Sasol Ltd. is looking to revive its international chemical business, including a sprawling US complex, to boost earnings and open up an option to potentially list it, according to the company\u2019s chief executive officer.<\/p>\n\n\n\n
The company\u2019s shares jumped as much as 10.5% in Johannesburg, the most since June 18. The South African maker of fuel and chemicals from coal reported its first loss since 2020 last year and took billions of dollars in writedowns. The company has about $4 billion of debt and suspended dividend payouts. Its shares tumbled 55% in 2024.<\/p>\n\n\n\n
Sasol CEO Simon Baloyi, a two-decade veteran of the company, who took over the role in April, sees the company\u2019s $12.8 billion Lake Charles chemicals facility in Louisiana playing a significant role in generating cash and raising investor confidence.<\/p>\n\n\n\n
\u201cIt\u2019s a fantastic asset that Sasol has and we have to make sure it starts making money,\u201d he said in an interview at Bloomberg\u2019s office in Johannesburg. The company separated the international chemical business from operations in South Africa and has set targets to increase its contribution to earnings and strengthen it as a standalone entity. While chemicals make up about a third of earnings, the regional contribution of the US is just 6%.<\/p>\n\n\n\n
Sasol’s Energy Segment Is Biggest Earner<\/p>\n\n\n\n
\u201cIn the future, at the peak of the chemical market, it\u2019s going to give us lots and lots of strategic options to create shareholder value, where you can have an option to either list it by itself or you can merge it with someone else,\u201d Baloyi, 48, said.<\/p>\n\n\n\n
Success could mean revising a dark chapter in the company\u2019s history. The Lake Charles Chemicals Project was originally designed to expand Sasol\u2019s operational footprint abroad, but suffered from mismanagement issues, hurricanes and billions of dollars in cost overruns that ballooned the company\u2019s debt.<\/p>\n\n\n\n
In 2020, the year it reached completion, Sasol sold a $2 billion stake in the US base-chemicals business to form a joint venture with LyondellBasell Industries NV to cut debt. It also accelerated an asset-sale program that wrapped up the following year.<\/p>\n\n\n\n
The company\u2019s shares have plunged for two straight years and its weighting on the FTSE\/JSE Africa All Shares Index has dropped to 0.86% from 3.2% a decade ago.<\/p>\n\n\n\n
Baloyi pledged to avoid \u201ca fire sale of assets\u201d that he considers \u201cvalue destruction.\u201d<\/p>\n\n\n\n
A review he announced in August, when the company took a 56.7 billion rand writedown largely on low chemical prices, is intended in the next three to four year to make the units capable of sustaining their own operating costs and help pay debt interest.<\/p>\n\n\n\n
It\u2019s also looking at all assets to determine which \u201care bleeding cash, which assets need fixing,\u201d and which need to be shut down if they can\u2019t be improved, he said.<\/p>\n\n\n\n
Another unanticipated obstacle to emerge for Sasol in recent years has been the quality of coal it produces and uses to feed its Secunda manufacturing hub.<\/p>\n\n\n\n
That\u2019s become another priority and the company has taken a final investment decision on a de-stoning project to improve the quality of the coal, according to Baloyi.<\/p>\n\n\n\n
The company has been purchasing about 4 million tons of the fuel a year to make up for the issue, that he considers a waste of money.<\/p>\n\n\n\n
\u201cWe shouldn\u2019t be buying coal because we have the infrastructure, we have the people, we have everything to mine the coal.\u201d<\/p>\n\n\n\n