Sasol battles coal challenges as mining production dips 1%

Sasol reported a slight fall in first-half mining production, primarily challenged by coal quality. First-half mining saleable production fell 1% to 15 million metric tons compared with the same period a year prior.

The chemical and energy group said saleable production for the half year remains between 30-32mm tons. However, coal quality challenges are prevailing, and as a result, external coal purchases were 18% higher than in the corresponding period.

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The repurposing of the Twistdraai export plant to a destoning unit is planned to start in February 2025, with the shutdown of the export plant in May. The estimated capital cost for this project is below R1 billion.

The coal de-stoning initiative is designed to recover coal quality.

According to the group, the mining cost per production ton remains within the market guidance of R600 to R640 per ton. However, the overall cost per ton remains under pressure due to increased external purchases.

Natural gas production was 2% higher than a year prior at 61.6 billion square cubic feet, despite the unrest in Mozambique.

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In December, the group announced it had reduced natural gas production at its central processing facility in Mozambique to maintain the safety of its staff and assets amid widespread post-election unrest.

For its fuels unit, Sasol said production volumes from Secunda Operations fell 5% to 3.34 million tons. Total chemicals sales volumes fell 6% to 2.98 million tons, while revenue rose 1% due to an 8% average sales basket price increase.

The fire at the Natref refinery in Sasolburg damaged supporting piping and infrastructure around the Crude Distillation Unit. The repairs are anticipated to be completed before the end of February 2025, and plans are being implemented, including product purchases, to address supply shortfalls where possible.

Read: Sasol fire heightens SA’s dependence on fuel imports

The company backed its full-year guidance for its mining and gas divisions.

However, for the fuels division, the company revised its volume guidance for Secunda Operations and Natref production downward. Sales volumes for fuels and chemicals in Africa are expected to align with the guidance for the 2024 financial year.

“Despite the operational challenges faced during the quarter, we remain committed to executing key self-help initiatives aimed at improving performance and mitigating the challenges we face,” the group said.

Sasol share price 

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