Anglo American’s coal spin-off Thungela Resources fails to catch fire
Investors have turned their noses up at Thungela Resources, the London-and-Johannesburg-listed South African coal business spun out of Anglo American


Investors have turned their noses up at Thungela Resources, the London-and-Johannesburg-listed South African coal business spun out of Anglo American. Its shares slumped from 150p to 113p on its first day of trading in London on Monday, says Neil Hume in the Financial Times.
One problem was that many big funds cannot hold Thungela because it has a market cap of only £150m, and is thus too small to meet their investment mandates. However, the flop also suggests that markets are only approaching coal stocks with “an extremely long barge pole”, says Ed Cropley on Breakingviews. Nevertheless, despite its poor reputation, coal could have “a long future”, as some analysts reckon it will still comprise 31% of global power generation in 2030, thanks chiefly to South Asian economies “being slow to switch to green energy”.
What’s more, with “minimal investment” in new mines, there’s even an argument that supply “will shrink faster than demand, pushing prices up”. Either way, for companies such as Thungela and larger rival Glencore, there’s another “decade or more of money to be made”.
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Not so fast, says Oliver Gill in The Daily Telegraph. Anglo-American estimated prior to the float that the company was worth around £500m. However, “secretive research outfit” Boatman Capital says that Anglo’s valuation was not only based on an “over-optimistic forecast of coal prices”, but also ignored a “slew of additional costs”, especially those related to the clean-up of the mines. Their conclusion? The value of Thungela Resources is “zero”.
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Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.
He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.
Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.
As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.
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