Profits soar as Europe flocks to S. African coal

STORY: South Africa's coal sales to Europe rose eight-fold in the first half of 2022 as demand surged ahead of a ban on imports of the fossil fuel from Russia.

That's according to Johannesburg-based coal exporter Thungela Resources, which on Monday (August 15) reported half-year profits 20-times bigger than the year before.

The boost was driven by Thungela's realized average price rising to $240 per tonne during the half year to June 30, compared with $75 a tonne last year because of the higher demand.

In April the European Union announced a ban on coal imports from Russia as a part of sanctions over the war in Ukraine.

It came into effect on August 10 but ahead of the ban European countries - which previously relied on Russia for 45% of their coal - began sourcing elsewhere.

Thungela said Europe was competing with Asia for South African coal.

The company is part of a consortium that owns Africa's largest coal export facility - the Richards Bay Coal Terminal.

Thungela's chief financial officer Deon Smith said coal exports from the RBCT had risen by 720% year-on-year to around 4.5 million U.S. tons in the first half of 2022.

But CEO July Ndlovu said South Africa was was not able to take full advantage because of its deteriorating rail infrastructure.

Poor maintenance, a lack of locomotives and copper cable theft have diminished the capacity of state-owned rail company Transnet.

As a result of the difficulties in getting coal to port, Thungela has revised down its production guidance for 2022.

The company, which was spun off from mining giant Anglo American in June last year, said it would return 8.2 billion rand, or a little over $500 million to shareholders.