Sasol’s big renewables plan

Sasol plans to run its flagship plant at full capacity, offsetting the use of coal feedstock by sourcing more renewables as part of a strategy by the world’s top producer of synthetic fuel from coal to improve its business.

South Africa’s second-biggest emitter of greenhouse gases will aim to ramp up the Secunda synthetic-fuels facility as close to a nameplate capacity of 7.6 million tons a year as possible, while maintaining its target of reducing emissions by 30% by 2030.

“We have to decarbonize — we will — but we’ll never decarbonize by shutting down,” Sasol Chief Executive Officer Simon Baloyi said in an interview on the company’s Capital Markets Day strategy.

Instead, it will expand a renewable-energy target by about two thirds to 2,000 megawatts. 

“We need to work on offsets so that we can keep the fossil fuel part running as long as possible,” he said.

Sasol’s first so-called CMD plan in four years comes during a turbulent oil market — that correlates with its fuel business — and US President Donald Trump’s irregular tariff oscillations that affect supply chains. The stock has slumped for the past year, with investors eager for details on a future strategy.

As the company focuses on improving coal quality to ramp up Secunda and cutting costs, it’s working on improving the chemical arm to earn as much as $1 billion annually, more than three times its current contribution, to the group in the next five years, said Baloyi. 

“We spent $12 billion on our international chemical business and we have to make sure we turn around that business,” he told reporters. Sasol spent $12.8 billion on the Lake Charles chemicals facility in Louisiana.

Sasol has put in place protections from ongoing volatility in crude and foreign-exchange markets. For this year, it’s completed an oil-hedging program that set the floor at around $60 a barrel, which is around the break-even price, and it has covered most volumes for the next, according to Sasol Chief Financial Officer Walt Bruns. 

The company is also lowering the net-debt level needed to trigger a dividend to $3 billion in fiscal 2027 from $4 billion, he said. It exceeded this in 2024, resulting in it skipping a final payout.

Sasol initially estimated that its emissions-reduction roadmap to reach the 30% cut would cost as much as 25 billion rand ($1.4 billion). It’s trimmed that to 7 billion because it’s opted not to supply Secunda with liquefied natural gas to displace coal.  

Baloyi said some of the preliminary agreements that Sasol has announced over the last year or so — including a sustainable aviation business with Topsoe, a partnership with South African state-owned power utility Eskom Holdings SOC Ltd. on gas aggregation, and a clean-energy platform with Discovery Green — are signs of a longer-term move to a lower carbon-energy business. 

“You won’t see us bringing gas to use our own facility, but gas-to-power we’ll probably do; we will do renewables” along with sustainable aviation fuel, the CEO said. “Naturally, we will slowly start to move away from fossil fuel.”

Listing on the way

Sasol may list its international chemical business “towards the end of the decade,” following a turnaround of the business that’s underway, according to Chief Executive Officer Simon Baloyi.

The company expects the unit — which includes a sprawling complex in Louisiana that cost $12.8 billion — to ramp up profitability and contribute as much as $1 billion annually to earnings by 2030.

Sasol separated the international chemical business from operations in South Africa and has set targets to strengthen it as a standalone entity.

There’s little interest in listing international chemicals while prices are soft, Baloyi said Monday in an interview. 

“When the market is looking good on the up cycle, it’s a nice time to do that,” he said.

Chemicals made up about 40% of Sasol’s adjusted earnings in the six months through December. The international business improved to a 13% contribution, with the remainder coming from South African operations.

Baloyi said in a January interview with Bloomberg that international chemicals may be listed on its own or merged with another business.