Sasol Lake Charles in the US. Photo: Supplied Sasol Lake Charles in the US. Photo: Supplied
Johannesburg - Sasol, the world’s biggest producer of
liquid fuels from coal, said the first units at its Lake Charles chemical
project will start operating in 2018, as the company reported lower first-half
profit because of currency losses and a strike.
The Lake Charles project is 64 percent complete and still
within its $11 billion budget, co-CEO Stephen Cornell said in a statement on
Monday. The fundamental drivers for the investment “remain sound,” he said.
Sasol said last year the cost of the project in Louisiana
had escalated by almost 25 percent, prompting the Johannesburg-based company to
make cuts elsewhere. The chemicals complex, which includes a 1.5
million-tons-a-year cracker, will convert ethane into plastics and other products.
Sasol’s profit before one-time items, known as headline
earnings, for the six months through December decreased 38 percent to R15.12 a
share, the company said. Sasol declared an interim dividend of R4.80 a share
and said it’s well placed to operate profitably at an oil price of $40 to
$50 a barrel.
Sasol feels “very comfortable” as the company prepares to
enter a fresh round of negotiations with workers around May, Cornell told
reporters on a call. “We believe that hopefully we’re in a better spot than we
were last year.”
Read also: Sasol minimises lower oil price risk with hedge
The Association of Mineworkers and Construction Union
downed tools for about three months last year at the company’s Secunda mining
operations over disputes about wages and benefits. The mining unit’s operating
profit fell 35 percent from a year earlier as a result, Sasol said. The Secunda
plant, located 130 kilometers west of Johannesburg, converts coal from five
mines into synthetic fuels and chemicals.
The company also recorded translation losses of about R1.3
billion ($100 million) due to the strengthening of the rand relative to the
dollar. Sasol benefits when the rand is weaker because most of its products are
sold in dollars, while it meets most costs in the South African currency.
For the rest of the year, the company has hedged 30
million barrels of crude oil at $47 a barrel, but doesn’t have currency-related
protections in place, co-CEO Bongani Nqwababa said. It’s still in the early
stages of hedging for the next financial year, he said.
“We’re still open to the risks of the rand at the moment,
which is quite significant,” Nqwababa said.
The company said it remains committed to its plans in
Mozambique, where the economy is struggling under mounting debt after the
global commodity slump combined with a freeze on aid. Key projects are either
on or ahead of schedule, and “we’re in a good space and we want to do more” in
Mozambique, Cornell told reporters.