Sasol to put billions into its plants
FUEL and chemicals group Sasol is striving to ensure that its chemicals operations contribute half of its income by the turn of the century.
Chemicals made up 28% of Sasol's operating profits in the year to June 1996. To improve on this, it will invest heavily in chemical plants in the next few years, says chief executive Pieter Cox.
Sasol's total current capital expenditure is over R3-billion. Over the past seven financial years, the group has invested more than R10-billion in new projects, mainly to produce value-added chemical feedstocks.
However, Cox says: "As we go downstream, we have to have world-class plants and operations, but the SA market is too small. As a result, a large percentage of our outputs will have to be exported."
Sasol's exports have jumped in the last two financial years from R770-million a year to R1.7-billion and then to over R3-billion, an increase of almost 250%.
This improvement was driven primarily by a significant increase in chemical sales and the opening of new chemical plants. Increased chemical sales were also mainly responsible for the jump in Sasol's exports to R1.9-billion in its current year to June.
Improved marketing and logistical know-how, new markets, the launch of new products and a weaker rand helped export growth.
Sasol's drive to boost its chemical sales is no doubt aimed at countering the loss of it annual R1.1-billion tariff protection which is being phased out.
Its investment in chemicals is also focused on adding value to its feedstocks to reduce its vulnerability to price changes on the world market.
Chemicals also offer it a largely untapped treasure chest. The process it uses to make fuel from coal generates a range of commodity and speciality chemicals, more than half of which are left unrecovered in the group's fuel streams. For only slightly more than the cost of producing fuel, Sasol can extract these chemicals, which sell at far higher prices than fuel.
Sasol's investments in chemical operations include a R85-million project to raise the hexene purification capacity of its Alpha Olefins' plant at Secunda. The project should be fully operational by year-end.
A R43-million project to boost the capacity of Sasol's ammonia plant at Sasolburg has just come on stream and a R167-million acid recovery plant at Secunda has been commissioned.
A strategic alliance with Dow Chemicals will result in Sasol supplying the US firm with comonomer octane, a chemical building block for polyethylene plastic, into the next century.
As part of this project, Sasol will construct a 50 000 tons-a-year plant at its Secunda chemicals complex. A second 50 000 ton plant will be operational in 2 001.
he project gets the greenlight, it will substantially increase throughputs and optimise product recovery.