Picture: Simphiwe Mbokazi/African News Agency (ANA)
Picture: Simphiwe Mbokazi/African News Agency (ANA)
JOHANNESBURG - Sasol will spend R68billion in capital expenditure in the next two years as it shores up its footprint in North America and consolidates its asset base in Africa.

The group said yesterday that it would have an outlay of R38bn for 2019 and R30bn for 2020 as it ramped-up the execution of its growth strategy.

Some of the investment was expected to be channelled to the multi-billion-dollar Lake Charles Chemical Project (LCCP) in Louisiana.

“2019 will be a defining year for Sasol, with the start-up of the LCCP, a catalyst for transforming our earnings profile,” said joint chief executive Stephen Cornell.

“Mozambique, our other key growth area, remains central to our gas strategy, where we are stepping up efforts to secure long-term gas feedstock, while delivering on our stakeholder commitments.”

The LCCP project consists of a 1.5million-ton-per-year ethane cracker, and six downstream chemical units adjacent to Sasol’s existing chemical operations.

The mega project, which has been hit by delays and rising costs, had an initial price tag of $8.9bn (R130.34bn) at the time the final investment decision was made on October 2014.

The group said yesterday that indications were that the cost of the LCCP would remain within the latest market guidance of $11.13bn.

“Overall the project is 88percent complete, with capital expenditure amounting to $9.8bn,” Cornell said.

The world’s biggest producer of fuel from coal burned cash in the year ended June.

The group’s net cash position tanked 42percent from R29.3bn in the prior period to R17bn in the year under review as a result of the funding of the LCCP and investments to fund growth projects.

The company also raised loans that amounted to R25bn in the period to what is said was “mainly for the funding of our US growth project.”

Sasol said that its year-ended June results were negatively impacted by several unplanned Eskom electricity supply interruptions and two internal outages at its Secunda Synfuels.

The group reported a decline of 6percent to R36.03 in core headline earnings in the period, while headline earnings per share plunged 22percent to R27.44.

- BUSINESS REPORT