South Africa’s Sasol grapples with lower coal prices

Market: Coal
20/08/24

South African integrated energy firm Sasol's earnings from its coal mining business saw a 4pc decline on the year to R4.8bn ($0.27bn) on lower export prices and higher external coal purchase prices, according to its 2023-24 financial results today.

The company reported a huge loss after writing down $3.06bn after tax in the carrying value of its chemicals and fuel assets. The company said operational issues and challenging market conditions negatively impacted its results, partially offset by a stronger rand and a higher oil price.

Reviewing its operations for 2025, Sasol said it will improve coal production volumes from its own mines, reduce unplanned coal purchases and cut production costs by increasing capacity at existing mines. For 2024-25, the company expects saleable production from its coal mining operations to be between 30-32mn t.

Sasol operates six coal mines which supply about 40mn t of thermal coal primarily as feedstock to Sasol's chemical and fuel operations in Secunda and Sasolburg, as well as smaller volumes to the export market.

The company also has a coal supply agreement from Thungela's Isibonelo colliery to its Sasol Synfuels business in Secunda which was due to conclude in 2026, but Sasol's chief executive officer Simon Baloyi announced today the company has already extended its agreement with Thungela by six months and are exploring a further extension.

"We also have our own plans to make sure we can supply the required coal to Secunda, even in the event that Isibonelo contract is not extended," he added.

Sasol also plans to invest in coal destoning to improve the product quality.

By Ashima Sharma

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