South Africa's coal producer Thungela Resources is attempting to acquire assets from overseas, as long-standing bottlenecks of domestic railway transport are restricting its exports.

The spinoff from Anglo American Plc made record profit last year due to increased European coal demand following the Russia-Ukraine conflict. However, the company's stocks decreased 12% in London after Thungela reported that sales are expected to decrease again this year as Transnet SOC Ltd., the state-owned rail operator, is facing more issues on its main coal transportation line.

Thungela CEO July Ndlovu said the company is looking at buying both thermal and metallurgical coal assets due to the deteriorating logistics situation in the country. Under an agreement declared last month, Thungela and its partners agreed to purchase 85% of Ensham Mine from Idemitsu Australia Ltd. for A$340 million ($226 million).

Ndlovu said in an interview that Thungela wants to create a diversified portfolio and if the Ensham deal is successful, it will enable the company to seek out more opportunities.

Thungela's coal shipments dropped 10% to 13 million tonnes last year, even though higher prices raised the company's profit and revenue. Shipments are likely to decrease more because of Transnet's locomotive shortage and vandalism on the export route from Mpumalanga to Richards Bay Coal Terminal.

The firm predicted to export 10.5-12.5 million tonnes of coal this year, the lowest amount on record, according to Ndlovu. Thungela has 3.2 million tonnes of stockpiles at its mines and another 400,000 tonnes at the port. As Transnet's situation is uncertain, Thungela couldn't give guidance for 2024.

(Writing by Alex Guo  Editing by Harry Huo)
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