022.

Thungela continues to work closely with industry players and Transnet to remedy rail performance. Through the RBCT, industry collaborated with TFR to strengthen security measures by deploying additional security on the coal line for the past 18 months. RBCT is also helping Transnet acquire the critical spare parts, necessary for the maintenance of locomotives, from alternative suppliers.

The cost of the spares and security deployment is recovered by the coal exporting parties through the mutual cooperation agreement signed between TFR and RBCT (representing the coal exporting parties). Further collaborative efforts will address critical systems, such as signaling, to improve overall performance.

We have responded to TFR’s persistent poor performance by curtailing production at our underground mines, renting sidings to improve our distribution patterns and driving efficiencies at our rapid loading terminals. Acting swiftly and decisively in the face of rail challenges has allowed us to benefit from additional trains when they are available, and to rail 12.3Mt of export saleable volumes in 2023.

Outlook

Export saleable production guidance for South Africa in 2024 is set between 11.5Mt and 12.5Mt based on expected rail performance. FOB cost per export tonne is expected to be between R1,170 and R1,290 excluding royalties. Including royalties, the range is between R1,180 and R1,300 per tonne. Sustaining capital expenditure is expected to be between R900 million and R1,100 billion. Expansionary capex is expected to be between R1,600 million and R1,900 billion on the Elders and Zibulo North Shaft projects.

For the Ensham Business, export saleable production guidance is between 3.2Mt and 3.5Mt (on a 100% basis) based on our plans to ramp up production. FOB cost per tonne is expected to be between AUD130 and AUD140 excluding royalties. Including royalties, the range is between AUD150 and AUD160 per tonne. Sustaining capital expenditure is expected to be between AUD40 million and AUD70 million (on an 85% basis), based on historical sustaining capex spend.

Looking ahead, despite near-term headwinds, Thungela remains committed to delivering on its strategic priorities to take advantage of the long-term fundamentals supporting coal demand and stronger coal prices in key markets. In the short term, a sustainable solution to ensure efficient and reliable rail performance in South Africa is critical, and we will continue working with TFR to remedy the state of rail in South Africa.

Ndlovu concluded: “We will continue to evaluate our portfolio with a focus on strengthening our competitiveness and optimising capital allocation to maximise shareholder returns.”

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Today, Thungela celebrates an innovative fish breeding facility at the Loskop Dam Nature Reserve in Mpumalanga, commissioned to restore aquatic life in the Wilge-Olifants river catchment following the unfortunate uncontrolled release of mine-impacted water from Khwezela Colliery’s Kromdraai site on 14 February 2022.

Thungela committed to rehabilitating the areas affected by this overflow and took full accountability to do what was necessary to restore the ecosystem. Through partnerships with the relevant stakeholders, Thungela developed a rehabilitation plan approved by the Department of Water and Sanitation, which included various activities aimed at restoring the environment, with particular emphasis on enhancing biodiversity to levels beyond those prior to the incident.

Through close collaboration with the Mpumalanga Tourism and Parks Agency (MTPA) and leading aquatic scientists in South Africa, Thungela embarked on a path to execute the plan successfully. Amongst the activities contained in the plan was to speed up the recovery of the fish population to restore biodiversity in the Wilge-Olifants River catchment, which resulted in the commissioning of the fish breeding facility we are unveiling today.

July Ndlovu, CEO of Thungela, said, “I am proud to witness the fulfilment of the commitment that we, as a responsible coal miner, made in 2022. To be able to implement all aspects of the rehabilitation plan, which has led to the restoration of the environment to even better conditions than we found it – is the legacy we want to leave. We hold ourselves to the highest standards as set out in our Environmental, Social and Governance (ESG) Framework.”

“Our dedication to this initiative has helped us achieve our objective of minimising impact on the environment to achieve sustainable outcomes where we operate, and we are thrilled that the partnerships we have formed with the MTPA will extend well beyond the river system’s ultimate revival. We anticipate that this facility will become a hub for research in endemic species into the future and that the MTPA will run the facility to benefit other river systems,” said Ndlovu.

With water quality having returned to pre-incident levels and a resurgence in macro invertebrate activity observed, the time is right to replenish fish stocks. Through the fish breeding project, up to sixteen native fish species will be re-introduced to the river system. These will be released as part of the launch celebration, and we will continue to breed and release fish until monitoring indicates that fish diversity and population density have returned to pre-incident levels.

