Energy and chemicals group Sasol reports that a turnaround in the production performance of the Natref refinery, in the Free State, helped offset the effects of an extended shutdown at its Secunda operations during the first quarter of its 2018/19 financial year.

The JSE-listed company attributed the “excellent” Natref production results to “focused management interventions and capital investments over the past few years”. Investments of R1.5-billion had been made in recent years to improve plant stability and to replace significant machinery

The refinery, which is operated in joint venture with Total, experienced a 9% decline in production volumes during 2017/18.  However, for the three months to September 30, 2018, it achieved average run rates of 661 m³/h, compared with 600 m³/h in the previous quarter.

“We are confident that this improved performance will continue over the ensuing months,” Sasol said in a statement to shareholders.

However, a delay in the commissioning of the Sasol Secunda Operations West factory following a recent shutdown had impacted production and sales volumes during the period.

Trade union Solidarity, which is in conflict with Sasol over its decision to exclude white workers from a new employee share ownership scheme, known as Khanyisa, said that the Secunda delay could be directly attributed to recent industrial action at the complex.

Solidarity CEO Dr Dirk Hermann asserted that the "technical problems" referred to by Sasol had arisen as a result of a strike by skilled workers on September 6, which coincided with the shutdown.

“Sasol and its shareholders are now paying the price for excluding its skilled workers from the Khanyisa employee share ownership plan," Hermann said in a statement.

Solidarity members would participate in a march on Sasol’s Sandton head office on October 25 and the union would also be contesting Khanyisa’s lawfulness in upcoming court proceedings.

Sasol said the longer-than-anticipated shutdown would result in yearly production guidance reducing to between 7.5-million and 7.6-million tons, from 7.7-million tons previously.

However, the company expressed confidence that it would achieve planned production targets for the remainder of the year. It also stressed that the full completion of the total Secunda shutdown of the West factory was delayed as a result of challenges experienced on a steam line project; a project that was unrelated to shutdown activities.

Sasol benefited from higher Brent crude oil and product prices during the quarter, as well as the weaker average rand exchange rate against major currencies.

Sasol also reported that engineering and procurement activities at its Lake Charles project, in the US, were substantially complete at the end of the quarter, with construction progress reported at 75%.

“We are making good progress with the project in Lake Charles and indications are that the capital cost of the project will remain within the previous market guidance of $11.13-billion.”