JSE-listed Thungela Resources says it continues to monitor the impact of the ongoing conflict in the Middle East on its employees and the broader operating environment, noting that, to date, the company’s operations have continued without any safety incidents or significant business disruptions.

Thungela, in a statement to shareholders, notes that energy markets remain volatile as prices continue to respond to shifting sentiment around the protracted Middle Eastern conflict and the disruptions to shipping through the Strait of Hormuz.

In recent weeks, Brent crude oil and gas prices traded in wide ranges which prompted brief sell-offs, based on reports of renewed US-Iran engagements, while also reaching multi-year highs on concerns that tensions could persist longer than anticipated.

During the conflict, Thungela says an estimated ten-million to 14-million barrels a day of oil and about one-fifth of global liquefied natural gas (LNG) supply were effectively displaced, supporting a higher floor for energy prices.

Against this backdrop, oil has fluctuated between $90/bl and $118/bl, while European gas prices have moved more moderately – caught between tighter global LNG availability and softer near-term demand, partly supported by milder weather conditions.

The company explains that price movements have softened at times on signs of de-escalation and the current reopening of the Strait of Hormuz, which remains a critical artery for global energy flows.

While the Strait is presently open and shipments have resumed, markets remain sensitive to any potential disruption given its strategic importance.

The company notes that thermal coal markets broadly tracked the tone in oil and gas, initially strengthening on higher oil and European gas prices, before retracting later as energy prices softened.

The Newcastle benchmark thermal coal price has tracked the higher energy market prices and remained firm to date.

However, the Richards Bay benchmark thermal coal price did not accelerate at the same rate seen by the Newcastle benchmark thermal coal price, mainly as a result of the slowdown seen in Indian buying activity.

Physical coal demand remained subdued, with end-users in India showing greater preference for cheaper, lower quality material, while other Asian importers favoured cheaper Russian and Colombian supply over South African and Australian higher quality cargoes.

Thungela says the protracted Middle East conflict has resulted in renewed buying in recent weeks from the Indian market, and this has been supportive of the Richards Bay benchmark thermal coal prices.

In the first half of the year, the company says export saleable production is expected to be about 6.3-million tonnes in South Africa and about two-million tonnes at Ensham, in Australia.

Export saleable production in South Africa benefitted from improvements at Khwezela and a consistent strong performance at Mafube compared to the prior period.

Thungela says Zibulo experienced an increase in conveyor belt and support services challenges in the mining footprint that will be retired once all production is shifted to Zibulo North shaft.

“We believe these challenges are transient and continue to receive the necessary operational and technical focus and therefore, remain confident in achieving the full year export saleable production guidance for the group,” the company says.

Thungela further reports that the Richards Bay benchmark coal price has strengthened this year, with an average of $104.25/t for the period January 1 to May 31, compared to $89.53/t for financial year 2025.

The company says discount to the Richards Bay Benchmark coal price is about 16% for the year to date, compared to 16.6% for financial year 2025.

The average realised export price for product sold through the Richards Bay Coal Terminal for the year to date is $87.6/t, compared with $74.67/t for financial year 2025. The discount is mainly driven by a lower quality sales mix, as a higher proportion of lower quality coal was railed from stockpiles.

Additionally, the company explains that foreign exchange rate volatility has had a material impact on the group's financial performance.

The US dollar has remained weak, largely driven by cyclical shifts in Federal Reserve monetary policies. The South African rand was stronger relative to the US dollar, trading at an average rate of R16.40/$ for the year to date, compared to R17.89/$ for financial year 2025.

This has resulted in an average realised export price of R1 437/t for the year to date, compared with R1 336/t for financial year 2025.

Moreover, Thungela notes that export saleable production in South Africa is expected to be about 6.3-million for the first half of 2026, compared with 6.4-million tonnes in the same period last year.

Together with the operational improvement initiatives at Zibulo and the traditionally stronger operational performance during the second half of the year, the company says the export saleable production guidance of 13-million to 13.6-million tonnes remains appropriate.

