• Thungela swung from a R3.5bn profit to a R7.1bn loss, driven largely by R8.8bn in non-cash impairments amid weaker coal prices and currency pressures
• Despite the loss, the group maintained strong operations, generating positive cash flows and remaining free cash flow positive
• Structural shifts in global coal markets , including rising renewable energy adoption, increased domestic production in China and India, and global oversupply , continue to weigh on prices and long-term outlook

Harare - Thungela Resources, one of South Africa’s largest coal exporters, swung into a R7.1 billion loss for the year ended December 2025 from a R3.5 billion profit recorded in the prior year according to the latest financial results.

This was despite maintaining solid production and cash generation, as weaker coal prices, currency pressures and a sharp reassessment of future market conditions weighed on earnings.

The loss was largely driven by a R8.8 billion non-cash impairment, reflecting lower long-term coal price assumptions, a stronger South African rand and a softer US dollar, factors that reduced the expected future value of the company’s assets.

‘’ The Group recognised non-cash impairment losses of R8.8 billion against our assets, reflecting lower benchmark coal price forecasts, the weakening of the US dollar and the strengthening of the South African rand,’’ Moses Madondo Chief executive officer said.

Operationally, Thungela remained resilient. Export saleable production increased to 17.8 million tonnes, supported by improved productivity and cost discipline. The group generated R2.4 billion in operating cash flows and remained free cash flow positive during the year.

However, financial performance weakened significantly. Revenue declined 17% to R29.6 billion, while adjusted EBITDA fell sharply to R1.2 billion from R6.3 billion in 2024, reflecting lower coal prices and tighter margins.

Coal prices came under pressure in 2025, with the Richards Bay benchmark falling about 15% year-on-year.

The decline reflects broader changes in global energy markets rather than a sudden collapse in coal use.

Major consumers such as China and India are increasingly investing in domestic coal production to secure energy supply and reduce dependence on imports. At the same time, these countries are accelerating investment in renewable energy, particularly solar and wind, as costs fall and capacity expands.

In developed markets such as Japan, South Korea and parts of Europe, utilities are shifting toward natural gas and nuclear energy, which provide more stable and lower-emission alternatives to coal.

This combination has reduced demand for seaborne coal, particularly imports from exporters like South Africa.

While demand is shifting, global supply has remained strong. Major producers including Indonesia, Australia and South Africa maintained high output levels throughout 2025, creating an oversupply in the seaborne market.

This imbalance between supply and demand has kept coal prices subdued, even as the commodity continues to play a key role in global energy.

The stronger South African rand further weighed on earnings. Coal is sold in US dollars, but most of Thungela’s costs are in rand. As the rand strengthened to an average of R17.89 per dollar, export revenues translated into less local currency, compressing margins.

Coal remains a critical source of energy, particularly in developing economies where it supports electricity generation and industrial growth.

However, the market is evolving. Countries are increasing domestic production while investing in renewables, gas and other energy sources, reducing reliance on imports and putting pressure on global prices.

Equity Axis News