SA petro-chem giant’s US expansion under capex cosh

Delays to output at Sasol’s exploratory adventures in the US continue to weigh on the local synthetic fuels and chemicals producer.

Capital expenditure (capex) costs to its plant at Lake Charles have gone up yet again, from $11.1 billion to $11.8 billion, after the company announced that starting up the plant’s units had been delayed by five months.

A company statement said this was largely because of unforeseen events experienced toward the last quarter of 2018.

“Several factors within and beyond our control impacted the completion schedule and associated costs for the remaining units, resulting in the overall project capital cost estimate being revised.”

In the meantime, Sasol awaits word from its investors, after being given peace of mind last October when it was told that capex at Lake Charles was “within market guidance”.

Sasol, though, has experienced several setbacks to its Louisiana expansion.

At the time, the $11.1 billion price tag was mooted, it was noted as a “worst-case scenario”.

With the price tag now nearing $2 billion, it remains to be seen what’s worse than a worst-case scenario. – Staff reporter

The petro-chemicals enterprise though, has been emboldened by headline earnings going up 34% in the last six months.

Investors, however, will not take kindly to the expectation that a loss-making dollar-based exercise must be life-lined through bear profits.

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