Sasol CEO David Constable
Sasol CEO David Constable unveiled plans on Monday for ‘Project 2050’, an initiative which he says is designed to sustain and expand the company’s integrated value chain in Southern Africa until at least the middle of the century.
He also defended the energy and chemical group’s globalisation strategy, which came under attack recently from the South African Communist Party (SACP), which described it as a disinvestment from South Africa.
In fact, SACP general secretary Blade Nzimande said Sasol had moved ahead with its US investment in breach of a gentleman’s agreement reached between Sasol and the National Treasury in 2007, whereby it committed to invest in a third coal-to-liquids refinery in return for the scrapping of plans for the introduction of a windfall tax.
Speaking following the release of strong financial results for the year to June 30, 2013, which were underpinned by record operating profits from its South African energy cluster, Constable said Sasol’s commitment to the region remained firm and that its US investment plans would not weaken that commitment.
He even argued that its future investments in the region could well 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 in the middle of a front-end engineering design (FEED) study for 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. It is also likely to approve a FEED study for a 96 000 bl/d gas to liquids (GTL) facility, also in Louisiana, which could involve an investment of between $11-billion to $14-billion.
Constable said that accelerating GTL growth internationally was but one of five strategic drivers, with improving and expanding its existing asset base in Southern Africa having also been identified as a key strategic priority.
Several projects, collectively clustered under Project 2050, were either under investigation or in the process of being implemented with the aim of extending the “life span of our Southern Africa value chain to the middle of the century”.
The plan would hinge, however, on the securing of sufficient coal and gas feedstock to sustain the asset base. Sasol was already optimistic that there was sufficient coal in the Secunda area to continue until at least 2050, but it was also hoping to introduce more gas, whether from domestic or regional sources.
The group already imports gas from southern Mozambique through a pipeline linked to its facilities in South Africa. However, it was unlikely to move entirely to gas, owing to the economics and logistics associated with its Secunda facility.
The group has approved investments of R14-billion for the development of the Impumelelo and Shondoni collieries, which will replace coal from Sasol Mining’s older mines – the new mines should begin producing in 2014 and 2015 respectively.
Constable also stressed that Sasol remained the country’s single-largest tax-paying entity, contributing R30.8-billion in direct and indirect taxes in 2013. It also spent R837-million on skills development, invested R627-million in socioeconomic projects and dispersed R185-million of a larger R800-million commitment for the Ikusasa public-private partnership with municipalities in Sasolburg and Secunda.
He also stressed that, in 2013, 59% of its R32.3-billion in capital investment was directed towards South African projects and that the country would continue to receive the bulk of its investment in the coming two years.
The group expected to invest R42-billion into capital projects in 2014 and R50-billion in 2015.