Thungela reaffirms SA’s use of coal

Retiring Thungela CEO July Ndlovu says South Africa should have a sovereign right to include coal as part of its energy mix in line with how developed nations built their economies.

In an interview with Business Times this week, Ndlovu said while the global north in Europe was phasing out coal, emerging economies like India, China, Vietnam, Indonesia and Bangladesh continue to invest in coal-fired power stations, underscoring coal’s runway.

“Does it make sense for a country like ours — which is a developing nation with a significant resource as coal — to walk away from that natural endowment? To what end when, in fact, countries with the biggest pollution burden like China and India continue to use coal... Why would we do that?”

Ndlovu said the US wanted to keep its coal-fired power stations open to address grid reliability.

“If a country like the US says they are not phasing out coal, help me understand why we as a country should do so? They (developed countries) built their economies on the basis of coal energy, why don’t we as a country have the sovereign right to do the same?”

If a country like the US says they are not phasing out coal, help me understand why we as a country should do so?

Thungela was established in 2021 when Anglo American demerged its South African thermal coal assets. Months later, Russia invaded Ukraine, sparking a commodity super cycle and bumper profits for coal producers like Thungela.

While the Thungela share price has slumped due to coal low prices, the performance is still better than expected, given the day one share price was R21 a share.

 “We started off as a short life business, most people did not believe we would be around today. They kept saying, ‘really, you are listing a coal company, what are you thinking?’ In a very short space of time, we have generated an enormous amount of value for our shareholders and stakeholders.”

Since its listing in June 2021, Thungela’s share price has surged to the current level of R91 a share. It went beyond R300 a share in 2022 amid heightening geopolitical tensions.

Ndlovu said Thungela’s returns trumped its share price performance, pointing to the group’s shareholder returns, the Elders Project expansion project and the acquisition of Ensham, a coal mine in Australia. “The issue is we have been able to return to our shareholders seven times our day one market cap, R22bn was returned to shareholders; in the same period we have invested close to R10bn in the Elders Project; [we are] about to commission the Zibulo north shaft; we acquired Ensham.”

Thungela, in tandem with the coal industry, was hampered by the underperformance of Transnet Freight Rail, especially when coal prices peaked.

Ndlovu said Transnet was a good business but during state capture, the wheels came off, however, South Africa was lucky logistical constraints happened when the prices were high. “If it had happened when prices were low, and having to cut production backwards, I think there would have been a bloodbath in the coal industry, but livelihoods were not  lost.”

Ndlovu, a one-time chair of the World Coal Association, said Thungela remained committed to cutting its scope 1 and 2  greenhouse gas emissions by a minimum of 30% by 2030 despite criticism from environmental groups. 

“We are well on track to deliver our promises to society,” he said.

Thungela, which came under fire for a toxic acid mine spill at its Khwezela Colliery’s Kromdraai site in 2022, has, however, since established a fish breeding project to address harm to the ecosystem. Thungela was able to rectify and deliver on its promise. “We did not hide, we acknowledged what had gone wrong, and we said we would do whatever it takes to make it right and that is what we have done,” he said.

Ndlovu,  said post his retirement he was looking forward to do the things he has always wanted to do.

"I want to play golf in different golf courses around the world, and just experience different cultures, and different people," he said.

Ndlovu will be succeeded by Moses Madondo, the incoming CEO designate effective August 2025.