SASOL share price drops dramatically after R35-billion impairment

The SASOL share price has dropped by as much as 6.1% this week, reports TopAuto. The South African petro-chemical company’s equity index dropped 0.7%, the most since March 2023. This equates to R9 billion in value after it recently told investors it will impair more than R35 billion.

SASOL SHARE PRICE DROP

SASOL’s liquid-fuels facility in Secunda, Mpumalanga, is the single biggest emitter of SO2 in the world. And it’s attracted the attention of authorities for its high emissions for some time now, being unable to meet current SO2 (Sulphur Dioxide) emissions standards.

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The SASOL share price drop follows its attempts to have the National Air Quality officer measure SO2 emissions in an ‘alternative way’ at Secunda. It wanted emissions measured by rate or load rather than concentration of particles. This was rejected and SASOL has until April 2025 to comply with the Air Quality Act’s minimum requirement or face further legal and financial consequences.

SASOL IS BLAMING GOVERNMENT

After the massive SASOL share price drop, the company hit back at government saying the impairment and lower earnings could be attributed to the poor performance of state-owned companies. It said government-run entities have constrained supply chains and resultant sales volumes. It said this in a trading statement of its 2023 results on Monday 14 August 2023.

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Among SASOL’s complaints, it said disruption to Transnet SOC Ltd.’s network and widespread corruption caused delays, as have blackouts as power utility Eskom Holdings SOC continues with country-wide loadshedding.

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Similarly, the prices SASOL charges are based on the volatile value of crude oil, which declined in the second quarter. As a result, basic earnings per share have dropped by as much as 84%, according to the SASOL statement.

SASOL SETS NEW TARGETS

The company has set a goal of cutting emissions by 30% by 2030 through the use of natural gas as a feedstock instead of coal. As a result, there is a strong possibility that Secunda’s future production will run below historical values.

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Energy generated will be supplemented by alternative energy sources, including renewable energy and gas. It has already procured 600MW of renewable energy to give effect to emissions reduction targets. Its overall goal is 1 200MW by 2025, it says.

BILLIONS INVESTED

SASOL says it has invested R7 billion over the past five years to reduce emissions. SASOL concluded its annual statement by saying it had made notable progress with the implementation of its plan to lower pollutants – known as the emission reduction roadmap.

The petro-chemical company will share more detail when it announces 2023 financial results later this month.