Business

Sasol synfuel production soars

Paul Burkhardt

The chemicals giant expects synfuel production for the year to fall in the upper end of the target range as it progresses a number of investments.

Growth prospects in South Africa, source of 75% of Sasol's operating income last year, remain muted, the company said. (AFP)

Sasol, the world’s biggest maker of motor fuels from coal, said output of synthetic fuels for this year will be similar to fiscal 2013 as it announced plans to build a US plant with Ineos Group Holdings.

Synfuels production will be at the top of the forecast range of 7.3-million metric tonnes to 7.5-million tonnes for the year ended June, the Johannesburg-based company said on Monday in a statement. That compares with 7.44-million tonnes in 2013, when Synfuels comprised 71% of operating income. 

Ineos and Sasol plan to build a high-density polyethylene plant in La Porte, Texas, that will start in 2016 and produce 470 000 tonnes of the material used in pipes, bottles and containers annually.

Sasol plans to make a final investment decision this year on an ethane cracker project in Westlake, Louisiana, and a gas-to-liquids (GTL) plant at the site 24 months after. The GTL plant would be the first of its kind the in the US.

“We continue to make progress on the front-end engineering and design work and are currently finalising the capital cost estimate and associated contracting strategy” for the 1.5-million-tonne-a-year cracker and derivatives complex, it said.

The company needs to raise $5-billion to $7-billion to build the facility and plans to start operating it in 2017, chief executive David Constable said on September 9. The cracker will convert ethane gas into ethylene, used to produce raw materials for goods such as paint and detergents.

Uzbek partner
A design study remains extended for a GTL plant in Uzbekistan, and Sasol is looking for a partner for its 19% stake in the project, it said. The final investment decision for the project is “dependent on securing appropriate project funding and confirming a suitable partner,” it said.

Potential investors in the project have already been determined, news agency Interfax reported April 24, citing a person close to the Uzbek government that it didn’t identify.

The Impumelelo coal mine will start in the first half of next year while the Shondoni pit will start in the six months after that, Sasol said. Funding for the operations, which form part of the company’s R14-billion mine-replacement program, has been boosted by a R2.5-billion external facility, with the first draw-downs already taking place.

Growth prospects in South Africa, source of 75% of Sasol’s operating income last year, remain 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% against the dollar since the start of the company’s financial year in July, the worst performance among 16 major currencies tracked by Bloomberg.– Bloomberg

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