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Sasol Limited - Sasol Chief Financial Officer Update

Release Date: 03/12/2012 07:05:00      Code(s): SOL SOLBE1     
Sasol Limited
(Incorporated in the Republic of South Africa)
(Registration number 1979/003231/06)
Sasol Ordinary Share codes:    JSE : SOL      NYSE : SSL
Sasol Ordinary ISIN codes:     ZAE000006896   US8038663006
Sasol BEE Ordinary Share code:      JSE : SOLBE1
Sasol BEE Ordinary ISIN code:       ZAE000151817
(?Sasol?)


SASOL CHIEF FINANCIAL OFFICER UPDATE
3 December 2012

Highlights for the period

  -   Sasol Synfuels delivers a strong operational performance.

  -   ORYX GTL continues to achieve new production records.

  -   US$1 billion bond successfully issued.

  -   US ethane cracker and GTL projects advanced to FEED
      phase.

Dear stakeholder

In the first three months of the 2013 financial year*, we have
delivered strong financial results, despite the ongoing global
economic uncertainty and labour turmoil in South Africa. The
group   benefited   from   improvements   in   the   operational
performance of its foundation businesses, as well as a weaker
rand/dollar exchange rate. Sasol Synfuels delivered an
exceptional operational performance, despite a planned phased
maintenance outage in September 2012. The average Brent crude
oil price for the three months softened and chemical prices
remained   depressed,   negatively   impacting   our   chemicals
businesses, where demand continues to remain soft. Our
Canadian shale gas assets have continued to ramp up
production, and our ORYX GTL and Arya Sasol Polymer Company
ventures continue to exceed performance expectations.

Delivering sustainable value for our shareholders underpins
all our actions. Accordingly, taking into account the
financial and human resource requirements as well as the
strategic implications, we have reviewed and prioritised the
projects in our project pipeline. Based on our review, we have
staggered our growth opportunities to sharpen our focus on
successful project execution and delivery. Furthermore, we
continue to focus on those factors within our control
including cost containment, operational efficiencies and
margin improvement.

We were very pleased to announce our successful US$1 billion
bond issuance. The bond, with a tenure of 10 years and a fixed
coupon rate of 4,5%, was oversubscribed by 3,47 times. The
coupon is the lowest ever achieved by a South African non-
state owned enterprise. This reflects the confidence that
investors have in our company and in our ability to deliver
value. The proceeds from this offering will be used for
general corporate purposes, including the funding of our
capital investments.

We remain confident that, based on the production guidance and
our   macroeconomic   assumptions,  we   will   deliver   solid
operational performance and earnings for the 2013 financial
year compared to the reported attributable earnings of R23,6
billion in the 2012 financial year, excluding the impact
resulting from the Arya Sasol Polymer Company potential
impairment. This impairment will not have an impact on
headline earnings per share. The increased uncertainty within
the Iranian environment coupled with the devaluation of the
Iranian currency, may further negatively impact our earnings.

Best regards

Christine Ramon
3 December 2012
Johannesburg

*This update is based on information for the three months
ended 30 September 2012, however, where practical, information
to 31 October 2012 has been included to indicate business
performance.

1. Weakening macroeconomics


                                  Oct    Sept     Sept   Change %
                                 2012    2012     2011       Sept
                                  YTD     YTD      YTD        YTD
  Macroeconomic indicators
  Average rand/US$               8,36    8,26     7,15     16%
  Brent crude oil (US$/b)         110     110      113    (3%)
  Henry Hub gas price
  (US$/MMBTU)                    2,99    2,88     4,13    (30%)
  Product prices
  SA fuel price (US$/b)           132     129      135    (4%)
  Ethylene (US$/ton)            1 519   1 468    1 571    (7%)
  Propylene (US$/ton)           1 358   1 317    1 571   (16%)
  Polymers basket (US$/ton)     1 205   1 195    1 349   (11%)
  Solvents basket (US$/ton)     1 168   1 144    1 467   (22%)
  
  Prices reflect international commodities or baskets of
  commodities and are not necessarily Sasol specific.
  Sources: RSA Department of Energy, ICIS-LOR, Reuters,
  Platts, International Energy Agency

  Global economic conditions remained challenging in the first
  quarter of our 2013 financial year, with the Euro-zone
  remaining in the grip of recession and the growth in China?s
  gross domestic product easing further. On a more positive
  note, economic activity in the United States (US) improved
  and early second quarter economic indicators suggest a
  stabilisation in the housing market and improved consumer
  confidence. In South Africa, economic growth remained
  subdued and below potential. Of particular concern is the
  labour unrest in the country, particularly in the mining
  sector, which was significantly impacted. Our own mining
  operations were not affected by any strike action during the
  period, owing to healthy labour relations and our ongoing
  corporate social investment in our surrounding communities.
  As a result of these challenges, South Africa recently
  received a downgrade in its credit rating from Standard &
  Poor?s as well as Moody?s Investor services.

