JOHANNESBURG, Dec. 14, 2021 /PRNewswire/ --
Background
Shareholders are referred to Sasol's announcement published on
the Stock Exchange News Service on 21
October 2021 relating to the production and sales
performance metrics for the three months ended 30 September 2021.
In the announcement referred to above, the forecast production
volumes for Secunda Operations (SO) for financial year 2022 were
revised from 7,4 to 7,5 million tons to 7,3 to 7,4 million tons.
This reduction was largely due to unforeseen delays during the
September shutdown, interruption of power supply from Eskom, poor
coal quality and other operational instabilities.
In that announcement, we set out the challenges experienced with
the ramp-up of the mining integrated shift system (Fulco),
operational stoppages due to safety incidents, poor coal quality
and lower production volumes. The annualised production run-rate
communicated was based on the performance from July to September 2021, our coal stockpile level as well
as planned mining operational improvements which translated to our
forecast 1 100 - 1 200 tons per continuous miner per
shift (t/cm/s) mining productivity.
Update on operational performance
As of 13 December 2021, the
operational instabilities at SO have been largely resolved. We have
seen significant improvements with gasifier and boiler availability
in the Synfuels facility over the past three months.
During September 2021, we saw some
measured improvements in coal quality, but after the end of
October 2021, we encountered three
major production impacts at Mining which resulted in more than 1
million tons of lost coal production.
The most significant safety incidents which occurred since
October 2021 include a fire at our
Shondoni mine (no fatalities), an underground water reservoir
incident at our Bosjesspruit mine (3 fatalities), and a high wall
failure at our Syferfontein mine (no fatalities). Collectively,
these incidents contributed to just over 50% of the coal production
shortfall.
Apart from these safety incidents, our operations were also
negatively impacted by adverse weather conditions and some
significant operational challenges. Furthermore, the Fulco ramp-up
continues to be slower than expected. As a result, production
run-rates decreased to below 1 000 t/cm/s and we had to
utilise the coal stockpile which, as a result, decreased to below
our targeted stock level. External coal supply from our
long-standing commercial supplier was also interrupted as a result
of wet weather, significantly impacting the supplier's ability to
provide us with our contracted off-take quantity. The lower coal
availability also hampered our ability to effectively blend coal,
which resulted in lower yield rates in the gasification process at
SO.
Although our efforts to improve SO's stability have yielded some
positive results, our Mining business improvement efforts have not
met our own targets. It is disappointing for all of us who have
been working tirelessly at repositioning the company for a
sustainable future, as well as pursuing the improvement benefits of
Sasol 2.0.
Due to the lower than expected coal availability and coal
quality, we have reduced SO production rates until such time
that our mining productivity rates increase and we have rebuilt our
coal stockpile to well above our threshold requirements. We are
committed to gradually lift production rates as coal availability
improves, while carefully monitoring the supply and demand balance.
We will also supplement our production shortfall by purchasing coal
on the open market. It is not possible to determine the shortfall
at this point.
As a consequence, we have revised our forecast SO production
volumes to 6,7 – 6,8 million tons for financial year 2022.
Based on actual performance and our coal purchase strategy, we
expect Mining operations to achieve an average productivity rate of
between 950 to 1 040 t/cm/s for financial year 2022.
Our first objective is to ensure that we restore the integrity
of the stockpile to a level of above ~1,2 million tons by the end
of quarter 1 of calendar year 2022. Following this, we plan
to gradually increase the pure gas loads through increased coal
supply to SO in an effort to improve the run-rate. We are
targeting a stockpile level of ~1,5 million tons and will further
improve the gas loads for SO by quarter 2 of calendar year
2022. Improving the coal quality will take some time and we
will update the market of our progress during the following
months.
We acknowledge that we need to set ourselves up to approach
financial year 2023 from a position of strength, supported by safe,
stable and sustainable operations.
Actions going forward
The safety of our employees remains our top priority. In
response to the tragic safety incidents within our mining business,
we have embarked on a business wide assessment of the
implementation effectiveness of our well-established safe working
practices to prevent repeats of safety incidents.
We maintain our focus on safely improving productivity and coal
quality at our Mining business. This includes the recent conclusion
of an in-depth review of the effectiveness of the Fulco system,
which will result in some adjustments to elements of the Fulco
model. A dedicated task team is responsible for rolling out
solutions and learnings throughout our mines as soon as
possible.
