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Sasol is said to plan sale of its SA coal mining unit

The company will begin a formal sales process in the coming weeks – sources.

Sasol is planning to sell its South African coal-mining business, according to people familiar with the matter.

The company will begin a formal sales process in the coming weeks, said the people, who asked not to be identified as the information isn’t public yet. The mining business had a turnover of R20 billion ($1.4 billion) in the 2018 financial year, according to the company’s financial report, mostly from internal sales to Sasol’s other operations.

The company is the world’s biggest manufacturer of fuel from coal, an energy-intensive process. Sasol’s coal mines produce about 40 million tons of coal a year, almost entirely for use in its own operations, according to its website.

The company would plan to sign a coal-purchase agreement with whoever buys the asset, said one of the people.

Sasol announced a long-term review process in November 2017 that would involve disposing of some assets at prices that ensure value for the company, it said in an emailed response to questions, while declining to comment directly on a possible mine sale.

“We do not wish to comment at this stage on which assets have been earmarked for divestment since they form a part of a disciplined and confidential M&A process,” it said. “Sasol will update the market as and when appropriate regarding progress on the asset review process.”

The mine sale plan comes as Sasol grapples with cost overruns and delays at its giant US chemicals project. Selling its coal mines may also help Sasol reduce its environmental liabilities at a time when more investors are focusing on how businesses affect climate change.

Read: Sasol delays results due to US project glitch

The funds most exposed to Sasol

The Lake Charles chemical plant in Louisiana, which is starting up this year, will transform Sasol’s production mix to focus on chemicals. Yet the company has lurched from one setback to the next, with the project now estimated to cost as much as $12.9 billion, about 50% more than initially planned.

Sasol’s shares have tumbled 48% in the past 12 months. Besides the cost overruns and startup delays, the company has also twice postponed its annual financial results while it completes an investigation into what went wrong at Lake Charles.

The company said in May it would accelerate the previously announced asset sale program. It said on Wednesday the company would “proceed only if there is value for Sasol and we will not sell assets at sub-optimal prices.”

© 2019 Bloomberg L.P.

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Plenty companies are leaving, softly, slowly over the last couple of years. One by one, proof of complete uncertainty with government policies. One after the other.

You are 100% correct Hachmet. I know SASOL well for over 2 decades. I have associates in all levels…from maintenance to engineers etc. They all say the same thing….SASOL has no major projects in the pipeline for SA at all. Additionally, SASOL has no plans for Secunda past 2050. The plant is already 30 years over original lifespan, with no major renovations being planned. Only repair and maintenance, no matter how severe the problem. Secunda is bankrolling Louisana plant, after-which SASOL will completely divest from SA. Sasolburg is in even more dire straits.

The Inzalo scheme was designed to keep personnel from early retirement or quiting for 10 years in order to complete the Lake Charles project. Now again Khanyisa for another 10 years, except Khanyisa is coupled to Sasol Africa LTD shares only. Any international growth or success won’t influence the Khanyisa shares. As for the coal to Secunda, the newest shaft is about 20km outside of Springs, 100km from Secunda, bringing in coal from that far already in 2020 says a lot.

And I suppose their ‘coal-purchase agreement’ will be about as trustworthy as their environmental reporting!

Not even to mention their so called internal “Ethics” program, not very ethical. I would advise anyone against contacting their ethics department, I was victimised for it every step of the way, I have all the emails and voice recordings to prove it. Despite 3 years trying to report the hazardous waste non-compliance internally, no investigation, only harassment, victimisation and suspensions for acting in the interest of the company by exposing a bad patch and the non-compliance. A blind person can see the moves are being made to move out of SA.

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