This comes against the backdrop of the chemical giant’s modest 4% increase in group earnings, announced gingerly by CEO Pieter Cox at Sasol’s interim financial results presentation yesterday, ahead of the company’s historic April 9 NYSE listing.
The comonomer project, a second 1-octene train, is expected to be commissioned by the third quarter of 2004, at a cost larger than the first 48 000 t/y plant, but with roughly the same capacity.
As a comonomer, 1-octene is used to manufacture different polyethylene products, providing mechanical strength to various types of plastics, including both high- and low-density polyethylene from which quality plastic products are made.
Sasol’s Hannes Botha revealed, in answer to a question, that the company’s board is also expected to approve an even bigger project soon.
This is the R10-billion to R12-billion, Project Turbo, the most significant part of Sasol’s renewal initiative, Project World Class, which will prepare Synfuels for new fuel specifications that are to come into effect in January 2006, the deadline for all South African refineries to supply lead-free petrol and low-sulphur diesel.
Engineering News Online can report that Project Turbo would require the largest portion of the estimated capital for Project World Class and is expected to have significant spin-offs for Sasol Chemical Industries, as it will supply the division with more feedstreams for further expansions. This is part of a R19-billion capex commitment.
Sasol Polymers will also benefit from increased levels of ethylene and propylene from Project Turbo's new processes.
The project consists of multiple phases, which, in turn, comprise several smaller projects.
In total, the project is estimated to require about 17 000 t of structural steel, and the employment of some 15 000 people.
Meanwhile, Sasol’s strong financial performances over the last three years have been followed by a mere 4% increase in operating profit, to R7,3-billion for the interim period to December 31, 2002.
The group’s earnings suffered a R2-billion blow, caused mainly by the strengthening of the rand.
Cox said the rand:dollar exchange rate weakened by 8% from an average of R9,29 in the previous reporting period to R10,03 in this reporting period. While the weaker rate had a beneficial effect on sales, the closing rate on December 31, of R8,57, was much stronger than the closing rate of preceding months and 28% stronger that the closing rate of R11,95 on December 31, 2001.
This resulted in net translation losses of R974-million being charged to the income statement, as a result of the revaluation of financial assets and liabilities on December 31 last year. This compares to net translation gains in the previous reporting period of R922-million and represents a swing of R1,9-billion.
Cox reported that attributable earnings were more or less equal to, and basic earnings per share of 751 cents were slightly above, those achieved in the previous reporting period.
Sasol’s financing costs rose by 23% to R529-million, mainly due to higher capital expenditure, which increased from R3,6-billion to R5,7-billion during the comparable periods.
Increased capital expenditure resulted primarily from the Mozambique Natural Gas project, the Qatari and Nigerian gas-to-liquid (GTL) projects and the n-butanol and acrylic acid projects in Sasolburg.
Top performing divisions during the period were Sasol Synfuels, which lifted profits by 36% – from R3,688-billion to R5,032-billion – and Sasol Mining, up by 10% to R708-million. National pipeline gas sales of Sasol Gas were about 12% higher.