[miningmx.com] – SASOL CEO, David Constable, said the debate
regarding the imposition of a carbon tax in South Africa requires calm heads and that
the unintended consequences of such a tax need to be considered.
“Calm heads need to prevail,’ said Constable in an interview with Miningmx
following the petrochemical group’s half-year results. Sasol posted a record profit
performance and lifted its dividend 84% to R5.70/share.
“Regarding a carbon tax, the country needs to stand back and think about the
unintended consequences,’ he said. Wrongly applied, a carbon tax would damage the
manufacturing industry in South Africa and harm foreign investment. “Not many
countries have a carbon tax,’ Constable added.
During Sasol’s presentation, Constable said the company was prepared to cooperate
with the South African government on “workable and sustainable’ solutions to climate
change. He later added that Finance Minister Pravin Gordhan’s statement in the recent
National Budget that a discussion document would be published (possibly in April) “…
gave companies the opportunity to advance their points in how carbon tax would
affect competitiveness’.
Constable earlier pointed out that Sasol was the country’s largest taxpayer, having
paid R25.4bn in direct and indirect taxes in its last full financial year, and a further
R13.5bn in the current financial year.
Gordhan announced in the National Budget that the National Treasury hoped to
introduce a carbon tax next year in an effort to reduce harmful greenhouse gas
emissions. In acknowledgment of an industry backlash that the tax would harm
private business prospects, nearly two-thirds of emissions would be tax-exempt until
2020, according to Gordhan’s proposals.
There would also be a 60% tax-free threshold on annual emissions for all sectors,
including electricity, petroleum, iron, steel and aluminium. All but electricity, where
state-owned power utility Eskom is the main supplier, would be able to claim
additional relief of at least 10%, Gordhan has said.
COAL PROJECTS
Constable said projects totaling up to R14bn in replenishment of Sasol’s South African
coal reserves, most of which were supplied internally to the Sasol Synfuels operation
at Secunda, were progressing. As a result, some 4,000 jobs would be retained and a
further 5,000 created during the construction phase, it said.
The projects, announced in the previous financial year, would provide 20 million
tonnes/year (Mtpa) of coal output. Sasol produces about 38 Mtpa, of which only 3.6
Mtpa is exported.
The projects include the greenfields expansion of the Twistdraai colliery, which sends
15 Mtpa in middlings product to Sasol Synfuels. An adjacent reserve – known as
Thubelisa – would require R3.3bn in capital to pay for sinking of three new shafts.
Twistdraai staff will be gradually relocated to Thubelisa.
The other major capital project is at Brandspruit, another greenfields expansion that
involves the development of a new shaft system and some 27 km of conveying. This
project, known as Impomelelo, will be the first time Sasol Mining is operating two
seams simultaneously. Total capital required is between R4bn and R4.5bn.
There’s also a semi-brownfields expansion at Sasol Mining’s Middelbult mine, known
as the Shondoni project. Basic engineering will cost approximately R160m and to
establish the mine will cost about R4.5bn to R5bn.
The collieries are expected to be completed in 2015 and 2016.
