http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 14.22Change: -0.23
R/$ = 11.16Change: -0.09
Au 1240.10 $/ozChange: -4.17
Pt 1243.50 $/ozChange: -18.70
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Mar 11, 2013

With $21bn capex plan, Sasol is poised to become Louisiana's largest foreign investor

Back
Senior group executive, global chemicals and North American operations André de Ruyter in conversation with Terence Creamer on Sasol's investment plans for Lake Charles, Louisiana, in the US. Camera Work: Nicholas Boyd & Duane Daws. Editing: Darlene Creamer. Recorded: 11.3.2013.
Construction|Engineering|Africa|CoAL|Diesel|Flow|PROJECT|Project Management|Projects|Sasol|Africa|North America|South Africa|United States|USD|Chemicals|Crude Oil Production|Energy|Equipment|Flow|Gas-to-liquids|Logistics|Logistics Infrastructure|Oil Market|Products|Lake Charles|US Gulf Coast|Bobby Jindal|Christine Ramon|Infrastructure|Proximity|Louisiana|US Gulf Coast|Diesel
Construction|Engineering|Africa|CoAL|Diesel|Flow|PROJECT|Project Management|Projects||Africa||||Energy|Equipment|Flow|Logistics|Products||Infrastructure|Proximity|||
construction|engineering|africa-company|coal|diesel-company|flow-company|project|project-management|projects|sasol|africa|north-america|south-africa|united-states|usd|chemicals|crude-oil-production|energy|equipment|flow-industry-term|gastoliquids|logistics|logistics-infrastructure|oil-market|products|lake-charles-natural-feature|us-gulf-coast|bobby-jindal|christine-ramon|infrastructure|proximity|louisiana|us-gulf-coast-region|diesel
More Insight
© Reuse this



South African energy and chemicals group Sasol is preparing to invest the equivalent of around two-thirds of its current market capitalisation into three major projects in the US over the coming seven years, which could also position it as the State of Louisiana’s largest foreign direct investor.

The group’s market capitalisation current stands at around R263-billion and the three North American projects collectively represent possible capital expenditure (capex) of between R146-billion ($16-billion) and R192-billion ($21-billion), at current rand/dollar exchange rates.

The group is pursuing a $5-billion to $7-billion ethane cracker project in Lake Charles, which is situated near to the US Gulf Coast and within close proximity to existing gas and logistics infrastructure.

A final investment decision on the cracker and downstream ethylene derivatives is expected during the first half of 2014 – the plant could be operational by 2017.

Sasol is also conducting front-end engineering design on two gas-to-liquids (GTL) projects at the same complex, where investment decisions are likely to flow over the coming 18 to 24 months.

The GTL projects would be a first for the US and would involve capex of between $11-billion and $14-billion.

It is currently envisaged that the GTL plants would be delivered in two 48 000 bbl/d phases to produce four-million tons a year of fuel and value-added products, such as waxes and base oils. These plants could be commissioned by around 2020 or 2021.

CEO David Constable says the megaprojects mark a "significant chapter" in the JSE-listed group's efforts to "enhance" its position as an international energy and chemicals company.

He is also sanguine about the perceived threat posed to the GTL projects by the current rise in US crude oil production, stressing that the products produced at the facility would be linked primarily to the international diesel market rather than the oil market.

The funding plan is built on the group’s ability to generate significant levels of cash, primarily out of South Africa, as well as its strong balance sheet, which currently has gearing of 6.6%, which is well below its gearing target of between 20% to 40%.

CFO Christine Ramon reported that, during the interim period to December 31, 2012, R21.4-billion in cash was generated, which was lower than the R22.7-billion generated in the corresponding period during 2011. Cash flow from operations increased 6%, but was offset by working capital charges.

The group also expects to make use of a combination of other capital-raising instruments, including dollar-denominated bonds. On November 7, Sasol issued a $1-billion bond, with a tenure of 10 years and a fixed coupon rate of 4.5%.

The issuance was oversubscribed by 3.47 times and Ramon indicated that further issuances would be timed to “match cash flows” with its “US growth projects”, which could see Sasol approaching the US capital markets later in 2013 or in early 2014.

The South African company, which is the largest producer of fuel and chemical from coal, is assessing ways to mitigate the risks of pursuing the large-scale developments, including the phasing of projects to meet gearings targets and sustain its progressive dividend policy.

