Shares in Anglo American (AAL) spin-off Thungela (TGA), a thermal coal miner, tumbled 16% to 126.2p in their first day of trading on the London Stock Exchange, down from their opening price of 150p.
It comes after Anglo American completed the demerger of its thermal coal business in South Africa, allowing Thungela to start trading on both the London and Johannesburg stock exchanges.
Thungela will trade on the London main market and have a primary listing in Johannesburg. Shares in Anglo American dropped 2.8% to £31.62 in morning trading on Monday.
Thungela has a 50% interest in Phola, which owns and operates the Phola coal processing plant in Mpumalanga, South Africa, and holds a 23% interest in the Richard Bay coal terminal, also in South Africa. It produces thermal coal from seven collieries in Mpumalanga.
Thungela's shares will initially be held by Anglo American shareholders, who will receive one Thungela share for every ten Anglo shares held.
‘RESPONSIBLE TRANSITION AWAY FROM COAL’
Anglo American first announced the demerger in April as part of its ‘responsible transition’ away from thermal coal. Chief executive Mark Cutifani said Anglo has ‘every confidence’ that Thungela will be ‘a responsible steward of what are valuable thermal coal resources in South Africa and will continue delivering value for all its stakeholders and for South Africa as a whole.’
Thungela's chief executive officer July Ndlovu added: ‘We expect our portfolio of assets to be cash generative throughout the life of our mines and well into the next decade, with the option for life extension opportunities.
‘In addition to export markets, we produce thermal coal for domestic consumption in South Africa, which provides us with inherent operational flexibility in response to changes in demand and other external factors.’
‘THUNGELA COULD BE WORTHLESS’
Not everyone is convinced on the merits of the business however, with Thungela targeted by short seller Boatman Capital Research, which has also waged a long-running campaign against engineer Babcock (BAB).
Boatman claimed in a report published on Sunday that due to proposed regulations the clean-up cost for Thungela’s seven mines could be as much as $1.36 billion, more than its book value and almost three times the amount it has set aside in provisions.
Attributing zero value to Thungela, the report said: ‘Given that Thungela’s mines have remaining lifespans of 5-11 years (assuming no extensions), this is now a pressing issue for Thungela and its shareholders.’