  Overall, the global economy continues to weather the
  economic crisis. However, the outlook remains subject to a
  number of downside risks, which include the ongoing European
  debt crisis, the potential US ?fiscal cliff?, as well as the
  possibility of a faster-than-expected slowdown in China?s
  economic growth. Given these uncertainties, it is expected
  that currency and oil price volatility will persist for some
  time to come.

  In the first quarter of the 2013 financial year, the average
  rand Brent crude oil price rose by 2,7% on a quarter-by-
  quarter basis. International chemical prices were weaker,
  due to lower demand in downstream markets because of reduced
  consumer confidence in Europe and a slowdown in the Chinese
  economy.

  Chemical product margins continued to be under pressure as
  feedstock price increases, in line with higher oil prices,
  outweighed the increases in selling prices. This has been
  particularly evident in our Sasol Polymers and Sasol
  Solvents businesses, which have experienced lower demand and
  softer product prices on the back of weakening European
  macroeconomic conditions. Our Sasol Olefins and Surfactants
  (O&S) business has been able to reduce volumes, while
  maintaining total gross margin.

  Across our operations, we remain focused on working capital
  management, cost containment, production planning and
  optimisation as well as margin improvement activities.

2. Improved operational performance

                                   Oct    Sept    Sept Change %
                                  2012    2012    2011   Sept
                                   YTD     YTD     YTD    YTD
 Total production
 Sasol Mining (mt)               13,1      9,6     9,8    (2%)
 Sasol Gas (mGJ)                 56,8     41,8    37,3     12%
 Sasol Synfuels (kt)            2 426    1 785   1 590     12%
 ORYX GTL* (mbbl)                1,75     1,50    1,27     18%
 Sasol O&S (kt)                 632,6    471,9   529,7   (11%)
 Arya Sasol Polymer Company*
 (kt)                           143,8    113,9    80,6     41%
 Canada shale gas assets*
 (bscf)                           8,1      5,9     2,9    100%
  * Sasol?s share of production

  Sasol Synfuels? year-to-date production for the three months
  to 30 September 2012 was 1,8 million tons. This represents a
  12% increase compared to the prior year comparable period,
  which was underpinned by stable operations of the running
  plant during a planned phased maintenance outage in
  September 2012. Although start-up was somewhat later than
  anticipated, the maintenance outage was completed by the end
  of September 2012. The commissioning of new equipment during
  the period, in particular the additional four gasifiers and
  the impact of the 17th reformer, contributed to the
  performance of the plant. The strong production performance,
  as well as favourable prices, supported increased operating
  margins for the period. These were, however, partially
  offset by increased energy costs as well as increased
  maintenance costs related to renewal maintenance. Sasol
  Synfuels? cash unit costs remain under pressure as a result
  of higher coal and natural gas feedstock prices (which are
  largely internal to the group), as well as increased energy
  and maintenance costs.

  Due to technical and labour productivity challenges, there
  will be a delay in the conversion of the two auto thermal
  reformers to gas heated heat exchange reformers (GHHERs).
  Accordingly, the GHHERs programme will be extended to run
  through to the second half of the 2013 calendar year. As a
  consequence, additional capital expenditure of around R850
  million will be required. We, however, do not anticipate
  this to have an impact on our production volumes guidance of
  between 7,2 and 7,4 million tons for the full 2013
  financial year.

  Our ORYX GTL joint venture, in Qatar, continues to perform
  well, achieving 1,5 million barrels (mbbl) (Sasol?s 49%
  share) cumulative production over the three month period,
  which on average is above design capacity.

  The performance of our Sasol Olefins & Surfactants? business
  for the three month period highlights the contrasting supply
  and market conditions that prevail between our US and
  European operations. The US continues to be supported by
  favourable feedstock prices, in particular ethane, while our
  European operations, most notably the surfactants and
  alkylate value chains, are experiencing pressure on earnings
  and margins due to softer demand and difficulties in
  securing feedstock at favourable prices. Overall production
  and sales volumes, in the three months to 30 September 2012,
  decreased by 11% and 6%, respectively, when compared to the
  prior year comparable period. Our focus remains on improving
  margins through product portfolio optimisation and strict
  cost   management.   The  ethylene   tetramerisation   unit,
  currently being constructed for Sasol Solvents at our Lake
  Charles, Louisiana site in the US, remains on schedule and
  is expected to start-up during the third quarter of the 2013
  calendar year.

