David Constable, delivering his last set of financial results.
Photo by: Duane Daws
JOHANNESBURG (miningweekly.com) – Uninterrupted coal supply to Sasol’s synfuel operations was assured, outgoing Sasol CEO David Constable said on Monday.
In presenting the company’s financial results for the half-year to December 31, the CEO – who will pass the reins of the company on to joint CEOs Bongani Nqwababa and Stephen Cornell on July 1 – said that the establishment by Sasol of its Impumelelo and Shondoni collieries, as part of a R14-billion coal mine replacement programme, would ensure continuous coal supply to the Secunda fuel-from-coal plant.
Constable said that the Impumelelo colliery had reached beneficial operation within budget.
Similarly, the Shondoni colliery continued to progress steadily, with beneficial operation expected during the first half of 2016.
Both coal mines have a capacity to produce at a rate of 10.5-million tonnes of coal a year of streaming coal, while Impumelelo would initially produce 8.5-million tons a year.
In total, Sasol is able to produce at a rate of 40-million tonnes of coal a year from one of the world’s largest underground coal-mining complexes.
Impumelelo and Shondoni together with Thubelisha, and Tweedraai are replacing the long-serving Twistdraai, Brandspruit, Middelbult and part of the Syferfontein operations.
Thubelisha is scheduled to ramp up in the next two years to extend the life of the Twistdraai colliery to beyond 2043, while the far smaller Tweedraai project will replace part of the Syferfontein mine as an opencast operation.
Tweedraai will incorporate the large 93-million-ton Block Four, which Sasol is acquiring from Anglo American Thermal Coal and BHP Billiton.
A decision on the next replacement mine will need to be taken in 2024 and is likely to involve Impumelelo’s remaining southern phases.
Sasol Mining’s half-year operating profit in the six months to December 31 was up 5% to R2.359-billion, which the company attributed to stability along with meaningful contributions from its business performance enhancement and response plan levers.
Costs of mined production were kept at 4% below inflation.
Export coal volumes, which remained flat, continued to benefit from the weaker rand/ dollar exchange rate that was partly offset by lower dollar coal prices.
Overall, Sasol’s half-year earnings attributable to shareholders plunged 63% to R7.3-billion in the six months to December 31, from R19.5-billion in the prior period.
Headline earnings a share fell 24% to R24.28 and earnings a share to R11.97.
The board declared an 18.6%-lower interim dividend of R5.70 a share.
Profit from operations halved to R14.9-billion on average Brent crude oil prices of $47/bl, compared to $89/bl in the prior period.
The price of Sasol’s basket of commodity chemicals declined 23%, with the impact of lower oil and commodity chemical prices partly offset by a 24% weaker rand/dollar exchange rate of R13.62 to the dollar compared with R10.99 in the prior period.
The average margin for Sasol’s speciality chemicals remained resilient.
Sasol upped production volumes and contained cost increases below inflation.
Its Secunda Synfuels Operations (SSOs) production volumes rose by 3% to one-million barrels.
Total liquid fuels production by the company’s energy business increased by 4% to 1.1-million barrels on a higher portion of SSO’s volumes being used by the energy business.
The Oryx gas-to-liquids facility in Qatar delivered another solid performance with an average 90% utilisation rate.
Secunda Chemicals and Sasolburg Operations’ production volumes remained in line, with the increase in volumes from Fischer-Tropsch wax expansion project offset by lower polypropylene (C3) volumes.
The sales volumes of the base chemicals business decreased 13% on lower available C3 output and softer demand for certain commodity chemical products.
Sales volumes from the performance chemicals business were consistent after conditions were normalised for the planned shutdown at the company’s ethylene plant in North America.