Sasol has revised downwards the volume guidance for its Secunda and Natref operations due to operational challenges in the six months to end-December.
The operational problems included coal quality issues at the Secunda business, civil unrest in Mozambique and a fire at the Natref refinery.
In the statement released on Thursday, the energy and chemicals group said its Secunda Operations experienced problems related to coal quality complications, which affected gasifier and equipment availability.
The company said it was implementing destoning — a process of removing impurities from coal to improve its quality — and equipment reliability improvement initiatives to increase production levels.
In Mozambique, civil unrest affected the central processing facility, reducing production rates in December. The company said the situation had improved and the unit was operating at full capacity, albeit with heightened near-term risk still prevalent.
A fire occurred at the Natref refinery on January 4, causing damage to supporting piping and infrastructure around the crude distillation unit. The company said repairs were expected to be completed before the end of February, and plans were being implemented to address supply shortfalls.
Despite these operational challenges, Sasol’s international chemicals revenue improved compared to the first half of 2024. However, the company’s overall business environment remains challenging, with sales volumes negatively affected by the East Cracker outage in the US. The unit started up successfully in November.
Sasol’s market guidance for mining and gas remains unchanged.
Sales volumes for fuels and chemicals in Africa are expected to be largely in line with the financial year 2024 guidance.
Sasol has revised production volume guidance upward for its gas-to-liquids plant, Oryx, while sales volume guidance for international chemicals has been adjusted downward, driven by weaker-than-expected demand and unplanned operational outages.
In December, Sasol made a final investment decision for a destoning solution to enhance the coal quality supplied to Secunda. The company said the benefits of the solution were expected in the first half of 2026, earlier than previously communicated.
The Secunda plant has not only endured poor quality coal, but has also attracted the attention of environmentalists over its high emissions. The giant plant, which makes fuel from coal, is Sasol’s biggest moneymaker and its biggest environmental headache, accounting for nearly 84% of its Scope 1 and 2 carbon emissions.
Sasol has over the years had several run-ins with environmentalists and authorities over its emissions, second only to Eskom.
In July 2023, Secunda Operations was informed that the national air quality office had declined its application of the minimum emission standards under the National Environmental Management Act to be regulated on an alternative emission load basis for sulphur dioxide emissions from Secunda Operations’ steam plants from April 1.
However, Sasol in April last year successfully appealed against the decision.
Sasol said in its latest annual report it had assessed its 2030 reduction target to be on track to reach well below 2°C and 1.5°C for its net-zero ambition.
“While some stakeholders commend the approach we have adopted, others view it as marking our own homework.”
The Secunda complex’s construction commenced in 1976 and remains a jewel in SA’s industrial crown. It is the sole manufacturer of most of SA’s petrochemicals and plastic raw materials based on ethylene and propylene, as well as ammonia, for fertiliser and explosives.
Business Day reported two weeks ago that a working paper by the School of Oriental and African Studies, a public research university in London, says decarbonisation is an existential challenge for Sasol, but argues the group is well positioned to drive SA’s green hydrogen economy.
The paper, published in December, looked into the green transition and employment in Southern Africa. It flagged Sasol as having a key role to play in the region’s just transition efforts, especially green hydrogen, with the question not being “if” but when and how.
The paper comes amid a discourse about the groundwork Sasol CEO Simon Baloyi is laying for the reinvention of a strategic company woven into SA’s fabric as an economic powerhouse and an environmental enigma.
Sasol has been in the hydrogen game for more than 70 years, but the hydrogen of the future — clean, green hydrogen — is still not mainstream and far from cheap to produce. It sits atop 3.5-million tonnes of grey hydrogen, used primarily in making ammonia and fertiliser, and refining oil.
With Kabelo Khumalo
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