SASOL has held discussions with various entities in Africa outside of
SA on the long-term potential for a chemicals plant, the group’s
executive, vice-president for chemicals Fleetwood Grobler, said on
Thursday.
The chemicals and energy group has production facilities
in SA, Mozambique and North America. It is investing $8.9bn in the
state of Louisiana in an ethane cracker and processing plant that will
treble its US chemicals capacity.
Mr Grobler said in its last
financial year Africa, the Middle East and India contributed just under a
third of the R105bn turnover of Sasol’s chemicals business. The
short-to medium-term focus in Africa was on improving the performance of
agents and distributors and selecting the best locations for a sales
office.
The focus in Africa is on countries with the fastest
growth in gross domestic product (GDP), including Angola, Mozambique and
Nigeria.
The effect on the South African business from forecast GDP below 1%
this year would be mixed, Sasol’s senior vice-president for base
chemicals Brad Griffith, said.
Mining was under pressure, which
would affect demand for explosives. Sasol was working with its mining
customers to improve their cost position through better planning.
The
polymers division, which sells to manufacturing and packaging firms,
should benefit from continued consumer spending but building
applications would be affected by the capacity problems in
municipalities. Sasol was working with government departments and
municipalities to bring projects together.
In Sasol’s 2015 financial year its chemicals business contributed 57% of group turnover.
Mr
Grobler said the group would report on March 7 on its interim results
to December, when it would also update the market on the progress of the
Louisiana project. He said the group was reassessing the project’s
timelines, but was confident the Gemini joint venture with Ineos to make
high-density polyethylene would be completed this year.
As oil
prices have slumped in the past two years, naphtha cracker plants in
Europe and Southeast Asia have become less competitive than ethane
crackers, which use feedstock from shale gas, Mr Grobler said. The
Louisiana ethane cracker project would give Sasol a competitive
advantage in selling products to China.
Asked about the effect of
lower oil prices on the group’s chemicals business, Mr Grobler said it
would vary. On some products margins would be squeezed but the
performance chemicals division was more robust.
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