  Arya Sasol Polymer Company (ASPC) continues to perform well.
  Production volumes were 41% up compared to the prior year
  comparable period. Sasol?s 50% share of the year-to-date
  total production output from the plants was 114 kt,
  achieving an average utilisation rate for the three month
  period of approximately 96,9% of design capacity. However,
  due to market challenges, specifically in the Far East,
  sales volumes were negatively impacted. Further challenges
  emerged during the period as a result of the devaluation of
  the average Iranian rial exchange rate against the US dollar
  by more than 100% over the last six months of the 2012
  calendar year. We previously announced our intention to
  divest of our investment in ASPC. The divestiture process is
  continuing. The investment in ASPC is being considered for
  classification   as   an   asset   held-for-sale.   However,
  significant uncertainty remains regarding the fair value of
  the asset. Accordingly, it is possible that the carrying
  value of the investment may be impaired at 31 December 2012.

  Figure 1: Global chemical prices for 2013 (US$/metric ton)
 
  Please refer to Sasol's website at www.sasol.com for Figure 1.

  Our South African-based polymers business continues to
  experience margin pressure in line with the global polymers
  industry, incurring an operating loss of R682 million for
  the three months ended 30 September 2012 (operating losses
  amounted to R912 million for the period to 31 October 2012).
  While sales prices are increasing in rand terms on the back
  of a weaker rand/US dollar exchange rates and lower US
  dollar-based prices, higher feedstock costs are eroding
  these benefits. Sales volumes were 5% higher than the prior
  year comparable period on the back of the slow recovery in
  the polymers market, however, this was partially offset by
  the recent road freight industrial action. This performance
  was underpinned by an 8% increase in saleable production,
  despite a number of prolonged scheduled maintenance outages
  at a number of the polymer plants. Cash fixed costs in this
  business continue to remain under pressure and during the
  period,   in  addition   to  normal   inflation  increases,
  additional maintenance outage costs were incurred compared
  to the prior year comparable period due to the phasing of
  scheduled maintenance outages. Our projects identified to
  improve production performance are making significant
  progress. The Ethylene Purification Unit (EPU5) project,
  which will increase ethylene available for our polyethylene
  plants, is expected to be operational in the second half of
  the 2013 calendar year, while the C3 stabilisation project
  will achieve beneficial operation during the middle of the
  2014 calendar year.

  Sasol Solvents? business performance for the three months to
  30 September 2012 remains under pressure. While production
  volumes were 10% below those of the prior year comparable
  period due mainly to planned maintenance outages both in
  South Africa and Germany, as well as reduced production in
  Germany following a demand slowdown, sales volumes were 10%
  above those of the prior year comparable period resulting
  from customers restocking. The economic crisis in Europe and
  slowdown in the Chinese economy adversely impacted our
  solvents business, resulting in our co-monomers products and
  our German operations incurring losses in the first quarter.
  The reduction in selling prices experienced across the
  solvents   product   portfolio,  coupled   with   increasing
  feedstock prices, resulted in severe margin pressure. The
  weaker rand did, however, provide some relief but not to the
  same extent as in the prior year comparable period. Given
  the current weak market conditions, we continue to focus on
  our business improvement and optimisation initiatives to
  improve the performance of our plants and marketing
  activities.

  In our other chemical businesses, the ongoing difficult
  economic conditions in Europe and the US have negatively
  impacted the global demand for paraffin waxes. Despite these
  challenges, total wax production volumes have increased
  marginally for the three months to 30 September 2012
  compared to the prior year comparable period. In Hamburg,
  Germany, the installation of an electricity co-generation
  plant is progressing well. It is expected that this plant,
  which will start-up early in the 2013 calendar year, will
  yield an energy cost saving of around 16%. In Sasolburg, the
  installation of an electricity generator from blow-off
  nitric   acid   plant   surplus   steam   was   successfully
  commissioned, achieving an energy cost saving of 10% in the
  production of explosives. Our fertiliser and explosives
  businesses have experienced challenging market conditions,
  mainly related to ongoing industrial action in the mining
  sector and delays in the summer rainfall planting season.

