Global thermal coal miners are likely to curb production as weak prices and a shaky economic outlook squeeze margins, South Africa’s Thungela Resources said on August 18, flagging a sector-wide shift from growth to “supply discipline.” The company also reported an 80% plunge in half-year profit to 248 million rand for the six months to June 30, underscoring how far the market has cooled from the 2022–2023 price surge.
Thungela’s outgoing CEO July Ndlovu said lower prices, pressured by rising renewables, slower global growth and trade frictions, are forcing producers to pull back. He pointed to slower output in Indonesia and Colombia and weather- and accident-related disruptions in Australia as early signs of tightening, and he expects further curbs to help rebalance supply with demand in seaborne markets.
profit slump, softer realizations, steady output guidance
The company’s headline numbers illustrate the squeeze. Thungela’s average realised export prices fell 11% for South African shipments and 10% for its Australian volumes in 1H 2025. Despite the weaker pricing, Thungela kept full-year production guidance at 12.8–13.6 million tonnes from South Africa and 3.7–4.1 million tonnes from its Ensham mine in Australia, suggesting it will aim to ride out the trough while watching the broader industry scale back.
Ahead of results day, Thungela had already warned investors of a sharp earnings decline. The miner flagged that half-year profit would fall by as much as 85% on softer coal prices, guidance that proved directionally accurate when results landed on August 18.
The board nonetheless declared an interim ordinary dividend of 200 cents per share and announced a share repurchase, signaling confidence in balance-sheet resilience even amid cyclical headwinds.
China’s pivot, inventories, and the energy mix
Coal prices across Asia have been trending lower since late 2024 as heavyweight buyers imported less, while domestic production in key markets climbed. By early May 2025, seaborne thermal coal benchmarks hit four-year lows: Australian 5,500 kcal/kg coal fell below $70/ton for the first time since 2021, and Indonesian 4,200 kcal/kg coal touched about $48/ton. China’s domestic Qinhuangdao price slipped to around 660 yuan/ton, also a four-year low, amid record local output and reduced coal-fired generation as hydro and renewables recovered.
The structural backdrop has also turned less friendly for coal. Beyond cyclical softness, power systems are absorbing more renewable generation, trimming incremental coal burn in several import markets. That trend, combined with slower global growth and trade frictions, has curbed demand for spot cargoes, compressing miners’ margins.
mixed Asia picture, but China sets the tone
In July, Asia’s import picture looked uneven. Japan and South Korea modestly increased buying, but China’s seaborne thermal coal imports through the first seven months of 2025 were down more than 17% year-on-year as domestic mines lifted output and power generators leaned more on non-coal sources. With China the world’s largest buyer, its pullback has outsized effects on seaborne prices and trade flows.
Earlier in the year, analysts cautioned that the seaborne market would struggle to rally if China kept imports subdued while producing more at home, a dynamic that has largely played out. India has intermittently stepped in with stronger volumes during tight power periods, but not enough to offset China’s drag.
What “supply discipline” could look like
Ndlovu’s message implies the market is entering a phase where miners prioritize margins and balance sheets over volume. In practice, that can mean throttling higher-cost pits, deferring strip campaigns, reducing contractor fleets, slashing discretionary capex, or accelerating mine-plan sequencing toward higher-quality seams. In Indonesia and Colombia, two key suppliers of mid-calorific coal, producers have already eased output. Australia’s exports, meanwhile, have been dented episodically by weather and safety incidents, removing some high-CV tonnes from the spot market.
For South African exporters, logistics remain a swing factor. 2023 exports collapsed to a three-decade low near 47 million tonnes as Transnet’s rail woes throttled shipments; Thungela and peers have long argued that export volumes could recover as locomotive availability, security, and maintenance improve. While rail performance has shown signs of stabilizing compared with the worst of 2023, the current price slump complicates the recovery calculus: higher rail throughput helps only if realizations cover costs and generate cash.
Implications for African miners and policymakers
For Thungela, Exxaro, Seriti, and other South African producers, a price-led downturn typically forces ruthless cost focus: optimizing strip ratios, renegotiating mining services, and shifting more sales to stable, contracted channels. Producers with Australian exposure, like Thungela via Ensham, gain portfolio diversification, but they are not insulated from global price cycles.
Policymakers in coal-exporting economies face a dual challenge. On the one hand, export revenues and mining jobs remain important; on the other, energy transitions are accelerating among major customers. Fiscal planning that leans heavily on coal royalties and rail fees becomes vulnerable when prices sag. Governments and rail operators also need to weigh investment in export corridors against the risk that long-term demand for thermal coal could plateau or decline.
Short-term market watchlist
- Asian power demand and weather: Heatwaves or low hydro can quickly lift imports, particularly in India and Southeast Asia. A single hot quarter can tighten balances.
- China’s domestic output and stockpiles: High mining rates and ample inventories suppress import demand; any safety campaign or mine curtailments could flip sentiment.
- Australian supply reliability: Weather-related supply disruptions to high-CV coal often ripple through Japanese and Korean utility procurements.
- Policy and trade frictions: Tariffs and geopolitical tensions can reroute cargoes, widen arbitrage windows, or dampen industrial activity, all price-relevant.
Despite the earnings hit, Thungela’s dividend and buyback show the balance sheet remains serviceable. Management is also betting that industry-wide cuts will steady prices without requiring drastic output reductions in its core assets, at least for now. The guidance range suggests the company is focusing on operational reliability and cost competitiveness while letting others shoulder more of the curtailment burden.
At the same time, the miner has been vocal about the need for consistent rail performance to capture price upswings when they do arrive. If Transnet’s service levels continue to recover, South African exporters could regain some lost tonnage share in seaborne markets, provided prices justify the effort.
