Sasol Offsets a Strategy to Run Coal Harder With More Renewables

A worker in the octene and hexene solvents zone at Sasol Ltd.'s main plant which uses gasification to make fuel, in Secunda, Mpumalanga, South Africa, . Photo by Waldo Swiegers /Photographer: Waldo Swiegers/Blo

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(Bloomberg) — Sasol Ltd. plans to run its flagship plant at full capacity, offsetting the use of coal feedstock by sourcing more renewables as part of a strategy by the world’s top producer of synthetic fuel from coal to improve its business.

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South Africa’s second-biggest emitter of greenhouse gases will aim to ramp up the Secunda synthetic-fuels facility as close to a nameplate capacity of 7.6 million tons a year as possible, while maintaining its target of reducing emissions by 30% by 2030.

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“We have to decarbonize — we will — but we’ll never decarbonize by shutting down,” Sasol Chief Executive Officer Simon Baloyi said in an interview on the company’s Capital Markets Day strategy. Instead, it will expand a renewable-energy target by about two thirds to 2,000 megawatts. 

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“We need to work on offsets so that we can keep the fossil fuel part running as long as possible,” he said.

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Sasol’s first so-called CMD plan in four years comes during a turbulent oil market — that correlates with its fuel business — and US President Donald Trump’s irregular tariff oscillations that affect supply chains. The stock has slumped for the past year, with investors eager for details on a future strategy.

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As the company focuses on improving coal quality to ramp up Secunda and cutting costs, it’s working on improving the chemical arm to earn as much as $1 billion annually, more than three times its current contribution, to the group in the next five years, said Baloyi. 

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“We spent $12 billion on our international chemical business and we have to make sure we turn around that business,” he told reporters. Sasol spent $12.8 billion on the Lake Charles chemicals facility in Louisiana.

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Sasol has put in place protections from ongoing volatility in crude and foreign-exchange markets. For this year, it’s completed an oil-hedging program that set the floor at around $60 a barrel, which is around the break-even price, and it has covered most volumes for the next, according to Sasol Chief Financial Officer Walt Bruns. 

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The company is also lowering the net-debt level needed to trigger a dividend to $3 billion in fiscal 2027 from $4 billion, he said. It exceeded this in 2024, resulting in it skipping a final payout.

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Sasol initially estimated that its emissions-reduction roadmap to reach the 30% cut would cost as much as 25 billion rand ($1.4 billion). It’s trimmed that to 7 billion because it’s opted not to supply Secunda with liquefied natural gas to displace coal.  

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Baloyi said some of the preliminary agreements that Sasol has announced over the last year or so — including a sustainable aviation business with Topsoe, a partnership with South African state-owned power utility Eskom Holdings SOC Ltd. on gas aggregation, and a clean-energy platform with Discovery Green — are signs of a longer-term move to a lower carbon-energy business. 

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“You won’t see us bringing gas to use our own facility, but gas-to-power we’ll probably do; we will do renewables” along with sustainable aviation fuel, the CEO said. “Naturally, we will slowly start to move away from fossil fuel.”

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