Sasol expects the peak capital outflow to be during its 2016/17 financial year and it is already working on ways to mitigate the risk associated with the peak year.

PROJECT TAILWINDS

But Constable also stresses that projects are well placed when assessed against the group’s key project parameters of feedstock availability, access to competitive technology and production platforms, the size and attractiveness of markets and the group's capability to execute.

Senior group executive, global chemicals and North American operations André de Ruyter tells Engineering News Online that, besides pursuing the projects in phases, modular engineering techniques will also be adopted. In other words, key plant and equipment will be fabricated and assembled in low-cost territories and shipped to site for erection and commissioning.

The group is also beefing up its internal project management capacity and will also undertake future recruitment in the US once the projects move towards construction and operations – the company already employs around 500 people in Louisiana having acquired operations in Lake Charles some time back.

The support and incentives on offer from the State of Louisiana have also been a factor, with Governor Bobby Jindal having personally visited the Sasol site three times.

By the time the projects are operations, Sasol will be a significantly “different company”, De Ruyter asserts.

“We are going to invest approximately two-thirds of our total market capitalisation, the total value of Sasol, in North America in these three projects. So, the nature of the company will fundamentally change,” he outlines, while stressing that South and Southern Africa will remain a key operational and profit centre.

The importance of South Africa is also emphasised by Constable, who notes that more than 72% of its current capex is being investment in South Africa.

The group will spend R31-billion on capital projects in 2012/13 and a further R35-billion in 2013/14, with more than 60% of that capex destined for South Africa.

“From out vantage point, South Africa is not only our home base, but it is also a great entry point to one of the world’s largest growth areas, [which is Africa],” Constable stresses.

Edited by: Creamer Media Reporter
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Energy News
Article contains comments
South Africa’s national oil company PetroSA produced 14% less refined product in 2013/14 than budgeted, owing to diminishing gas feedstock. The State-owned group also warned that that inadequate feedstock would remain a constraint on its future performance. The...
Total CEO Christophe de Margerie
The CE of French oil major Total, Christophe de Margerie, was killed when a business jet collided with a snow plough during takeoff at Moscow's Vnukovo International Airport, the company and airport officials said. The collision occurred late on Monday, just minutes...
Energy company Shell has handed over rare, high-quality three-dimensional (3D) seismic data, collected off the west coast of South Africa, to the universities of the Western Cape and Cape Town to be used for the advancement of research and skills development relevant...
Article contains comments
More
 
 
Latest News
Trade union Solidarity warned on Wednesday that ongoing restructuring and retrenchments in the information and communication technology (ICT) industry continued to put employees in the sector under “immense” pressure. This as the union claimed it had received...
Directors of investment holding company Combined Motor Holdings (CMH) say they are satisfied with the results achieved in the six months ended August 31, during which time the local economic environment continued to battle impediments to growth and national dealer...
In the Medium-Term Budget Policy Statement Finance Minister Nhlanhla Nene has outlined concrete plans to consolidate South Africa’s pubic finances and restore macroeconomic balances. The proposed adjustments – lower than planned spending and increased tax revenues -...
More
 
 
Recent Research Reports
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
 
 
 
 
 
This Week's Magazine
The broad-based black economic-empowerment (BBBEE) alignment process in the con-struction sector has begun, dur-ing which the sector codes of the Construction Sector Charter Council (CSCC) will be aligned with the revised Codes of Good Practice (CoGP), which come...
It is second time lucky for Toby Venter. Ten years ago he negotiated to buy the Kyalami racetrack, but “the deal did not materialise”.
Environmental solutions company I-Cat started construction work on its R22-million, 1 949 m2 environmentally sustainable office and warehouse facility, commissioned by I-CAT Environmental Solutions, at a launch event in October. The new sustainable I-CAT campus,...
IAN EVANS AirWatch file synchronisation and sharing system was initially designed for a large airline company
Effective file synchronisation and sharing across an organisation’s structures can provide the basis for robust mobile-device and document management while maintaining proper backup, version control and content distribution. These are the lessons learned by complex...
Hotel group Carlson Rezidor currently holds the largest hotel pipeline in Africa with 30 hotels and 6 300 rooms under development. The hotel group develops and operates Radisson Blu in the upper upscale segment and Park Inn by Radisson in the mid-market segment. With...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks