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Sasol - disposal & further cautionary
Sasol announce that Sasol South Africa Ltd. (“SSA”), a Major Subsidiary of Sasol, has signed an exclusive negotiation agreement with Air Liquide for the sale of its sixteen air separation units located in Secunda to Air Liquide Large Industries South Africa (Pty) Ltd. (“Air Liquide”). The proceeds will total approximately R8.5 billion.
The air separation units, which have a capacity of up to 42 000 tons per day, provide oxygen for Sasol’s fuels and chemical production processes in Secunda as well as producing various other gases utilised at the site. Air Liquide will supply the gases to SSA’s operations under a long-term gas supply agreement. It is anticipated that Air Liquide’s expertise would allow, in coordination with Sasol, a targeted reduction in greenhouse gas emissions (GHG) associated with the oxygen production over the coming years, which will contribute towards the GHG reduction for the overall Secunda site.
Air Liquide has been present on the Secunda site since 1979, and already owns and operates the seventeenth air separation unit, which was commissioned in January 2018. Air Liquide owning and operating the full air separation fleet is expected to provide optimisation of management of the assets and energy efficiency benefits.
The transaction remains subject to further due diligence, finalisation of relevant definitive agreements and associated internal and external approvals, including the Competition Commission and the South African Reserve Bank. The parties aim to negotiate final agreements by mid August, and a further announcement will be made at that time. The transaction is currently expected to close within financial year 2021.
This transaction forms part of Sasol’s accelerated divestment programme as part of Sasol’s comprehensive response plan announced on 17 March 2020.
Release of trading statement update
Sasol's accelerated asset disposal programme is impacting the completion of our year-end processes. The group anticipates the release of a trading statement update early in August 2020.
Further cautionary
Sasol refers to the SENS announcements released on the Stock Exchange News Service (“SENS”) on 17 March 2020, outlining a comprehensive response strategy designed to mitigate the impact of a lower oil price and COVID-19. The strategy includes a cash conservation programme, an accelerated and expanded asset disposal programme, as well as a potential rights issue of up to USD2 billion which remains subject to the progress of other initiatives. A further SENS announcement was released on 1 July 2020, updating investors on the progress regarding the asset disposal programme.
Sasol shareholders are advised that implementation of the response strategy is underway, the outcome of which may have a material effect on the price of the Company’s securities. Accordingly, shareholders are advised to continue exercising caution when dealing in the Company’s securities until full announcements on the disposal of the air separation units, the asset disposal programme and the potential rights issue are made.
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Sasol-production and sales metrics;covid-19 update
Sasol has published its production and sales performance metrics including a hedging update for the year ended 30 June 2020, on the Company´s website at www.sasol.com, under the Investor Centre section or via this URL: https://www.sasol.com/investor- centre/financial-reporting/business-performance-metrics
Sasol is still in the process of completing its year-end processes and plans to issue an updated Trading Statement on or before 31 July 2020.
Covid-19 update
As of 22 July 2020, Sasol’s total number of COVID-19 infections since the beginning of the pandemic is 774, with the majority of cases recorded in South Africa. There are 561 active cases and two COVID-19 related deaths which occurred in South Africa. The infected employees are receiving our full support. The increase in Sasol’s infection rates is in line with the trend in South Africa. Up to now, there has been no material impact to our operations. The continuous increase in COVID-19 infections within Sasol could potentially impact our operations in the near-term. While we have implemented all regulatory requirements and have the necessary controls in place, we will continue to actively monitor and mitigate the impact.
LCCP status
The last remaining LCCP unit to come online is the Low Density Polyethylene (LDPE) plant, which was damaged during a fire in January 2020. Repair work to the unit is ongoing and the unit is expected to achieve beneficial operation (BO) before the end of October 2020. Some challenges were experienced in the completion of the restoration process, resulting in a slight delay to the previous market guidance of a BO date before September 2020. Overall project completion was at 99% and capital expenditure amounted to USD12,7bn.
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Sasol - further cautionary and asset sales
Escravos Gas-to-liquids (GTL)
Sasol and Chevron have signed an agreement that will result in Sasol selling its indirect beneficial interest in the Escravos GTL (EGTL) plant in Nigeria to Chevron. The transaction will release Sasol from associated company guarantees and other obligations. Sasol will continue to support Chevron in the performance of the EGTL plant through ongoing catalyst supply, technology and technical support.
The transaction has an agreed economic effective date of 1 September 2019.
Explosives joint venture
In October 2019 Sasol announced its intention to form a new explosives partnership with Enaex S.A. Sasol has concluded the transaction to sell a 51% share in the business to Enaex, and on 1 July 2020, Enaex Africa in association with Sasol, will officially start operating in South Africa and on the African Continent.
These transactions form part of Sasol’s accelerated divestment programme to streamline our portfolio by focusing on core assets, which will enable Sasol’s repositioning over the following 24 months.
Other divestments
Divestment processes are well underway with respect to Sasol’s equity interests in the Republic of Mozambique Pipeline Investment Company (Pty) Ltd (ROMPCO) pipeline and the Central Termica de Ressano Garcia (CTRG) gas-fired power plant in Mozambique, and partnering discussions in relation to the Base Chemicals assets in the USA are far advanced. Further updates on these and other disposals will be provided as and when appropriate.
Further cautionary announcement
Sasol refers to the cautionary announcements released on the Stock Exchange News Service on 17 March 2020 and 31 March 2020, outlining a comprehensive response strategy designed to mitigate the impact of COVID-19 and a lower oil price. The strategy includes a cash conservation programme, an accelerated and expanded asset disposal programme, as well as a potential rights issue of up to USD2 billion which remains subject to the progress of other initiatives.
Sasol shareholders are advised that implementation of the response strategy is underway, the outcome of which may have a material effect on the price of the Company’s securities. Accordingly, shareholders are advised to continue exercising caution when dealing in the Company’s securities until full announcements on the asset disposal programme and the potential rights issue are made.
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