Johannesburg - Sasol’s output of synthetic fuels for this year would be similar to the past financial year, the group said yesterday, as it announced plans to build a US plant with Ineos Group.
Synfuels production would be at the top of the forecast range of 7.3 million to 7.5 million tons for the year to June.
That compared with 7.44 million tons in 2013, when Synfuels comprised 71 percent of operating income. Ineos and Sasol planned to build a high-density polyethylene plant in Texas that would start in 2016 and produce 470 000 tons a year of the material used in pipes, bottles and containers.
Sasol said it would make a final investment decision this year on an ethane cracker project in Louisiana, and a gas-to-liquids (GTL) fuel plant at the site 24 months after. The GTL plant would be the first of its kind in the US.
Strategy
“We continue to make progress on the front-end engineering and design work and are… finalising the capital cost estimate and associated contracting strategy” for the 1.5 million-ton-a-year cracker and derivatives complex, Sasol said.
The group needed to raise between $5 billion (R53bn) and $7bn to build the facility and planned to start operating it in 2017, chief executive David Constable said in September. The cracker would convert ethane gas into ethylene, used to produce raw materials for goods such as paint and detergents.
A design study remained extended for a GTL plant in Uzbekistan, and Sasol said it was looking for a partner for its 19 percent stake in the project.
The final investment decision for the project was “dependent on securing appropriate project funding and confirming a suitable partner”.
Potential investors in the project had already been determined, news agency Interfax reported on April 24, citing a person close to the Uzbek government that it did not identify.
The Impumelelo coal mine would start in the first half of next year while the Shondoni pit would start in the six months after that, Sasol said.
Funding for the operations, which form part of the company’s R14bn mine-replacement programme, had been boosted by a R2.5bn external facility, with the first draw-downs already taking place.
Growth prospects in South Africa, the source of 75 percent of Sasol’s operating income last year, remained muted, it said.
“Macroeconomic conditions remain volatile, impacting on our assumptions of stable crude oil prices in the near term, slightly improved natural gas prices, a moderate recovery in product prices and a weaker rand-dollar exchange rate,” it said.
The rand has depreciated 6.8 percent against the dollar since the start of Sasol’s financial year in July last year, the worst performance among 16 major currencies. – Bloomberg