In a fitting end to a grueling year, Sasol faced its toughest AGM yet on Wednesday when shareholders interrogated management on everything from the Lake Charles debacle in the US and the non-payment of dividends, to climate change.
Although the oil and synthetic fuel producer’s meeting was held in a business park in Bryanston instead of at its head office in the middle of Sandton, there was still a demonstration by the Centre for Environmental Rights outside. Inside, the meeting dragged on for four hours as ordinary shareholders accused management of trying to “polish” the Lake Charles problem without providing true solutions.
One activist demanding more answers around climate change was threatened with being thrown out by security as tensions, and voices, escalated.
2019 was expected to be a rewarding year for Sasol as its Lake Charles Chemicals Project in Louisiana was anticipated to transform Sasol into a global chemicals giant. But the project faced delays and by May it became known that costs had ballooned 45% from $8.9bn in 2014 (about R131bn) to $12.9bn in 2019. Sasol joint-CEOs lost their jobs over it in October and Fleetwood Grobler, a long-time Sasol employee, has now been promoted to the hot seat.
Asked by shareholder activist Theo Botha whether Sasol’s oversight committees took any responsibility for the inadequate controls when it came to Lake Charles, chair Mandla Gantsho, reiterated that the findings of an independent probe found there had been a toxic culture and inaccurate information was fed to management.
“It is very difficult when not given accurate info. We all regret that we could not see we were being misled,” Gantsho said.
Peter Robertson, chair of Sasol’s capital investment committee, said he was embarrassed about the fiasco. “I wish I could have seen behind some of these numbers and done a better job … it was not for lack of interrogation or understanding,” he said. “I feel some sense of failure for not predicting where this would end up.” He said, however, that the project will still prove to be good value for the company.
Dividends and the climate
Two ordinary shareholders raised the issue of dividends, which they had come to expect from Sasol and depended on for income. Sasol skipped the final dividend for the year and warned it may do the same with the interim dividend for the six months to end-December as the company works to deleverage its balance sheet.
Gantsho said this will not be a long-term feature and that the company has faith it will return it to its former glory.
Sasol, SA’s largest emitter of greenhouse gas after Eskom, was also subjected to a raft of questions related to climate change. In a recently published climate-change report Sasol said it intends to reduce emissions from its operations by at least 10% by 2030.
Asked if it thought the target was sufficient, given the urgency of the climate crisis, Grobler said there is no sense in setting targets that are not attainable with feasible and practical solutions. “We believe we have to be realistic about what is possible given the current situation and circumstances, and given the regulatory and structural constraints we may have [in introducing renewable energy into its operations],” he said.
However, Grobler did say Sasol is “strong and resourceful and fully capable of meeting our challenges”.
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