[miningmx.com] — SASOL said its mine replacement programme remained on track to deliver uninterrupted coal supplies for exports and its synfuels division. It has budgeted R8bn in capital expenditure.
Reporting interim figures for the period to end-December on Monday, Sasol group executive for mining Riaan Rademan said the mines replacement programme should ensure that the firm would not have to source coal from elsewhere once three key mines come to the end of their lifespan in the near future.
Mining was Sasol’s second-highest capital expenditure item for the financial year, behind wax expansion at R8.3bn.
The Thubelisa export coal mine, which is to replace Twistdraai in the Secunda coal complex, is a R3.3bn project due for completion in the first half of 2012. Impumulelo is to replace Brandspruit at a cost of R4.6bn and is due for operation in 2014. Sasol has also allocated R160m for the basic development of its Shondoni project, earmarked to replace Middelbult by 2015.
Sasol mining posted an operating profit of R140m for the period under review, down 18% from R170m on the corresponding period, despite an 18% increase in turnover.
Sasol CEO Pat Davies said the division incurred a cost of R565m associated with the Ixia Coal black economic empowerment (BEE) transaction.
If this amount is excluded, operating profit for mining shows a 315% increase to R705m.
“Although production and sales volumes decreased due to the planned Sasol synfuels outage and adverse geological conditions, higher US dollar export coal prices as well as sales prices to Sasol synfuels contributed to an improved operating profit,’ said Davies. This was partially offset by a stronger rand/dollar exchange rate and stock effects.
Rademan said the conclusion of the Ixia BEE deal -which saw the allocated groups gaining 20% of the division’s ownership – placed the group in a good position to comply with the mining charter’s ownership target of 26% by 2014.
“There are a few ways how you can do that (reach the 26% target),’ said Rademan. “Once the charter has been finalised we’ll talk to the department (of mineral resources) on how we can close that gap.’
Rademan said the group would try to earn credits for other initiatives, rather than selling more equity.
Commenting on progress at Sasol’s Mafutha coal-to-liquid project in the Waterberg region of Limpopo, Davies said the group continued to analyse coal quality, which “seemed OK’.
However, the project would remain on the backburner for as long as Sasol was looking for a carbon capture storage solution. The group was also waiting for government to prioritise the country’s mega energy projects, saying the state “should be a partner’ in such a venture.
Sasol was still awaiting approval for its proposed coal-to-liquids (CTL) operations in China. An application in this regard had been submitted in December 2009.
In other figures, the group reported interim headline earnings per share of R12.97, up 22%. Earnings per share were up 20% to R12.68.
The interim dividend was up 11% to R3.10 per share.
