Page 9 - DMEA Week 38 2021

DMEA COMPANIES DMEA

“This will be done through a mix of energy long-term human capital plans – managing a
and process efficiencies, investments in renew- natural transition of people involved in fossil
ables and a shift to incremental natural gas as a fuels related activities and investing in reskilling
transition feedstock for our Southern African for the needs of a low carbon economy in the
value chain. These solutions are well known and future,” said Grobler.
mostly under our control, and the investments
required are cost-effective, preserving strong Funding for the new direction
returns in our business, above the cost of capital.” Sasol also explained it would self-fund the tran-
Beyond 2030, Sasol has more than one viable sition, while delivering sustainable returns. It
pathway to get to its net-zero ambition by 2050, said its refocused strategy is “underpinned by
with different options to transform its Southern a financial framework that will enable the com-
Africa value chain by progressively shifting its pany to grow shared value, while accelerating its
feedstock away from coal, towards more transi- transition, as sustainable and resilient dividends
tion gas, and then green hydrogen and sustain- are restored to our shareholders.”
able carbon over the longer term, as economics Paul Victor, Sasol’s group chief financial
improve for these options. officer, believed a clear and updated capital allo-
“In an uncertain future, this approach offers cation framework from Sasol and a good govern-
agility and enables us to pivot as cost-effective ance structure will ensure effective and efficient
mitigation levers become available. We are also decision-making to navigate all the capital deci-
avoiding infrastructure lock-in and regret capital sions it faced in delivering “Future Sasol”.
spend,” said Grobler. In the short to medium term, the first phase
Sasol’s proprietary Fischer-Tropsch (FT) up to 2025 will see Sasol strengthen its balance
technology, in particular, is well-suited to play- sheet, while improving cost-competitiveness
ing a meaningful role in a low-carbon future, and ability to increase cash flow generation in a
with attractive new and emerging value pools, low oil price scenario. Sasol targets to improve
it said. return on invested capital (ROIC) to between 12
“Against this backdrop, we are setting up a and 15% in this period.
new business, Sasol ecoFT, with the intent to The second phase in the short to medium
build on our technology leadership, to establish term up to 2030 prioritises the balance between
a significant market position internationally. returns and investing in Sasol’s transition
One of the first applications for the technology plan. In this period up to 2030, Sasol plans
is likely to be sustainable aviation fuels, where to invest between ZAR20bn to ZAR25bn
new regulations are driving demand, and exist- ($1.35bn-$1.69bn) per annum to maintain its
ing technology and feedstocks have limitations asset base, comply with all relevant environ-
that FT can address.” mental and air quality regulations, as well as fund
the transition to reach the 30% GHG emissions
Disruption in the industry reduction target.
Sasol noted that as global economies trans- This includes a total of ZAR15bn to ZAR25bn
form their energy systems, this will disrupt in aggregate transformation capital up to 2030,
industry, shift value pools and job markets, and while targeted ROIC is anticipated to be above
require diverse skills and capabilities in different 15%.
geographies. “The overall Sasol group return profile will
Sasol will progress a just transition across its continue to improve significantly and remains
geographical footprint, with the aim of protect- attractive – there is a clear pathway through to
ing and fostering employment opportunities higher returns while we achieve our climate
by accelerating the development of new energy change objectives,” added Victor.
value pools. Dividends will be resumed once key triggers
South Africa in particular holds significant are reached and there is confidence that these
promise for renewables and low-cost green returns delivered to shareholders are sustainable
hydrogen production for own use and export based on the prevailing outlook at that time. The
opportunities, it stated. minimum pay-out of 2.8 times or 36% of Core
“This will require national plans to be estab- Headline Earnings per share will be triggered
lished by industry stakeholders and government when a leverage ratio of 1.5 times Net Debt to
to develop opportunities, maximise localisa- EBITDA is reached and the absolute debt level
tion opportunities to create jobs and economic is below $5bn.
wealth.” The step-up to 2.5 times or 40% of Core HEPS
Grobler said the biggest impact on South will follow when absolute net debt levels reduce
Africa’s workforce would to be after 2030. “This to below $4bn. The regular dividend will be
needs to be anticipated now, with the right maintained in this range.™

Week 38 23•September•2021 www. NEWSBASE .com P9