The coal miner could be worth US $950million according to Liberum Capital. However, Thermal coal miners have been struggling to find investor favour amid growing climate concerns and a shift towards sustainable investing, with global mining giants offloading such assets as they transition out of the most polluting fossil fuels.
The 136 million shares opened at 25.00 rand but by 1300 GMT were down about 13% at 21.68. The company has a secondary listing on the London Stock Exchange. The demerger gave ownership to existing owners with investors receiving 1 Thungela share for every 10 Anglo American shares they hold.
“Institutional investors have been moving away from coal mining in recent years. Investors now require many funds to avoid polluting assets such as coal miners making it difficult to find large cornerstone investors. The performance of Thungela shares will give us a clue as to how influential ESG is in terms of stock market investment,” said analyst John Meyer of SP Angel.
According to Short-seller Boatman Capital Research, Thungela’s environmental liabilities had been “massively under-estimated”. Instead, it values the company at zero. Boatman said environmental liabilities costs stood around US $1.36 billion, surpassing Thungela’s current provisions US $33.46 million.
Thungela said the report was “flawed”, saying the provision was above the regulatory guidelines and that Boatman’s calculations were made on draft environmental management regulations yet to be finalised in South Africa. Anglo spun off its South African thermal coal mines joining the world’s largest mining company BHP Group (BHP.AX), Australia’s South32 and global miner Rio Tinto (RIO.L) in taking steps to go thermal coal free. Liberum said the valuation would likely fall further as passive investors sell out of the stock.
“Our conviction is that thermal coal remains part of the energy mix for decades to come,” Thungela CEO July Ndlovu said.