Sasol, South Africa’s petrochemical giant and a leading figure in the global industry, has reaffirmed its commitment to reducing carbon emissions by 30% come 2030. However, the company emphasizes the importance of a “balanced debate” on the path to achieving these climate goals, taking into account the economic implications and the broader impact on South African society. Chief Financial Officer Hanre Rossouw highlighted this stance in a recent statement, stressing the need for a pragmatic approach to the energy transition that considers job creation, economic growth, and energy security alongside environmental commitments.
As the world’s top producer of fuel and chemicals derived from coal and gas, Sasol has been under the microscope, facing scrutiny from both environmental activists and some investors regarding its approach to climate change. Last November, the company’s annual general meeting was even disrupted by climate protesters, underscoring the contentious nature of its operations within the global push for more aggressive action on climate targets.
At the heart of Sasol’s strategy to meet its emissions reduction target is a significant shift in its raw material and energy sourcing. The plan includes a 25% reduction in coal usage, transitioning first to gas and, eventually, to biomass when it becomes a financially viable option. To support its decarbonization efforts, Sasol has secured contracts for 600 megawatts (MW) of renewable energy, with 500 MW already reaching financial closure.
Rossouw firmly stated Sasol’s dedication to its decarbonization objectives but cautioned against pursuing these goals without considering their broader implications. “We are fully committed to our decarbonization targets,” he said, “but we’ve got to be clear about what’s going to drive economic growth, jobs, and energy security in South Africa. It’s not just energy transition at all costs.”
Sasol’s role in South Africa’s economy is substantial; the company is one of the nation’s largest employers and taxpayers, contributing up to 5% of the country’s gross domestic product (GDP). This significant economic footprint underscores the complexity of balancing climate action with national economic interests.
The financial performance of Sasol has also been in the spotlight, with the company reporting a 34% decline in half-year profit to 12.85 billion rand ($665.23 million) for the six months ending December 31. This downturn is attributed to weaker oil and petrochemical prices, along with rising operational costs. In response to these financial challenges, Sasol announced an interim dividend of 2 rand per share, a decrease from the previous 7 rand per share. Additionally, Rossouw mentioned that Sasol is contemplating a revision of its dividend policy to focus on cash flow generation rather than core headline earnings. The share price of Sasol reflected the company’s current challenges, dropping 2.9% to 141.77 rand in the mid-afternoon trading session.
