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Sasol in environmental damages situation
Waste dumped into Sasol's tar pits near the old Sasol One plant, are leaking into the water system. If proved, Sasol will have significant damages claims and clean up costs. Already, Sasol contracted with a company, Separation & Recovery Systems (SRS) to reprocess the tar pits and waste at a cost of R2m per month. In addition, Sasol is supplying SRS free creosote at a cost of R1.5m per month. After two years of the 10 year contract, Sasol ended the supply of creosote, forcing the closure of SRS. SRS is now suing for damages.
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Sasol / Petronas in co-operation discussions
Sasol, it has been reported, is in preliminary talks with Malaysian Petronas over a co-operation and merging of their respective South African refining businesses. They would create a new, large, South African oil company of which Sasol and Engen would be significant shareholders. This new company may eventually be listed. As mentioned before, Total SA has a pre-emptive right on the sale of Sasol's stake in Natref.
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Sasol in new bid for AECI explosives
Sasol is once again looking at an offer for African Explosives, AECI's explosives division. This acquisition would help it in its quest to become the world's largest explosives producer by 2004. The division is valued at around R1500m. There are two other interested parties - Dyno from Norway, and Orica from Australia (the current world leader with 20% of the market). The current situation is a 40% buy-sell differential in the price. Should one of the foreign parties succeed in its bid, Sasol could look to take a significant stake therein. Both Dyno and Orico are vulnerable to takeover while world commodity prices remain depressed.
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More on the Sasol / Petronas possibilities
Sasol and Petronas are expected to sign an memorandum of understanding about consolidating their SA crude oil businesses. Amongst other things, Sasol would gain access to Engen's forecourt network while Petronas would gain access to Sasol's gas to liquid technology. With low oil prices and a waning subsidy, Sasol has to ensure an outlet for its fuel. It is still working on becoming the world's largest explosives producer by 2004. It plans to increase contribution from chemicals.
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SASOL / Petronas tie-up complications
The mooted tie-up between Sasol and Petronas is more complex than it seems. Total has a 36% of Natref and Sasol the balance. Total also has a pre-emptive right over the balance, and this ties Sasol's hands over selling its stake to Petronas. Petronas is interested therein, as well as in Sasol's gas to liquid technology, amongst others. A deal would probably have to include Total. Also, a black empowerment partner looks essential to be in line with the government white paper's suggestion of 25% empowerment interest. The split interests in Polifin will pose another obstacle. Will Petronas make an offer for AECI's 40%, Sasol's 50%, or both?
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Sasol tariff protection hearing set for August
Arbitration hearings over alleged breaches by Sasol of the supply agreements with the major SA oil companies has been delayed until August. Sasol has already agreed to end them, by 2004. The oil companies are unhappy with Sasol receiving tariff protection while still forcing them to buy its product.
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Sasol / Polifin / Petronas alliance potential
There is potential for an alliance between Sasol, Petronas, and Polifin. Petronas wants to expand its involvement in SA to include the plastics and chemical industries, over and above its stake through Engen in the petroleum industry. Sasol could benefit by securing, through the Engen forecourts, an outlet for its petrol. It would also allow Sasol to move closer to Worldwide African Investments, the black empowerment group that is expected to take 20% of Engen over the next 4 years. Petronas is interested in Polifin's ability to market polyethylene in emerging markets. Currently, Sasol has rights of first refusal over AECI's 40% therein. Should AECI be sold, this will fall away. AECI's stake in Polifin will probably be sold once polymer prices, and hence the share price, recovers. Should this stake go to Sasol, something will have to be done to ensure that the free float of Polifin shares is significantly more than the 90% that Sasol could control in order to ensure liquidity and a market-related price.
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| Closing price data source: JSE Ltd. All other statistics calculated by ProfileData. |
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