Sasol reports no further Lake Charles Chemicals Complex damage
JOHANNESBURG - Petrochemicals giant Sasol said yesterday that preliminary assessments at its Lake Charles Chemicals Complex (LCCC) in the US indicated that no further damage occurred as a result of Hurricane Delta and a co-ordinated start-up of the complex was underway.
Hurricane Delta, which made landfall near Sasol’s LCCC in Southwest Louisiana on October 9, resulted in widespread electrical blackouts and other damage, preventing Sasol from operating most utility systems.
Hurricane Delta was the second storm to hit the group in the quarter after Hurricane Laura, which made landfall on August 27. It was one of the strongest recorded hurricanes to impact the gulf coast. The group said post Hurricane Laura, it had made significant progress towards readying the LCCC facilities for restart.
“Seven chemical manufacturing units have returned to operation and all remaining units which were operating prior to Hurricane Laura are expected to return to operation by end October 2020,” said the group.
Sasol flagged that Hurricane Laura had a 170000-ton impact on net saleable tons at its North American Operations during the September quarter. The investment into Lake Charles has been a hot potato, following increasing project costs and its contribution to the group’s debt. Last month Sasol announced that it had entered into an agreement to partner with LyondellBasell to form a 50/50 joint venture with the Lake Charles Chemicals Project (LCCP) Base Chemicals business.
The transaction is to be implemented before the end of calendar year 2020, following shareholder and regulatory approval.
Sasol said yesterday that given the impact of Hurricanes Laura and Delta, the Base Chemicals joint venture partnership and the current market conditions, it expected the LCCP ring-fenced earnings before interest, taxation, depreciation and amortisation for the 2021 financial year to be between $50million (R818m) and $120m, including anticipated insurance proceeds resulting from claims in respect of Hurricane Laura.
Vestact Asset Management portfolio manager Michael Treherne said yesterday that the market had not moved much on the news, so it would be roughly in line with what participants were expecting.
“Part of the reason for the non-reaction from the market is probably given the large range forecast. There is a significant difference between $50m and $120m. This profit figure is before taking into consideration the interest due on all the money borrowed to build the plant. I suspect that the plant is loss making after the interest bill is taken into consideration,” said Treherne.
Sasol said sales in the volumes chemicals business slumped by 11percent during the September quarter, compared to a year earlier on the negative impact of the Covid-19 regulations and Hurricane Laura.
In terms of mining the group reported a 7percent decline in saleable production compared to the previous quarter due to the impact of Covid-19 on its operations. Saleable production fell to 8.8 million tons from 9.5 million tons a year earlier.
Sasol's shares closed 2.12percent lower at R97.86 on the JSE yesterday.