Sasol cuts coal output, boosts imports amid quality woes

Petrochemicals company Sasol will reduce its own coal production by a further 2 metric tons and replace it with higher quality purchased coal, which contains lower sinks.

In an update on the nine months ended 31 March 2025 published on Thursday, the group says management has taken this decision to halt production until the destoning plant is in beneficial operation. 

Read: Sasol battles coal challenges as mining production dips 1%

In its financial results for the first half, the JSE-listed group says coal quality challenges are prevailing, and as a result, external coal purchases were 18% higher than in the corresponding period.

The repurposing of the Twistdraai export plant to a destoning unit was planned to start in February 2025, with the shutdown of the export plant in May. The estimated capital cost for this project is below R1 billion.

“The destoning project to improve the quality of coal is progressing well and remains on track for completion in the first half of the 2026 financial year,” says the group. 

Sasol says in its Southern Africa Energy and Chemicals business, coal quality continues to impact Secunda Operations. As a result,  Natref experienced a delay in the production ramp up post the fire incident in January 2025. 

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“This delay, as well as an unplanned operational outage at Secunda impacted production and consequently fuels and South African chemicals sales volumes,” says the group. 

Geopolitical challenges

The chemical and energy group says its margins continue to face pressure due to the prevailing global macro-economic pressures and geopolitical uncertainties. 

Revenue in International Chemicals, which faces exposure to market volatility and global economic conditions, increased during the period compared to the previous quarter.

This was mainly driven by higher average prices in both America and Eurasia. 

However, sales volumes declined, largely due to operational outages in America. While the business environment remains challenging, Ebitda has improved as a result of proactive management initiatives compared to the prior year.

Read: Is Sasol a screaming buy?

The group says International Chemicals sales volumes are expected to be at the lower end of its previous guidance, which indicated a 4-8% decrease compared to 2024 financial year.

“This is primarily due to the unplanned Louisiana Integrated Polyethylene LLC (LIP) JV cracker outage in the US and the uncertainty surrounding ongoing global tariff disputes,” says the group.

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