Transitioning SA's Petrochemical Value Chain

South Africa is the world’s fifth largest consumer of coal as well as the fifth largest exporter in 2021. National coal consumption is dominated by the power sector, followed by the synthetic fuel industry at Secunda, which accounted for 23% of national consumption in 2017.

Sasol’s mining business is the third largest producer of coal in South Africa, contributing 13% to Sasol’s overall earnings. It supplies approximately 40 million tons per annum (Mtpa) to Secunda and 1.7 million tons per annum to Sasolburg. The coal supplied to Secunda is mainly used as process feedstock, but is also used to generate electricity and steam, with coarse coal going to the gasification plants, and fine coal to the steam and power plants. Coal supplied to Sasolburg is used to generate electricity and steam.

The mining business comprises five operations; the Mooikraal colliery near Sasolburg, and the Syferfontein, Bosjesspruit, Thubelisha, Shondoni, and Impumelelo collieries at Secunda. Over the past decade Sasol has invested R14 billion in the extension of their collieries, replacing ~60% of operating capacity in Secunda between 2012 and 2020.

The long-serving Twistdraai, Brandspruit, Middelbult and part of the Syferfontein operations were replaced during the mine replacement programme, which included development of Thubelisha, Impumelelo, Shondoni and Tweedraai. Sasol has indicated that they will not be building any further mines as part of their decarbonisation strategy, as they have sufficient coal, although expansion of existing mines is not precluded. The issue of coal supply was, however, raised in the Asset Management Engagement as a potential risk to short term revenues, corroborated by recent reports of supply difficulties.

In addition to their own mining operations, Sasol buys ~5.2 Mtpa from Anglo American Thermal Coal’s Isibonelo colliery. The offtake agreement with Isibonelo lapses in 2026, when the Isibonelo operation is forecast to be mined out. Sasol Mining also has a 4,2% shareholding in Richard’s Bay Coal Terminal, which it utilises for coal export.

For Paris-alignment, the models suggest coal use by Secunda will be entirely phased out between the mid 2030’s and late 2040s.