  Sasol Petroleum International (SPI) is currently in the
  process of appraising the Inhassoro field in Mozambique to
  determine its commercial viability. We are encouraged by the
  extended well test results and expect to make a decision for
  development in the first half of the 2013 calendar year.
  Unfortunately, the wildcat exploration well, Mupeji-1, which
  was drilled in the offshore M-10 concession did not
  encounter hydrocarbons and was subsequently plugged and
  abandoned as a dry well. Sasol?s share of the estimated
  costs is US$53 million and will be expensed. We completed
  the acquisition of 1 836 square kilometres (km2) of 3D
  seismic in the offshore Sofala block and are acquiring a 2
  000 km 2D seismic survey in the onshore Area A block. We
  continue to investigate prospects and consider development
  plans in the area to support current production.

  In Gabon, where we hold a 27,75% working interest, oil
  production remained on track. For the quarter to 30
  September 2012, we produced a total of 439 000 barrels of
  oil, compared to 487 000 barrels in the prior year
  comparable period. No lifting took place during September
  2012 due to the suspension of two wells, however, the impact
  thereof was negated by positive stock movements. We will
  continue to develop this area over the next four years.

  Our Canadian shale gas assets (Farrell Creek and Cypress A)
  continue to remain under pressure resulting from the slow
  recovery of gas prices and the related slow down in
  development activities, coupled with higher depreciation. We
  anticipate a continuation of the current loss position for
  the 2013 financial year. At 30 September 2012, our share of
  the capital expenditure on the Canadian shale gas assets
  amounted to CAD93 million for the period. At that date,
  there were a total of 90 wells on stream, with 19 wells
  which have been drilled but not yet completed. The gas
  production rate for the quarter to the end of September
  averaged 127 million standard cubic feet per day (mmscf/d)
  (100% gross). The cumulative year-to-date production for
  these assets to 30 September 2012 was 11,9 billion standard
  cubic feet (bscf) (100% gross).

  Aeromagnetic surveys of the coal bed methane licences in
  Botswana have been completed and the 9 core hole drilling
  programme commenced at the end of November 2012.

  3. Financial performance

  Weaker rand increases inflationary cost pressures

  A 14% weaker average rand/US dollar exchange rate (R8,36/US$
  at 31 October 2012) negatively impacted cash fixed costs for
  the four months ended 31 October 2012. Cash fixed costs,
  excluding once-off, growth costs and the impact of exchange
  rates, reflect inflationary pressure, resulting primarily
  from increased labour and maintenance costs.

  Increased free cash flow

  Our cash flow generation from operations for the three
  months ended 30 September 2012 was higher than the prior
  year comparable period, mainly due to increased production
  volumes and the positive impact of the weaker average
  rand/US dollar exchange rate. We continue to maintain a
  strong cash position, sustaining a strong balance sheet.
  This, in turn, supports the funding of our capital
  investment programme, as well as our progressive dividend
  policy, while providing a buffer against volatility and
  retaining financial flexibility in uncertain credit markets
  where the cost of corporate credit is above risk free rates.
  We continue to focus on strengthening working capital
  management and monitoring credit exposure and counterparty
  risks.

4. Projects update

  We are fortunate to have a healthy portfolio of attractive
  capital investment opportunities for the next ten years.
  However, to execute such a large portfolio of opportunities
  requires a significant amount of financial and human
  resources. Therefore, with the aim of achieving maximum
  benefit from our growth portfolio, we have reviewed and
  prioritised the projects in our project pipeline. In
  determining the prioritisation of our projects, we have
  considered the financial and human resource requirements as
  well as the strategic implications of each capital
  investment opportunity. Taking into account the impact on
  our consolidated growth portfolio, we have staggered our
  growth opportunities accordingly, to sharpen our focus on
  successful project execution and delivery.

  US integrated GTL complex

  Following the successful completion of the feasibility
  studies to determine the technical and commercial viability
  of an integrated, two phase 96 000bbl/d GTL and chemicals
  facility in Louisiana in the United States, we have decided
  to proceed with front-end engineering and design (FEED).
  Total current project costs are estimated to be between
  US$11 billion and US$14 billion, which are higher than
  previous estimates primarily due to 30% of the fuels being
  upgraded to high value chemicals, as well as higher cost
  escalations due to the phasing of the project after the
  ethane cracker. We expect beneficial operation to be
  achieved during the 2018 and 2019 calendar years for the two
  phases, respectively.

  US integrated ethane cracker complex

  Following the successful completion of the feasibility
  studies to determine the technical and commercial viability
  of a world scale 1,5 million tons per annum ethane cracker
  and associated derivatives facility in Louisiana in the
  United States, we have decided to proceed with FEED. Total
  current project costs are estimated to be between US$5
  billion and US$7 billion, which are higher than previous
  estimates primarily due to increased plant capacity, the
  inclusion of additional downstream derivative units and
  undertaking the project without a partner. We expect
  beneficial operation to be achieved during the 2017 calendar
  year.

