Sasol set to invest R40bn regionally

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Sasol chief executive David Constable. Photo: Simphiwe Mbokazi.

Sasol would inject R40 billion into its southern African operations over the next two years, David Constable, the company’s chief executive, announced yesterday.

The spending ranged from the expansion of wax production and exploration for natural gas, to the investments Sasol was looking to make in low-carbon and renewable energy.

In June last year, the company reported future capital commitments of R48bn. These included R11.7bn on synfuels growth; R8.4bn in expansion of wax production; and R1.8bn in additional power-generation capacity of 140 megawatts in Sasolburg, all in South Africa.

Sasol also committed R1.1bn to the central processing facility expansion project in Mozambique; R1.7bn towards the tetramerisation project in North America; R1.9bn for the ethylene EPU5 project; and R3bn towards the Escravoc gas-to-liquids project in Nigeria.

For the six months to December last year, capital expenditure was R14.54bn, with total capital expenditure for the 2012 fiscal year at R29bn.

Of the capital expenditure over the next two years, 64 percent will be spent locally, and 36 percent internationally.

Constable was speaking yesterday during the launch of the R3.5bn Thubelisha mine shaft at the Twistdraai Colliery, near Bethal in Mpumalanga.

Thubelisha, which means “new opportunity” in Zulu, is part of the company’s mine-replacement project in which 60 percent of operating capacity supplying Secunda in Mpumalanga will be substituted over the next eight years.

The total cost of the replacement project is R14bn.

The Thubelisha shaft, which will supply coal to Sasol Synfuels, as well as the export and domestic market, is expected to expand the life of the Twistdraai Colliery beyond 2039.

“Our capital expenditure in South Africa alone, over the past three years, was over R42bn. Looking ahead, our current pipeline expenditure on projects has Sasol committing an additional R40bn to its southern African operations over the next two years,” Constable said.

Last year Sasol said that its South African business was the engine that had made both domestic and international growth possible.

“Sasol is firmly rooted in South Africa and we are making significant investments in growth opportunities at home and in the southern African region,” the company stated.

The firm’s mine-replacement programme, which is expected to create 5 000 jobs during the construction phase, will ensure that more than 4 000 jobs are retained.

Sasol said that Thubelisha would deliver more than 8 million tons of coal a year over a 25-year lifespan from 12 coal production sections. Production is expected to start in November, and the mine will reach full production by 2018.

“Our mining business is not only the foundation of Sasol’s South African operations; it is also a key component to ensure the country’s energy security and is a vital contributor to the country’s growth and development goals,” Constable said.

Sasol shares rose 2.4 percent on the JSE yesterday, closing at R357.18.