Chemicals and energy giant Sasol has warned that the underperformance of state-owned enterprises and socioeconomic challenges continue to weigh on volumes and profitability.
This is as the group on Tuesday said export sales in its mining division in the year to end-June were 13% lower compared with the prior year.
It said this was largely due to “ongoing operational challenges at Transnet Freight Rail”. Another reason put forward by the company for the decline in sales volume in the mining business was due to “diversion of export coal” to its Secunda operation.
Data from Richards Bay Coal Terminal, Africa’s largest coal export facility, shows exports of the mineral hit their lowest level since 1993 in 2022, as a consequence of lack of trains to carry coal from mines to port.
Sasol said its suppliers and customers are hamstrung by business disruptions due to Eskom and Transnet challenges.
“A co-ordinated effort, supported by Sasol, is under way with the South African government to assist both Eskom and Transnet to address the associated energy and supply chain constraints,” it said.
Sasol’s Secunda plant in Mpumalanga made the news last week after SA’s national air quality officer had rejected the company’s request to measure the sulphur dioxide emissions from its Secunda boiler plant in an alternative manner.
Sasol has indicated it will appeal against the decision to the minister of forestry, fisheries & the environment.
The group said its liquid fuels sales volumes for the year under review were 53.9-million barrels — in line with its market guidance range of 52-million to 55-million barrels. Acts of criminality at the Natref refinery have also resulted in disruption, affecting production.
Sasol said while its third-quarter performance was affected by delays in starting up the refinery due to a planned shutdown, the plant is back online.
However, the company said in the first quarter of the 2024 financial year there were disruptions due to illegal tapping of the crude oil pipeline, which affected crude oil processing rates.
“We are working closely with Transnet Pipelines to address and resolve these challenges,” the company said.
The group, valued at about R151bn on the JSE, said it had commissioned its gas facility in Mozambique in its Production Sharing Agreement.
Mozambican authorities in 2020 approved Sasol’s field development plan, which the company in 2021 valued at $760m.
The company said natural and methane-rich gas sales volumes in SA were 3% and 1% lower, respectively, due to lower customer demand.
SA’s competition authorities this month said Sasol has been charging excessive gas prices to its customers for almost a decade.
The Competition Commission said Sasol extracted markups of up to 72% on natural gas.
“Sasol has launched review proceedings, currently before the Competition Appeal Court, so that the court may consider Nersa’s [National Energy Regulator of SA’s] jurisdiction to regulate gas prices,” Sasol said on Tuesday.
Correction: July 26 2023
A previous version of this article noted an unplanned shutdown, whereas it was a planned shutdown of the plant.
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