Shareholder activist organisation Just Share has accused Thungela Resources of not taking climate change seriously through its limited plans to reduce coal mining after demand surged to all-time highs after Russia's invasion of Ukraine last year.
Speaking on the sidelines of the Thungela AGM in Johannesburg this week, Just Share executive director Tracey Davies said the company does not present a compelling case for any science-based net zero strategy.
“At the moment the only way for a coal mining company to reduce its scope 3 emissions is to mine less coal. They do not have any plan for that. Thungela has no plan to reduce their coal mining.
“CEO July Ndlovu has said they will not replace production from mines in South Africa that are depleted [but] at the same time they are investigating further acquisitions and further purchases of new coal mines,” said Davies.
JSE-listed Thungela, with a market cap of R19bn, was established after Anglo American unbundled its South African thermal coal assets. It is a pure play coal producer with plans to diversify to Australia and buy Ensham coal mine.
Davies said that when Thungela listed in 2021 there was an understanding in the market that it would responsibly wind down Anglo's thermal coal assets.
“However, Russia and Ukraine happened, and the price of coal went up and that seems no longer the plan. It is all well in the short term to take advantage of the coal price, but in the long term these problems are not going away. Climate change is not going away. The world has to decarbonise at an incredibly rapid rate,” she said.
Thungela chair Sango Ntsaluba told the AGM that environmental, social and governance (ESG) concerns were paramount for the company.
“It is not a secondary issue. It is not an issue which is a by the way. We consider the issue of climate change as falling within the context of our ESG criteria.”
Ndlovu said the group had made progress in dealing with scope 1 and 2 carbon emissions and that scope 3 emissions had been reduced from 54-million tons to 39-million in 2022.
Scope 1 emissions are direct emissions from operations, scope 2 are indirect emissions, such as from energy the company buys and uses, and scope 3 covers other direct emissions, such as transporting products.
“Though we are reporting on scope 1 and 2 and we say one of the levers we are going to pull is when production comes to an end, we are not going to replace production like at Isibonelo Colliery. So, we do take that science into account. We say as we continue to improve our response strategy we will look at scope 3 and what we can do in time,” he said.
In addition to closing Isibonelo, Thungela envisages closing its Goedehoop, Greenside and Khwezela collieries by 2030, paving the way for a reduction in greenhouse gas emissions associated with those operations.
In March Thungela said it would reduce its scope 1 and 2 emissions by 30% by 2030 in line with its path to net zero by 2050.
In its inaugural climate change report released in April, Ndlovu said that over the next twenty years coal would provide lower-cost energy security, particularly in countries where fuel choices are limited.
Ndlovu said technology was available to abate up to 99% of coal emissions, including high-efficiency low-emissions coal-fired power plants, coal-to-hydrogen, and carbon capture, use and storage.
Fossil fuel executives all over the world have profited enormously from the war against Ukraine and we think that is very problematic
— Just Share executive director Tracey Davies
Thungela raked in R18.2bn in profits in the year to end-December 2022 up from R6.9bn a year earlier and returned R100 a share, or R13.8bn, to shareholders, up from R18 a share in 2021. Prices soared after the EU's ban on Russian gas and coal due to its invasion of Ukraine early last year, spiking to an average of $270.87 a ton in 2022, up from $124.11 a year earlier.
As a result, Ndlovu's 2022 remuneration nearly doubled to R129m, up from R74m in 2021, while CFO Deon Smith was paid R66m, up from R36m the previous year.
Davies said the returns the company delivered to shareholders and the profits it made over the past year were the result of a historic event that caused the prices to escalate dramatically.
“It was not extremely clever management that resulted in those profits, it was external geopolitical events and not just any external geopolitical event, but a devastating war that is having an extraordinary affect on the whole world’s economy, so there is a huge irony. It is not just Thungela, it is fossil fuel executives all over the world have profited enormously from this war and we think that is very problematic.”
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