We have also strengthened our management review system with
additional leading and lagging indicators which are reviewed on a
daily and weekly basis with appropriate escalation measures. An
increased focus on our leadership training initiatives is in
progress to embed the right behaviours, safety practices and
culture at all levels.
We recognise that our production challenges may impact on our
ability to supply customers. We are currently reviewing multiple
options including different sources of supply to supplement our
production shortfall where feasible.
A further update on our production and sales volume outlook will
be provided when we publish our quarterly business performance
metrics in January 2022.
The President and Chief Executive Officer and Chief Financial
Officer will host a conference call on Tuesday, 14 December 2021 via webcast at 14:00 (SA time)
to answer questions related to this announcement.
Live conference call link:
https://www.corpcam.com/Sasol14122021
For further information, please contact:
Sasol Investor Relations,
Tiffany Sydow, Investor Relations
Officer
Telephone: +27 (0) 71 673 1929
investor.relations@sasol.com
Disclaimer - Forward-looking statements
Sasol may, in this document, make certain statements that are
not historical facts and relate to analyses and other information
which are based on forecasts of future results and estimates of
amounts not yet determinable. These statements may also relate to
our future prospects, expectations, developments, and business
strategies. Examples of such forward-looking statements include,
but are not limited to, the impact of the novel coronavirus
(COVID-19) pandemic, and measures taken in response, on Sasol's
business, results of operations, markets, employees, financial
condition and liquidity; the effectiveness of any actions taken by
Sasol to address or limit any impact of COVID-19 on its business;
the capital cost of our projects and the timing of project
milestones; our ability to obtain financing to meet the funding
requirements of our capital investment programme, as well as to
fund our ongoing business activities and to pay dividends;
statements regarding our future results of operations and financial
condition, and regarding future economic performance including cost
containment, cash conservation programmes and business optimisation
initiatives; recent and proposed accounting pronouncements and
their impact on our future results of operations and financial
condition; our business strategy, performance outlook, plans,
objectives or goals; statements regarding future competition,
volume growth and changes in market share in the industries and
markets for our products; our existing or anticipated investments,
acquisitions of new businesses or the disposal of existing
businesses, including estimates or projection of internal rates of
return and future profitability; our estimated oil, gas and coal
reserves; the probable future outcome of litigation, legislative,
regulatory and fiscal developments, including statements regarding
our ability to comply with future laws and regulations; future
fluctuations in refining margins and crude oil, natural gas and
petroleum and chemical product prices; the demand, pricing and
cyclicality of oil, gas and petrochemical product prices; changes
in the fuel and gas pricing mechanisms in South Africa and their effects on prices, our
operating results and profitability; statements regarding future
fluctuations in exchange and interest rates and changes in credit
ratings; total shareholder return; our current or future products
and anticipated customer demand for these products; assumptions
relating to macroeconomics; climate change impacts and our climate
change strategies, our development of sustainability within our
Energy and Chemicals Businesses, our energy efficiency improvement,
carbon and GHG emission reduction targets, our net zero carbon
emissions ambition and future low-carbon initiatives, including
relating to green hydrogen and sustainable aviation fuel; our
estimated carbon tax liability; cyber security; and statements of
assumptions underlying such statements. Words such as "believe",
"anticipate", "expect", "intend", "seek", "will", "plan", "could",
"may", "endeavour", "target", "forecast" and "project" and similar
expressions are intended to identify forward-looking statements but
are not the exclusive means of identifying such statements. By
their very nature, forward-looking statements involve inherent
risks and uncertainties, both general and specific, and there are
risks that the predictions, forecasts, projections, and other
forward-looking statements will not be achieved. If one or more of
these risks materialise, or should underlying assumptions prove
incorrect, our actual results may differ materially from those
anticipated. You should understand that a number of important
factors could cause actual results to differ materially from the
plans, objectives, expectations, estimates and intentions expressed
in such forward-looking statements. These factors and others are
discussed more fully in our most recent annual report on Form 20-F
filed on 22 September 2021 and in
other filings with the United States Securities and Exchange
Commission. The list of factors discussed therein is not
exhaustive; when relying on forward-looking statements to make
investment decisions, you should carefully consider foregoing
factors and other uncertainties and events, and you should not
place undue reliance on forward-looking statements. Forward-looking
statements apply only as of the date on which they are made, and we
do not undertake any obligation to update or revise any of them,
whether as a result of new information, future events or
otherwise.
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SOURCE Sasol Limited