Coal quality and mining productivity issues continue to weigh on production at Sasol’s Secunda Operations in Mpumalanga, where only between 6.6 million tonnes and 6.9 million tonnes will be produced this financial year.
This production is well below the group’s initial production guidance for the year of 7-7.2 million tonnes, as well as historical production levels of more than 7.5 million tonnes.
Production, which fell 2% in the interim period to about 3.2 million tonnes, was also hit by the planned shutdown of the East plant, which reduced output by about 150,000 t during the period.
Lower volumes were offset in the six months to December 31 by higher energy prices, allowing the JSE-listed group to maintain earnings before interest and tax of 24.2 billion rands, in line with the previous period.
Production at Secunda Operations will be higher in the second half, but will continue to be weighed down by coal-related difficulties.
CEO FLeetwood Grobler reports that ensuring a recovery in production from Secunda Operations is now a key focus area for the group, which is undertaking a number of initiatives to address low coal volumes and quality.
Coal remains the primary feedstock for producing synthetic fuels and chemicals at Secunda Operations, which also uses some gas as a feedstock.
Grobler says an “all potential” program has been launched at its Syferfontein operation and will be extended to its other mines over time.
In the short term, however, internally mined volumes will need to be further supplemented by third-party purchases to maintain a stockpile of sufficient size (above 1.5 million tonnes) to improve Secunda Operations’ security of supply and to facilitate the combination with the correct quality.
Sasol is also considering “destroy” initiatives to further improve coal quality in the near term.
A number of longer-term commodity options are also being reviewed, including the opening of the Alexander mine, with a final investment decision likely to be made this year.
The group is also pursuing the prospect of increasing the volume of natural gas used in Secunda’s production process, which would also support Sasol’s decarbonisation efforts.
The group has committed to reducing its greenhouse gas emissions by 30% by 2030 and transitioning to net zero by 2050.
Sasol is also moving ahead with plans to displace coal-fired electricity with renewables, confirming during its interim results that it had signed power purchase agreements with independent power producers in South Africa for a total of 500MW and was continuing with plans to secure 1,200. MW.
Renewable electricity will initially displace Eskom’s purchases, but over time it will also allow Sasol to shut down its own coal-fired generation capacity, helping it reduce its annual coal consumption.
He was also investing to maintain the gas supply from Mozambique, with CFO Hanré Rossouw told Engineering News it was investing about $1 billion to secure an extension to its gas supply plateau from neighboring South Africa until at least 2028.
The group’s well stock in Mozambique had expanded from 19 to 24 and Sasol was on track to add two more wells in the coming months.
Mozambique’s gas production is expected to be between 111 and 114 billion standard cubic feet in the current financial year.
