Sasol to accelerate $2bn asset disposal programme as capex on US project leaps by another $1.3bn

Energy and chemicals group Sasol, which announced another large increase in the capital cost of its Lake Charles Chemicals Project (LCCP) being build in the US, will accelerate its $2-billion noncore asset disposal programme and will used the proceeds to deleverage its balance sheet.

Joint president and CEO Bongani Nqwababa said on Wednesday that the JSE-listed group was “extremely disappointed” in having to confirm a further upward revision to the capital cost of the LCCP project, which is now expected to be between $12.6-billion and $12.9-billion.

In 2014, the group said the Louisiana project would cost $8.9-billion to build, but there have been several cost revisions since that date, the latest being in February when Sasol provided a cost-to-completion range of between $11.6-billion to $11.8-billion.

The latest revision increases the project’s price tag by between $1-billion and $1.3-billion, with the higher figure including a contingency of $300-million.

Joint president and CEO Stephen Cornell refused to divulge the identity of the assets identified for disposal, indicating only that they has been identified during an asset rview process initiated a year ago.

Nqwababa said the disposals would be aligned with the group’s updated strategy, which was geared towards increasing its speacialty chemicals footprint, consolidating its position in the gas and oil markets of Mozambique and West Africa respectively and growing its fuel retail network in South Africa.

Under the strategy, Sasol would no longer pursue new oil refineries, coal- and gas-to-liquids projects, or seek to growt is base chemicals portfolio.

Sasol would be engaging with varios banks and transaction advisers to ensure that the assets would exposed to a “wide universe” of potential buyers. However, Cornell stressed that Sasol was not in a position where it was being forced to sell assets and would, thus, only enter into transactions where value could be secured.

Source: www.miningweekly.com

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