Johannesburg, South Africa — ESI-AFRICA.COM — 08 March 2011 – South African petrochemical giant Sasol says its mine replacement programme has remained on track to deliver uninterrupted coal supplies for exports and for its synthetic fuels division. It has budgeted a total of R8 billion in capital expenditure.
Reporting interim figures for the period to 31December 2010, Sasol group executive for mining Riaan Rademan said the mines replacement programme should ensure that the company would not have to source coal from elsewhere once three key mines came 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 R8.3 billion.
The Thubelisa export coal mine, which is to replace Twistdraai in the Secunda coal complex, is a R3.3 billion project due for completion in the first half of 2012. Impumulelo is to replace Brandspruit at a cost of R4.6 billion, and is due for operation in 2014. Sasol has also allocated R160 million for the basic development of its Shondoni project, earmarked to replace Middelbult by 2015.
Sasol mining posted an operating profit of R140 million for the period under review, down 18% from R170 million in the corresponding period of the previous year, despite an 18% increase in turnover. Sasol CEO Pat Davies said the division had incurred a cost of R565 million associated with the Ixia Coal black economic empowerment (BEE) transaction.
If this amount is excluded, operating profit for mining shows a 315% increase to R705 million.
“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.
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. And the interim dividend was up 11% to R3.10 per share.