EDITORIAL: Costly and dirty liability

Sasol has acknowledged that its Secunda liquid fuels plant in Mpumalanga is worth much less than it thought. 

The company will impair more than R35bn in the coal-to-liquids facility, which has attracted the attention of authorities for its high emissions of sulphur dioxide and other pollutants. The decision reflects the harsh reality that Sasol’s Secunda plant is a costly and dirty liability that threatens its future viability and reputation. 

The plant is one the largest and most carbon-intensive industrial complexes in the world, producing synthetic fuels, chemicals and electricity from coal. It consumes a large amount of water, a scarce resource in SA. It emits 56-million tonnes of greenhouse gases a year, more than the individual totals of more than 100 countries, including Portugal.

The writedown charge is mainly due to the fact that it costs more to borrow money and to run the plant because it has to produce less to reduce pollution. Shares in the company shed more than 5% on the news.

The impairment must be a reminder to the Sasol management team to take more drastic and decisive action to transform the Secunda plant into a sustainable and competitive business. As it stands, the plant erodes Sasol’s value and reputation.