Sasol is not considering further new investments before 2020 of the size of the recently completed R13.6bn Fischer-Tropsch wax expansion plant in Sasolburg as its priorities are to fund its Sasol Khanyisa black empowerment shareholding scheme and reduce gearing, says joint president and CEO Bongani Nqwababa.
The group is completing two substantial investments, the Lake Charles chemicals complex in Louisiana, US and the development of new oil and gas wells in Mozambique.
Management said in December it was completing a review of all its assets and had earmarked its Canadian shale gas assets for sale. Its growth focus in the long term will be speciality chemicals for the global market, fuel retail in SA and exploration/production in Mozambique and West Africa.
The firm’s immediate targets are to bring down gearing from 44% to about 30% once the peak funding period has passed, and then to gradually increase the proportion of dividends paid as a proportion of earnings.
Sasol will release its interim results on February 26.
The Sasolburg plant, which produces hard and medium waxes using gas as a feedstock, represents a 60% expansion of the group’s previous capacity. It was fully funded from internal resources. Construction of phase 1 started in 2010 and reached beneficial operation in May 2015.
The second phase of expansion began in 2014 and was completed in March 2017.
Although thousands of temporary jobs were created during construction, at full capacity the plant offers only a few hundred new jobs. But over time, more jobs are expected to be created among local businesses using wax as an input.
In the six months to December, Sasol produced 63,000 tonnes of wax, it said in its recent trading update.
Nqwababa said on Tuesday the market for hard and medium wax – which is used in adhesives, coatings and inks – is strong. But Sasol’s customers had built up stockpiles in the event there were commissioning problems and it would take about three months to run those stocks down.
In the meantime, Sasol, whose largest competitor in the wax market is Shell, was developing new customers.
In a speech delivered on her behalf at the official opening of the Sasolburg plant, as she had to go to Cape Town for an urgent meeting, Small Business Development Minister Lindiwe Zulu said it was vital to identify opportunities this investment had opened up for small businesses.
She said her department had realised it could not pursue its policies on its own but needed partnerships with private sector firms such as Sasol. It intended to hold further talks with Sasol on how they could form public-private partnerships (PPPs).
"PPPs are an important tool for developing economic and social infrastructure and therefore fostering economic development in SA," she said. Yet in the five years to March 2017, the value of PPPs had halved because of obstacles such as lack of institutional capacity and lack of understanding of the legislation governing PPPs.
The main reason to involve the private sector was that it brought financial resources and the ability to manage projects efficiently, Zulu said.