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Omnia's plant in Sasolburg. Picture: SUPPLIED
Omnia's plant in Sasolburg. Picture: SUPPLIED

Chemicals, fertiliser and explosives group Omnia will increase the capacity of its Sasolburg solar facility to 15MW as it ramps up its strategy to lessen its reliance on Eskom for power supply.

The JSE-listed company said in its latest annual report that its operations were affected by failing road, rail and port infrastructure in SA, and by Eskom and Transnet’s subpar performance, which raised operating costs and limited output.

Through its “grid failure contingency plan” Omnia has committed R127m to boost solar power generation at its Sasolburg plant with the first phase commissioned at the end of 2022.

The second followed in November 2023, which augmented its total production capacity to more than 10MW at peak performance, CEO Seelan Gobalsamy said in the report.

“The plant has improved the security of our power supply by reducing our reliance on the national power utility,” Omnia said. “It will also contribute to reductions in the carbon gas emissions associated with the use of coal-fired power.”

Gobalsamy said a large component of the manufacturing strategy was to “manage production cost increases and to delink the Sasolburg site from utility cost increases”, through further investment in green technologies such as solar power, water-saving initiatives and assessing the use of biogas as an alternative to natural gas.

The solar development and Omnia’s ability to generate electricity from the surplus process steam produced by the nitric acid plants were expected to fulfil between 25% and 50% of Sasolburg’s annual electricity needs.

Total generation capacity rose to 12.976MW in the 12 months to end-March, from 4.911MW of solar power previously. At a group level, solar-generated electricity accounted for 14.7% of the total consumed.

Despite Eskom having suspended load-shedding since March 26, Omnia said it would increase its solar capacity at Sasolburg to 15MW in 2025 at a cost of R74m.

Omnia confirmed to Business Day on Monday that the capital was approved for an additional 5MW, bringing the total capacity to 15MW.

Group chair Tina Eboka said the move was necessary as the lack of energy security in SA had remained a significant challenge for Omnia’s 24-hour operations, even with its investment in alternative energy sources.

The company also commissioned solar generation solutions at its mining manufacturing facilities in Dryden and Losberg, while it allocated R39m for further investment in solar and battery backup solutions for up to 50 international sites.

Omnia produces and distributes chemicals, specialised services and solutions for the mining, chemical application and agricultural industries in more than 40 countries.

It said its 2024 financial year performance was characterised by a declining commodity price cycle and deteriorating Southern African Development Community infrastructure, which contributed to a reduction in revenue.

The conflict between Russia and Ukraine continued to disrupt manufacturing and supply chains, which led to fluctuations in commodity prices, it said. The situation was compounded by the tension in the Middle East, which affected the Red Sea shipping route.

However, Omnia said it managed to maintain security of supply for its customers throughout the year, despite the logistical and supply chain disruptions.

Flagging the possibility that SA might face difficulties obtaining natural gas — the main energy source used by manufacturers — in the next two years, Omnia said it was evaluating technology changes and alternative gas sources such as biogas.

Due to its diminishing gas supply, Sasol stated in August 2023 that it would import gas only for its operations and would cease supplying gas to third parties at the end of June 2026.

Chronux Research analyst Rowan Goeller cautioned that there was a risk that ammonia production might cease at Sasolburg should new gas supplies not be secured.

“With significant uncertainty around Sasol, Omnia does need to have diversity in its ammonia supply chain,” Goeller said in a note. “However, Omnia does have enough options to be able to continue to supply the bulk of its manufacturing plant requirements. A greater reliance on imports of ammonia and fertiliser may be required, but this is common among global explosives peers.”

Gobalsamy said the construction of a biomethane production facility in Sasolburg, in anticipation of the discontinued supply of natural gas, offered Omnia an opportunity to switch to a renewable, environmentally friendly and locally produced energy source.

Omnia shares closed unmoved at R67 on Monday, having risen more than 12% in the past year.

Correction: July 23 2024

Unit measurements have been corrected from MWh to MW throughout to reflect capacity, rather than consumption.

gumedemi@businesslive.co.za

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