Page 5 - AfrOil Week 39 2021

AfrOil COMMENTARY AfrOil

“In an uncertain future, this approach offers transition, while delivering sustainable returns.
agility and enables us to pivot as cost-effective It said its refocused strategy was “underpinned
mitigation levers become available. We are also by a financial framework that will enable the
avoiding infrastructure lock-in and regret capi- company to grow shared value, while acceler-
tal spend,” said Grobler. ating its transition, as sustainable and resilient
Sasol’s proprietary Fischer-Tropsch (FT) gas- dividends are restored to our shareholders.”
ification technology, in particular, is well-suited Paul Victor, Sasol’s group CFO, believes a
to playing a meaningful role in a low-carbon clear and updated capital allocation framework
future, with attractive new and emerging value from Sasol and a good governance structure will
pools, it said. ensure effective and efficient decision-making to
“Against this backdrop, we are setting up a navigate all the capital decisions it faced in deliv-
new business, Sasol ecoFT, with the intent to ering “Future Sasol.”
build on our technology leadership, to establish In the short to medium term, the first phase
a significant market position internationally. up to 2025 will see Sasol strengthen its balance
One of the first applications for the technology sheet, while improving cost-competitiveness
is likely to be sustainable aviation fuels, where and ability to increase cash flow generation in
new regulations are driving demand, and exist- a low oil price scenario. Sasol targets to improve
ing technology and feedstocks have limitations return on invested capital (ROIC) to between
that FT can address.” 12% and 15% in this period. Sasol sees
The second phase in the short to medium natural gas as
Disruption in the industry term up to 2030 prioritises the balance between
Sasol noted that as global economies transform returns and investing in Sasol’s transition plan. a transition
their energy systems, this will disrupt industry, In this period up to 2030, Sasol plans to invest
shift value pools and job markets and require ZAR20-25bn ($1.32bn-$1.65bn) per annum feedstock
diverse skills and capabilities in different geog- to maintain its asset base, comply with all rele-
raphies. It said it intended to progress toward a vant environmental and air quality regulations,
just transition across its geographical footprint, as well as fund the transition to reach the 30%
as well as protecting and fostering employment GHG emissions reduction target. This includes
opportunities, by accelerating the development a total of ZAR15-25bn ($988.81mn-1.65bn) in
of new energy value pools. aggregate transformation capital up to 2030,
South Africa in particular holds significant while targeted ROIC is anticipated to be above
promise for renewables and low-cost green 15%.
hydrogen production for own use and export “The overall Sasol group return profile will
opportunities, it stated. “This will require continue to improve significantly and remains
national plans to be established by industry attractive – there is a clear pathway through to
stakeholders and government to develop oppor- higher returns while we achieve our climate
tunities, maximise localisation opportunities to change objectives,” added Victor.
create jobs and economic wealth,” it commented. Dividends will be resumed once key triggers
Grobler said the biggest impact on South are reached and there is confidence that these
Africa’s workforce would to be after 2030. “This returns delivered to shareholders are sustainable
needs to be anticipated now, with the right long- based on the prevailing outlook at that time. The
term human capital plans – managing a natu- minimum pay-out of 2.8 times or 36% of Core
ral transition of people involved in fossil fuels Headline Earnings per share will be triggered
related activities and investing in reskilling when a leverage ratio of 1.5 times Net Debt to
for the needs of a low carbon economy in the EBITDA is reached and the absolute debt level
future,” he said. is below $5bn. The step-up to 2.5 times or 40%
of Core HEPS will follow when absolute net debt
Funding for the new direction levels reduce to below $4bn. The regular divi-
Sasol also explained it would self-fund the dend will be maintained in this range. ™

(Photo: Sasol)

Week 39 29•September•2021 www. NEWSBASE .com P5