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(Alliance News) - Thungela Resources Ltd reported Thursday it did not expect a "material impact" on its performance even though the state-run logistics firm Transnet SOC Ltd operates under force majeure.
Shares in Thungela dropped by 5.0% to 1,301.00 pence each in London on Thursday, and were down 3.6% to ZAR250.55 each in Johannesburg.
Transnet provides a crucial rail service for exporters like Thungela, transporting coal from fields in Mpumalanga to the privately held port Richards Bay Coal Terminal.
The logistics parastatal is battling with ongoing legal matters related to the irregular locomotive acquisition, maintenance contracts, as well as the vandalism of the coal line.
Transnet said these challenges, which are beyond its control, will continue to hobble its ability to perform its rail service for at least the next six months and that accordingly it is force majeure, Thungela noted in a statement on Thursday.
Companies declare force majeure due to unforeseeable circumstances that prevent them from fulfilling a contract.
Thungela said Transnet's view is that the continued impact and duration of these factors actuate a termination right, and expressed a desire to exercise this right to terminate long-term coal transportation agreements with coal exporters.
But Transnet reiterated its commitment to continue to perform the rail services and has recently confirmed its commitment to work with coal miners and the RBCT to improve its performance.
Coal exporters, including Thungela, are engaging actively with Transnet to clarify the contractual position and ensure the stability of coal deliveries to the RBCT in order to continue to take advantage of the current strong market demand for South African coal.
"Through these engagements, Transnet has confirmed its intent to conclude an addendum to the agreements which Transnet believes would assist Transnet in addressing certain factors affecting its performance, but reaffirmed its commitment to the existing material commercial terms and it is therefore unlikely that these developments would have any material commercial impact on Thungela," Thungela said.
With coal rail services and export sales continuing, Thungela said it did not envisage that this development will have a material impact on its 2022 operational outlook.
Thungela said last month export coal production is expected to range between 14 million tonnes and 15 million tonnes this year, and rise above 16 million tonnes in 2023 and 2024.
Thungela was spun off last year by Anglo American PLC, and it was listed it on the Johannesburg Stock Exchange and the London Stock Exchange in June.
By Artwell Dlamini; artwelldlamini@alliancenews.com
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