In addition, Thungela has forged partnerships with other authorities, the farming community and members of society, embodying a shared vision for environmental stewardship and the well-being of neighbouring communities. This initiative not only contributes to the improvement of biodiversity in the area but also highlights Thungela's dedication to environmental restoration and sustainability - demonstrating the Company’s accountability and commitment to being a responsible steward of the environment.

 Mduduzi Vilakazi, CEO of Mpumalanga Tourism and Parks Agency, commends the collaboration: "Our partnership with Thungela showcases the significance of united efforts in conserving our region's valuable natural resources and enhancing community livelihoods. This partnership sets a precedence that ensures sustainable use of resources to benefit our communities. The best way to conserve nature is through such strategic collaborations with established economic entities that invest in environmental appreciation.”

The fish breeding facility is among several of Thungela's conservation endeavours, including the introduction of renewable energy solutions and advanced water treatment systems to protect the environment, particularly during periods of low rainfall in the area.

 We are committed to continuously share updates on the rehabilitation measures to rectify the environmental impact and averting future occurrence, with an end goal of achieving full ecological revival that reflects a return to pre-incident biodiversity and water quality levels.

Download the Thungela Rehabilitation Brochure

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Thungela received high ratings from five highly respected agencies that evaluate companies based on their environmental, social, and governance (ESG) performance. These agencies assess listed companies against a wide range of sustainability criteria, recognizing transparency and commitment to responsible practices.

Mpumi Sithole, Thungela’s Executive Head for Corporate Affairs, said: “We are immensely proud to be recognised for our outstanding environmental, social, and governance performance on a global scale. For us, this is a testament that our ESG framework and approach is entrenched in every aspect of our operations. Understanding our exposure to risks and opportunities related to ESG allows us to address and monitor them. These rankings reaffirm our dedication to transparency and fostering positive impact where we operate.”

Thungela’s ESG performance was assessed by five agencies in 2023 based on 2022 performance, including CDP, FTSE Russell, MSCI, ISS, S&P Global and Sustainalytics.

• CDP scored over 21 000 companies on their environmental disclosures and released its score report on Climate Change. In the report, Thungela received an overall B rating, setting Thungela above both the African regional average of B-, and the global coal mining sector average of C. Thungela also received an A/A- Leadership score for implementing current best practices in governance and a B/B- Management score for taking coordinated action on climate-related issues.
• On the annual FTSE Russell ESG Index, Thungela’s rating improved from 3.5 out of 5 in 2022 to 4 out of 5 in 2023, largely because of enhancements to reporting protocols.
• On the MSCI index, Thungela moved up from a BB rating in 2022 to a BBB rating in 2023.
• The ISS rated Thungela for the first time in 2023, and while coal mining companies are classified as high-risk and automatically penalised for their contribution to climate change, Thungela was ranked as an industry leader alongside several local coal producers and outperforming global peers.
• On the S&P Global Corporate Sustainability Assessment (CSA), which annually evaluates the sustainability practices of over 10,000 listed companies around the world, Thungela’s total score rose to 49 in 2023, placing it in the 97 th percentile of the companies in the sector.

As a leading future-orientated thermal coal business with the purpose of creating value together for a shared future, Thungela remains committed to continuous improvement in its disclosure efforts.

Thungela will be publishing its reporting suite for the year ended 31 December 2023, which includes the Integrated Annual Report, Annual Financial Statements, ESG and Climate Change Reports. These will be available on our website on Wednesday, 24 April 2024.

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Thuthukani, Thungela’s Enterprise and Supplier Development (ESD) programme, announces the signing of a co-funding agreement with Absa, one of South Africa’s leading financial services providers. Absa will reserve R200 million, reviewable annually, for Thuthukani beneficiaries using their new or existing contracts with Thungela as collateral. 

Thuthukani, derives its name from the Zulu word translated “uplift.” The programme focuses on cultivating local businesses through the provision of business skills training and coaching, access to funding and technical enablement. This co-funding agreement further empowers them to seize opportunities within Thungela’s value chain. 

