Sasol falls back on coal

The company has opted to revert to coal following challenges encountered with its decarbonization strategy, which was initiated in response to the pressures of newly imposed carbon emission restrictions. As South Africa's second-largest polluter, the organization is exploring alternative methods to achieve its carbon emission targets after attempting to eliminate coal from its operations.

In 2021, Sasol committed to reducing its carbon emissions by 30% by 2030 and established a goal of achieving net zero emissions by 2050. However, recent developments suggest that the company's efforts to meet these objectives may be faltering. In November 2024, reports indicated that converting the existing Secunda plant to utilize renewable and sustainable feedstocks is not economically feasible. This facility is already recognized as the largest carbon emitter globally, primarily due to its dependence on coal as a key feedstock. Furthermore, Rod Crompton and Bruce Douglas Young from Wits University have projected that the Secunda plant is approaching the end of its operational life. The closure of this facility could have severe implications for the South African economy.

Since that time, Sasol's financial position appears to have deteriorated. The company has been grappling with a decline in shareholder value, increasing debt, and costly projects that have not yielded the anticipated results. Currently, Sasol is exploring alternative strategies to meet its carbon emission targets while reverting to coal, following challenges in its transition to natural gas and green hydrogen in its pursuit of the 2050 net zero emissions goal. In a recent public address, Simon Baloyi, the CEO of Sasol, who assumed leadership after the company's commitments were made, asserted that ceasing operations to achieve climate objectives is illogical. While Sasol remains committed to a 30% reduction in emissions, Baloyi has acknowledged that this target cannot be met in the originally proposed manner.

The high costs associated with clean energy are deterring potential buyers. Sasol has experienced minimal advantages from its position as an industry pioneer in this area. For the fiscal year ending June 30, 2024, Sasol reported a loss before interest and tax amounting to R27 billion, a decline from the previous year's earnings before interest and tax of R21.5 billion. This downturn was primarily attributed to increased impairments, reduced earnings, translation losses, and diminished gains from derivatives. Consequently, Sasol has suspended its dividend payments and is facing approximately R75 billion in debt at the conclusion of the financial year.

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