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Sasol - Press Release

Release Date: 09/12/1998 14:52:03      Code(s): SOL SOLD
GROWTH INITIATIVES FOR THE NEW MILLENNIUM
- R1,5-BILLION NEW INVESTMENT IN CHEMICAL PROJECTS
- SASOL GIVES NOTICE ON AGREEMENTS WITH OIL COMPANIES
SASOL TODAY ANNOUNCED SEVERAL NEW INVESTMENT PROJECTS WORTH MORE THAN
R1,5-BILLION AS PART OF A R14-BILLION, FIVE-YEAR CAPITAL EXPANSION PROGRAMME
AIMED AT ENHANCING GROWTH INTO THE NEW MILLENIUM.
THE COMPANY ALSO PLANS TO EXPAND ITS SYNTHETIC AND CRUDE OIL BASED FUEL
PRODUCTION.
THIS ANNOUNCEMENT FOLLOWS ON THE COMPANY'S INVESTMENT OF R7,5-BILLION OVER THE
PAST THREE YEARS, INCLUDING THE CURRENT SUCCESSFUL COMMISSIONING OF THE FIRST
SASOL ADVANCED SYNTHOL (SAS) REACTORS AT SECUNDA (AN INVESTMENT OF
R1,1-BILLION).
SOME OF THE NEW INVESTMENTS IN THE CHEMICAL SECTOR OF THE COMPANY'S BUSINESS,
APPROVED AT THE LATEST SASOL LIMITED BOARD MEETING, ARE:
ETHYL ACETATE PLANT                     R270-MILLION
HIGH PURITY ETHANOL PLANT               R140-MILLION
THIRD HEXENE PLANT                      R240-MILLION
NORMAL-BUTANOL PLANT                    R825-MILLION
ETHANOL DEHYDRATION PLANT               R29-MILLION
TOTAL                                   R1 504-MILLION
A FURTHER R2 000-MILLION OF PROJECTS, MAINLY IN THE SOLVENTS AND ALPHA OLEFINS
DIVISIONS OF SASOL CHEMICAL INDUSTRIES, IS AT AN ADVANCED STAGE OF PLANNING.
THESE INCLUDE THE PRODUCTION OF OTHER ACETATES, ACRYLATES AND DETERGENT
ALCOHOLS.
SASOL SOLVENTS, A BUSINESS DIVISION OF SASOL CHEMICAL INDUSTRIES, FORMS A
STRONG FOCUS POINT IN TERMS OF THE GROUP'S OVERALL GROWTH STRATEGY. THE
DIVISION CURRENTLY MARKETS ABOUT 450 000 TONS PER YEAR OF HIGH-QUALITY
SOLVENTS. THIS VOLUME WILL INCREASE BY 280 000 TONS PER YEAR OVER THE NEXT FIVE
YEARS. ABOUT TWO-THIRDS OF ITS CURRENT PRODUCTION IS EXPORTED TO 88 COUNTRIES
WORLDWIDE AND THIS EXPORT RATIO WILL BE MAINTAINED WITH FUTURE GROWTH.
EXPANSION OF ITS SYNTHETIC AND CRUDE OIL DERIVED FUEL PRODUCTION FORMS ANOTHER
IMPORTANT PART OF SASOL'S GROWTH STRATEGY. THE COMPANY HAS THEREFORE DECIDED TO
GIVE FIVE YEARS' NOTICE TO THE OIL COMPANIES THAT IT WILL TERMINATE ITS SUPPLY
AGREEMENTS AND BLUE PUMP AGREEMENTS. THE NOTICE IS EFFECTIVE FROM 1 JANUARY
1999 AND THE SUPPLY AGREEMENTS AND BLUE PUMP AGREEMENTS WILL TERMINATE ON 31
DECEMBER 2003.
THE SUPPLY AGREEMENTS REQUIRE THE OIL COMPANIES - BP, CALTEX, ENGEN, SHELL,
TOTAL, ZENEX, TEPCO AND EXEL - TO PURCHASE A DEFINED VOLUME OF SASOL'S FUEL
PRODUCTION ON A WHOLESALE BASIS. HOWEVER, THE SUPPLY AND BLUE PUMP AGREEMENTS
PLACE CERTAIN CONSTRAINTS ON SASOL IN RESPECT OF THE DIRECT RETAILING OF ITS
OWN FUELS. IN TERMS OF THE BLUE PUMP AGREEMENT SASOL IS PERMITTED TO HAVE ONLY
ONE PUMP, IN A DEMARCATED MARKETING AREA, ON THE FORECOURTS OF THE MARKETING
OIL COMPANIES AND ITS MARKET SHARE IS PEGGED AT A MAXIMUM OF 9,23%.
TERMINATION OF THE AGREEMENTS WILL GIVE SASOL THE FLEXIBILITY TO ENTER INTO NEW
SUPPLY AGREEMENTS WITH ONE OR MORE OF THE OIL COMPANIES FOR ITS SYNFUEL
PRODUCTION AND TO PUT STRUCTURES IN PLACE TO FACILITATE THE DIRECT MARKETING OF
ITS CRUDE OIL DERIVED FUELS. THIS WILL RESULT IN INCREASED VOLUMES AND BETTER
MARGINS.
SASOL'S MANAGING DIRECTOR, PIETER COX, SAID SASOL WOULD, IN THE MEANWHILE,
NEGOTIATE NEW SUPPLY AGREEMENTS FOR ITS SYNFUEL PRODUCTION THAT WOULD CATER FOR
GROWTH IN PRODUCTION VOLUMES AND IMPROVE ITS PROFITABILITY. THE GROUP IS
DETERMINED TO MAINTAIN AND IMPROVE ON HISTORIC EARNINGS, IN SPITE OF LOW OIL
PRICES. FEASIBILITY STUDIES ON INCREASING FUELS PRODUCTION AT SECUNDA BY 15%
AND AT THE NATREF CRUDE OIL REFINERY BY UP TO 30%, ARE PROGRESSING WELL.
DECISIONS TO PROCEED WITH BOTH THESE PROJECTS ARE EXPECTED SOON.
SAID MR COX: "THE SUPPLY AGREEMENTS AND BLUE PUMP AGREEMENTS SERVED ALL PARTIES
WELL IN THE PAST, BUT ARE NO LONGER APPROPRIATE. WE NEED A NEW DISPENSATION,
WHICH WILL ENHANCE OUR GROWTH STRATEGY". HE SAID SASOL'S DECISION WAS PURELY
COMMERCIAL AND HE WAS CONFIDENT THAT IT WOULD ENABLE THE COMPANY TO BOOST THE
BOTTOM LINE SIGNIFICANTLY. HE ADDED THAT THIS WOULD ALSO BRING SASOL IN LINE
WITH THE GOVERNMENT'S FUTURE COMPETITION AND ENERGY POLICIES.
END
CONTACT PERSON:     ALFONSO NIEMAND
                    MANAGER : COMMUNICATIONS
                    SASOL LIMITED
                    TEL     27-11-4413218  /  0836535959
                    FAX     27-11-4413236
                    E-MAIL  ALFONSO.NIEMAND@SASOL.COM



                                        
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