Mpumi Sithole, Executive Head for Corporate Affairs at Thungela says, “I am pleased that our partnership with Absa will make funding more accessible for local SMMEs with new and existing contracts with us. In 2023, Thuthukani disbursed R21.6 million in loans, leading to the creation of 114 jobs. To this end, we couldn’t support businesses requiring loan funding beyond this threshold, as larger contracts require substantial funding that Thuthukani alone could not provide. This partnership with Absa will close this funding gap for SMMEs, opening opportunities for them to pursue larger projects.”

Absa will manage the loan application process on their ESD portal, subject to a recommendation from Thuthukani. The portal is critical in ensuring funds are accessible to the approved beneficiaries, offering loans at a prime-linked interest rate.

Kgalaletso Tlhoaele, Executive for Enterprise Development at Absa Relationship Banking says, “This agreement highlights Absa’s dedication to enabling financial inclusion for SMMEs while also fostering sustainable economic growth across various sectors. The allocation aims to provide substantial financial support that empowers SMMEs to expand, innovate and achieve long-term sustainability. It also underscores our commitment to being an active force for good in society – enabling us to achieve our goal to support mining communities and create a robust environment where small and medium enterprises can thrive.”

This partnership targets SMMEs in municipalities hosting Thungela’s operations such as eMalahleni, Steve Tshwete and Govan Mbeki.

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Thuthukani, Thungela’s enterprise supplier development (ESD) programme hosted a graduation ceremony in honour of sixty-one (61) local entrepreneurs from communities surrounding its operations, who completed the programme. This is the second cohort of entrepreneurs to complete the programme since its inception in 2022.

The training programme is provided by business development support partner, Raizcorp, a pioneering business incubator that supports the growth of small and medium-sized businesses. The programme equips entrepreneurs with business-skills training, technical enablement and comprehensive mentorship to build sustainable and profitable businesses.

Mpumi Sithole, Executive Head for Corporate Affairs at Thungela said: "In the hands of small business owners lies the power to create jobs, transform lives and uplift communities, fostering resilience with every venture. We are proud of this cohort as they set out to make a positive impact in the community.”

Thuthukani exemplifies the spirit of transformation and empowerment, which honours the legacy of the 30 years of democracy by driving meaningful change in our host communities. Thuthukani promotes the growth and development of entrepreneurs to help improve access to income generation opportunities and reduce reliance on mines, which is in line with Thungela’s socio-economic development impact goals.

This year's cohort has demonstrated remarkable growth and progress, with many of them already reporting significant increases in revenue and expansion into new markets. One of the beneficiaries, David Mphikeleli Mavuso, owner of Mphikeleli's Civils and Building CC, said: “I joined the programme to enhance my business management skills and I am grateful that the programme has helped me acquire invaluable insights into finance and marketing through the Supply Chain Support course. Thanks to Thuthukani, I have since been able to expand my business to other provinces across South Africa.”

Jeanne Renou Raizcorp’s Strategic Relations & Projects Manager said: “Partnering with Thuthukani has allowed us to directly contribute to the growth and development of many small and medium businesses in Mpumalanga. Seeing these business owners succeed shows that we are making progress in growing and developing entrepreneurs.”

The Thuthukani ESD programme is tailored to support entrepreneurs based on individual needs identified through a detailed gap analysis. Graduates completed training sessions covering entrepreneurship, finance, marketing, sales, project strategy, leadership and management, mentorship and guidance, personal development and ISO certifications. The courses were aimed at enhancing competitiveness for supply chain opportunities and improve financial and business management skills for the future.

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[JOHANNESBURG, 18 JANUARY] - Thungela, a leading pure-play producer and exporter of high-quality thermal coal, has been honoured with the Top Employer Certification, securing an impressive score of 87.86%. This prestigious certification reflects Thungela's commitment to excellence in various key areas of organisational development.

Showcasing excellence, Thungela achieved an impeccable 100% score in business strategy, employer branding, talent acquisition, ethics, and integrity. This accomplishment not only reinforces Thungela’s status as a leader but highlights its commitment to maintaining high standards for vital operational standards. These achievements are indicative of Thungela’s persistent efforts to promote transparency, uphold integrity, and pursue a strategic vision that aligns with business ethics and effective talent management.

