Chemical and energy giant Sasol has unveiled measures to stop the deterioration of coal quality in its South African mining business after a fall in output in the six months ended December 2022.
Speaking during a results presentation, Sasol CEO Fleetwood Grobler said: “We have seen that our mining operations have been under pressure, mainly because of quality and productivity issues. We've also seen that our major supplier, with which we've got a contract to deliver 4-million tonnes of coal, is also under pressure and hasn't delivered the volumes per the contractual agreement that we planned for.”
Grobler was referring to a long-standing contract with Thungela Resources' Isibonelo mine which ends in 2026.
He said to bolster that shortfall from the Isibinelo contract and the company's own collieries, Sasol had secured a short-term supply of additional coal for its facilities in Secunda.
“We believe that this is a short, medium-term measure, which we will not be able to sustain in the long term. Therefore our focus after we have assessed thoroughly the impact of coal quality on our Secunda operations [is] a plan to bring us back to a blended quality over time where we know we will have optimised the value out of the Secunda value chain.”
He said coal quality and productivity were the main issues facing its mining business in South Africa and to provide a sustainable solution it had implemented a programme that will be rolled out in a phased approach at the Secunda collieries over the next 18 to 24 months.
Sasol said the first, six-month phase began last month at the Syferfontein colliery and would be implemented at the remaining four collieries in the coming months.
“We are seeing a changing landscape within the mining industry in South Africa as we contend with increasing regulatory pressure, ageing mines and more complex geology.
“Sasol has always been aware that we mine in challenging geological reserves. Gradual deterioration of coal qualities can be expected and needs to be planned for. In the previous decade, we installed additional oxygen gasification and reforming capacity in Secunda operations.”
Poor coal quality was not Sasol's only headwind in the period. The company declared force majeure after the strike at Transnet affected the supply of ammonia railcars.
Brad Griffith, Sasol's executive vice-president for chemicals, said Transnet is South Africa's sole provider of ammonia transportation.
“We have been constrained on being able to supply ammonia to our rail customers ... so, we continue to work with Transnet. We've received a number of additional cars back from maintenance, [though] still not to the full supply, and we continue to work with them to get additional railcars into the fleet. But that will be some time later this year,” said Griffith.
Sasol, which operates in 37 countries, declared an R8 a share interim dividend and an operating profit of R19.4bn for the half-year ended December 2022.
The company announced a 550MW renewable energy programme at its domestic operations that could reduce its scope 2 emissions by about 1.8-million tonnes per year.
O Hanré Rossouw
“People have been throwing stones at Sasol saying it is making promises about becoming greener, and we are not doing it. This is a great proof point of leading the biggest renewable programme in SA through 550MW of renewables that we will generate and use in the facilities. Hopefully, that gives some confidence to our investors and stakeholders of our continued commitment to our transition,” CFO Hanré Rossouw said.
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