Export sales for South Africa, including third-party sales of about 700 000 t, are expected to be about 7.5-million tonnes for the first half of 2026, compared with 6.6-million tonnes for the same period last year.

The higher export sales were enabled by improved performance by State-owned Transnet Freight Rail at an annualised run rate of about 60.8-million tonnes, as well as the usage of rail from coal export producers who did not have sufficient coal available to fully use their rail allocation.

Thungela says free-on-board (FOB) cost per export tonne excluding royalties for South Africa for the first half of this year is expected to be marginally above the guidance range of between R1 320/t and R1 370/t, in line with lower export saleable production in the first half of this year.

However, for the full year, the company says cost guidance remains appropriate as production run rates are expected to improve in the second half of the year.

Additionally, the company explains that the Newcastle Benchmark coal price has averaged $124.79/t for the year to date, compared with $105.37/t for financial year 2025.

Discount to the Newcastle Benchmark coal price has increased to 13.9% for the year to date, compared with a discount of 0.4% for financial year 2025.

The higher discount to the index is mainly owing to fixed price tonnes negotiated prior to the stronger price environment impacted by the Middle East conflict.

In addition, the company has sold about 360 000 t under a fixed price contract which is invoiced at the financial year 2025 contract price until the ongoing negotiations conclude in the second half of this year.

The average realised export price in Australia for the year-to-date was $107.5/t, compared with $104.93/t for financial year 2025.

Export saleable production at Ensham for the first half of 2026 is expected to be about two-million tonnes, compared with 1.6-million tonnes in the same period last year. Production in the first half of 2025 was impacted by the more challenging geology, which was transient.

The company says the export saleable production full-year guidance of 3.9-million to 4.2-million tonnes remains appropriate.

Further, export equity sales for Ensham are expected to be about two-million tonnes for the first half of this year, compared with 1.9-million tonnes for the first half of 2025.

Thungela says FOB cost per export tonne excluding royalties at Ensham for the first half of this year is expected to be lower than the guidance range of R1 480/t to R1 570/t, mainly owing to the impact of the stronger South African rand on the consolidation of the Australian operations. The company says the full year cost guidance remains appropriate.

Additionally, Thungela notes that capital expenditure (capex) for the South African operations for the first half of this year is expected to be about R600-million. This consists of R500-million relating to sustaining capital and expansionary capital of R100-million.

The company says the full year guidance range of R700-million to R1-billion for sustaining capital remains appropriate.

Sustaining capex at Ensham for the first half of this year is expected to be about R250-million. The full year guidance range of between R500-million and R700-million remains appropriate.

PORTFOLIO OPTIMISATION IN SOUTH AFRICA

Meanwhile, Thungela says its South African portfolio has continued its transition, with Goedehoop North and Isibonelo mines reaching end of life.

In line with its portfolio optimisation strategy, the company says it has concluded the sale process of the Kleinkopje mining right at the Khwezela mining colliery and continues to progress the sale of Goedehoop North.

The company notes that the Kleinkopje transaction will result in a non-cash reduction of the environmental provisions of about R1-billion for the areas sold and is likely to benefit expected earnings in the first half of this year.

The company will provide an update on the impact of the transaction on expected earnings prior to the release of the interim financial results.

Thungela says it expects net cash at June 30 to range between R5.9-billion and R6.1-billion. The net cash range includes about R1-billion of cash generated from foreign exchange derivatives.

The company says the board reaffirms its commitment to the company's dividend policy, which is to distribute a minimum of 30% of adjusted operating free cash flow to shareholders.

Further, Thungela says the board will consider an appropriate cash buffer which provides flexibility to prioritise shareholder returns and invest through the cycle.

“We remain focused on safety and operational improvements and acknowledge the impact of other macro-economic factors on the business. Our robust balance sheet position continues to provide resilience and a solid foundation for long-term value creation.”

The group expects to release its interim results on August 17.