Coal miners profit from energy market turmoil

Coal miners profit from energy market turmoil

Thungela Resources endured a baptism of fire in June when it was demerged from FTSE 100 miner Anglo American, with its share price sinking as much as 25 per cent on its trading debut in what had been billed a test of investor appetite in coal stocks.

But since then surging coal prices have helped the Johannesburg-based company thrive — its shares rose more than 300 per cent before retreating in the past month and it now commands a market value of $550m.

“The conventional wisdom was this thing will get dumped and that no one is going to buy it”, said July Ndlovu, chief executive. “What people forgot is that market fundamentals for thermal coal were still solid and ultimately that is exactly what has played out.”

Thungela is among a small group of miners emerging as big winners from the global energy crunch that has pushed the price of thermal coal, which is burnt in power stations to generate electricity, to record levels. Others include Glencore, the world’s biggest exporter of thermal coal, Peabody Energy, Whitehaven Coal and Exxaro Resources.

They are set to generate large profits for shareholders this year and could continue to churn out cash for years to come