Sasol flags railway woes even as it cashes in on record coal prices
21 October 2021 - 08:35
by Karl Gernetzky
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Sasol’s Secunda plant. Picture: BLOOMBERG/WALDO SWIEGERS
Chemicals and energy group Sasol says it is also feeling the effects of problems on Transnet Freight Rail’s network, but it has also seen the benefits of record coal prices in its first quarter ending September.
Mining export sales in the group’s first quarter were up 17% year on year despite lower volumes, Sasol said in a production update, with the group hedging up to 80% of its exposure to export contracts to protect margins.
Sasol said, however, it was facing logistical issues that were delaying the transport of coal from Secunda to Richards Bay, joining peer Thungela in flagging problems on the rail network this week, with that miner on Monday trimming its production guidance as a result.
Issues with Transnet’s network have already cost the industry an estimated R30bn in lost foreign sales in 2021, generating concerns that SA will lose out on another commodities boom at a time when a global energy crunch has led to a surge in demand for coal, while oil has been trading at a three-year high.
Locomotive issues, rampant vandalism, cable theft and derailments have hobbled exports of coal and other commodities in 2021, meaning miners cannot take full advantage of record prices, with Chinese imports surging in September as that country grappled with heavy rains that hit production.
Sasol said on Thursday it was working with Transnet, along with the wider industry, to help normalise operations.
External sales in the group’s chemicals business also benefited from higher prices, rising 44% in the first quarter, despite an 8% fall in volumes.
Sasol’s shares had jumped 30% in the three months ending September, and have doubled so far in 2021. The group’s remarkable turnaround can be seen in its shares, which briefly rose above R300 in early October, having fetched R20.77 at one point in March 2020, when SA’s hard lockdown took effect.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Sasol flags railway woes even as it cashes in on record coal prices
Chemicals and energy group Sasol says it is also feeling the effects of problems on Transnet Freight Rail’s network, but it has also seen the benefits of record coal prices in its first quarter ending September.
Mining export sales in the group’s first quarter were up 17% year on year despite lower volumes, Sasol said in a production update, with the group hedging up to 80% of its exposure to export contracts to protect margins.
Sasol said, however, it was facing logistical issues that were delaying the transport of coal from Secunda to Richards Bay, joining peer Thungela in flagging problems on the rail network this week, with that miner on Monday trimming its production guidance as a result.
Issues with Transnet’s network have already cost the industry an estimated R30bn in lost foreign sales in 2021, generating concerns that SA will lose out on another commodities boom at a time when a global energy crunch has led to a surge in demand for coal, while oil has been trading at a three-year high.
Locomotive issues, rampant vandalism, cable theft and derailments have hobbled exports of coal and other commodities in 2021, meaning miners cannot take full advantage of record prices, with Chinese imports surging in September as that country grappled with heavy rains that hit production.
Sasol said on Thursday it was working with Transnet, along with the wider industry, to help normalise operations.
External sales in the group’s chemicals business also benefited from higher prices, rising 44% in the first quarter, despite an 8% fall in volumes.
Sasol’s shares had jumped 30% in the three months ending September, and have doubled so far in 2021. The group’s remarkable turnaround can be seen in its shares, which briefly rose above R300 in early October, having fetched R20.77 at one point in March 2020, when SA’s hard lockdown took effect.
gernetzkyk@businesslive.co.za
Sasol shares back to pre-Covid levels
S&P Global lifts Sasol’s outlook to positive on debt reduction and stronger cash flow
Sasol triples greenhouse emission reduction targets
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Related Articles
Sasol shares back to pre-Covid levels
Riding the green energy wave
Changing its spots: why Sasol is going green
GRAY MAGUIRE: Digging into the details of Sasol’s change of heart
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.