Lesego Mataboge, the Executive Head of Human Resources at Thungela, says: “Thungela's three consecutive Top Employer Certifications signify our unwavering dedication to fostering an exceptional workplace. This award reaffirms our belief that a supportive, safe, and thriving workplace is the foundation of sustained success, and we are excited to continue this journey of excellence, while creating value for a shared future.”

The leadership team at Thungela continues to shine with a remarkable 95% score, emphasising the company’s commitment to cultivating a leadership that drives innovation and success. In the sustainability category, Thungela earned a notable 94.83%, showcasing the company's commitment to environmental responsibility. The 97.58% score in performance highlights Thungela's ongoing dedication to achieving operational excellence and delivering value to its stakeholders.

The Top Employers Institute is the global authority on recognising excellence in people practices and has certified 2,053 organisations in 121 countries/regions since 1991. The certification is given if the people and practices at the organisation can pass the HR Survey, which is based on six key HR themes: steer, shape, attract, develop, engage, and unite.

For three consecutive years, Thungela has achieved the Top Employers Certification, showcasing not only its current successes but also its steadfast commitment to being a forefront advocate for a positive, inclusive, and forward-thinking workplace environment. This recognition once again confirms that Thungela is a people-centric business built on their people, for their people.

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Earlier this year Thungela announced that it will acquire a majority shareholding interest in Sungela Holdings, which in turn will acquire an 85% interest in the Ensham Business.

Thungela is pleased to announce that all conditions precedent relating to the acquisition have now been fulfilled and that the Transaction has become unconditional. The effective date of completion will be 31 August 2023, and Thungela will assume operational control of the Ensham Business from 1 September 2023.
 
The acquisition of the Ensham Business is a significant step in Thungela’s strategy to pursue geographic diversification. The Transaction will also allow the Group to leverage its core capabilities in a commodity and mining method which it understands well, while providing access to new markets and to the Newcastle export coal price.

Based on Ensham’s performance up to completion, the mine is expected to produce approximately 2.7Mt of export saleable production (on a 100% basis, at an average quality of 5,850 kcal/kg) in 2023, at an FOB cost of between USD110 and USD120 per tonne.
 
The terms of the Transaction remain unchanged, save for the fact that the Co-investors are required to apply not less than 90% (previously 70%) of all distributions received from Sungela Holdings to service the Co-investors Mezzanine Loans and that the term of the Loans is revised to 18 months (previously 4 years).
 
The Transaction was structured to enable Sungela to benefit from the economics of the Ensham Business (subject to certain limits) during the period between 1 January 2023 and the date of completion. The determination of the economic benefit will be finalised over a period of up to three months following completion. The Transaction is also subject to customary working capital adjustments upon completion.

Thungela CEO, July Ndlovu, commented on the Transaction: “We are delighted to welcome our colleagues from Ensham into the Thungela family as they continue to build on a proud history of safe production in the Bowen Basin region of Queensland. We look forward to learning from them and also to sharing our knowledge.“
 
Thungela is proud to have concluded a landmark Transaction with Idemitsu, a responsible and reputable owner with well-established processes and systems. The Transaction delivers on our purpose to responsibly create value together for a shared future, and we will continue to support existing regional communities while also delivering superior returns for the Group’s shareholders.”

Capitalised terms used in this announcement shall bear the same meanings as those defined in the SENS and RNS announcements dated 3 February 2023.

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Thungela announced the successful registration of Thungela Marketing International (“TMI”) with the Dubai Multi Commodity Centre Authority (DMMCA) as of 15 December 2023.

The Dubai office will house the export marketing team, operating under Thungela Marketing International and this team will be responsible for overseeing a broad range of marketing functions, catering to both the South African and Australian assets.

July Ndlovu, CEO of Thungela said, “This is a key milestone towards fulfilling one of our strategic objectives - to create future diversification options. TMI gives us direct access to seaborne markets and helps us to strengthen relationships with our customers. Our presence in Dubai is testament of the steps we are taking to realise geographic diversification and becoming a key player in the international market.

The expansion into Dubai underscores Thungela’s intention to stay attuned to the needs of customers and the global commodities market, deliberately positioning the Company as a coal producer with a global footprint.

Further details on TMI will be provided at the upcoming annual financial results presentation in March.

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