Engineering News

Energy and chemicals group Sasol expects to implement its new operational business model from July 1, 2014, and has confirmed that the restructuring could have an impact on some of its 35 000 employees. However, the JSE-listed company stresses that the organisational redesign has not been finalised and that the impact, therefore, remains uncertain, notwithstanding reports that up to 1 000 jobs could be affected.

A business performance enhancement programme, which has been under way for more than a year, is being conducted under the banner of ‘Project Phoenix’ and Sasol has drawn in Bain & Company to support it with the process.

Employees and unions have reportedly been kept abreast of developments through the group’s partnership forums, while other stakeholders, including the South African government, have also been appraised.

CEO David Constable has indicated that a “simplified and tailor-made operating model” will be implemented in an effort to secure yearly savings of R3-billion and to deal with organisational complexity.

Currently Sasol, which has operations in 37 countries, consolidates its various entities under four clusters: the South African energy cluster, which is the largest single cluster; the international energy cluster; the chemicals cluster; and other businesses.

Group media manager Alex Anderson indicates that the future model is likely to be defined by value chain, comprising four distinct groupings, including:

• operating business units, made up of Sasol’s mining and upstream oil and gas activities;
• regional operating hubs, which will include operations in Southern Africa, North America and Eurasia;
• strategic business units that focus on the group’s commercial and customer interfaces within the energy and chemicals areas; and
• group functions, which will deliver business support services.

“Due to the progress made in designing the new operating model, we are contemplating potential people impacts as a result of this programme. We anticipate that for at least the next six months the impacts will be limited to the senior management structures in the organisation,” Anderson outlines.

Solidarity’s Marius Croucamp confirms that all of Sasol’s unions have been receiving regular updates on the reorganisation process and says “no surprises” have been sprung on workers.

Nevertheless the union, which has about 6 500 Sasol employees on its books, remains concerned about the prospect for retrenchments even though it does not anticipate many production jobs being affected – it appears that the programme will target the reduction of management layers.

In fact, Croucamp argues that, in the context of chronic skills shortages, the group needs to be careful to secure its scarce technical skills.

Constable has indicated that he anticipates that most of the savings will be achieved through arresting cash fixed-cost increases over the coming two years, and has promised that more details will be revealed in March.

In the interim, the Sasol board has approved a new group executive committee (GEC) structure to align top management with the new operating platform.

Towards the end of 2013, it was announced that, from July 1, its GEC will comprise Constable (CEO), Nolitha Fakude (sustainability and human resources), Riaan Rademan (upstream and business enablement), Bernard Klingenberg (Southern African operations); Stephen Cornell (international operations), Maurice Radebe (energy business), Fleetwood Grobler (chemicals), Paul Victor (acting CFO), Vuyo Kahla (advisory and assurance and company secretary) and Ernst Oberholster (strategy, development and planning).

In parallel to Project Phoenix, Sasol is also moving ahead with ‘Project 2050’– an initiative designed to sustain and expand the company’s integrated value chain in Southern Africa until at least the middle of the century.

Several projects are either under investigation or in the process of being implemented and Constable has indicated that regional investments could be larger than the $16-billion to $21-billion that the group is gearing up to invest in the US between 2014 and 2020. Sasol is studying a 1.5-million-ton-a-year ethane cracker, in Lake Charles, Louisiana, which could involve an investment of between $5-billion and $7-billion, while it is also considering a 96 000 bl/d gas-to-liquids facility, also in Louisiana, which could involve an investment of between $11-billion to $14-billion.

The Southern African investment plan would hinge on the securing the coal and gas feedstock needed to sustain its asset base.