  Canada GTL

  The feasibility study to determine the technical and
  commercial viability of a GTL facility in Western Canada was
  successfully completed. In accordance with the need to
  prioritise our growth portfolio, a decision was made to
  phase this investment opportunity after the integrated US
  GTL and ethane cracker complex. A FEED decision will,
  therefore, be considered at a later stage.
  Uzbekistan GTL

  Our Uzbekistan GTL FEED activities are progressing well and
  are expected to be completed during the second half of the
  2013 calendar year. An investment decision for this project
  is, amongst others, dependent on appropriate project
  financing.

  Good progress made with our mining replacement projects

  The newly inaugurated R3,5 billion Thubelisha Shaft at the
  Twistdraai Colliery in Mpumalanga, South Africa, has largely
  been completed. We anticipate that all work, including
  gaining access to areas around the burnt coal section, will
  be finalised in the third quarter of the 2013 calendar year.
  Progress on the Impumelelo and Shondoni Collieries, which
  are part of Sasol Mining?s R14 billion mine replacement
  programme, is progressing. Despite shaft sinking challenges
  due to productivity at the Impumelelo Colliery, it is
  anticipated that the project will be completed within budget
  during the fourth quarter of the 2014 calendar year.
  Construction of the Shondoni Colliery is progressing and we
  expect that the first development section will start opening
  up the underground area during the first quarter of the 2014
  calendar year. Beneficial operation in respect of this
  colliery is anticipated for the 2015 calendar year.

  Acquisition of coal reserves at Lake DeSmet

  We purchased a property at Lake DeSmet, Wyoming, in the
  United States for an amount of US$31 million. The property?s
  coal reserve will form part of our overall strategic
  resource portfolio. However, there are no plans to develop
  the resource at this time.

  FT wax expansion project

  Construction on the FT wax expansion project facility in
  Sasolburg, South Africa, continues to progress. As reported
  previously, the commissioning of the new Slurry Bed Reactor,
  which is key equipment for the capacity expansion, has been
  delayed until the end of the 2013 calendar year. While this
  will not jeopardise the completion date of 2015 for the full
  project, it will delay the first ramp up stage versus the
  original schedule. The cost implications associated with the
  delay will be communicated during our interim results
  announcement once these costs have been finalised.

  Progressing our sustainability initiatives

  The construction of the R1,9 billion Sasolburg project to
  produce 140 megawatts (MW) of power using natural gas is
  largely completed. Commissioning activities have started and
  the project should be completed ahead of schedule and below
  budget. We expect that the facility will be on line and
  reach full capacity before the end of December 2012, in
  support of Sasol?s ambition to generate up to 60% of our
  South African electricity requirements.

  During the period, through Sasol New Energy (SNE), we
  advanced the development of our US$246 million additional
  gas-fired   electricity   generation   in   Mozambique,   in
  partnership with the country?s state-owned power utility
  Electricidade de Mocambique at Ressano Garcia. Negotiations
  of the commercial contracts have been finalised and we are
  in the process of finalising the definitive agreements with
  our partner and obtaining concession rights. A final funding
  and investment decision has been made by our board, subject
  to certain suspensive conditions.
  
  We acquired a 30,8% share in the UK-based OXIS Energy for
  GBP15 million during the period. This strategic investment
  will allow us to apply our extensive experience of
  commercialising and scaling up chemical processes to assist
  OXIS in realising the potential associated with their
  development of next generation battery technology.

  Clean Fuels 2 update

  The high level Clean Fuels 2 (CF2) specifications were
  gazetted on 1 June 2012, and are in line with expectations.
  Our latest estimates on the capital expenditure needed to
  comply with the core specifications is between R10 billion
  and R11 billion, attributable to both our share in the
  Natref joint venture and Sasol Synfuels. These estimates are
  subject to change, based on the finalisation of feasibility
  studies being carried out in this regard by Natref.
  Additional projects, that may be required to further
  mitigate the volume and octane impact of CF2 and to restore
  capacity to pre-CF2 levels, are currently being investigated
  in respect of Sasol Synfuels. Based on the finalisation of
  the feasibility studies and the additional projects, we
  estimate additional capital expenditure to range between R2
  billion and R3 billion.
  
  We continue to engage with the South African government
  (National Treasury and the Department of Energy) on cost-
  recovery mechanisms and specifications to be prepared and
  published by the South African Bureau of Standards.

5. Update on strategic issues

  Credit rating

  Our foreign currency credit rating according to Standard &
  Poor?s (S&P) is BBB/Negative/A-2 and the local currency
  rating is A-/Negative/A-2. The latest S&P corporate rating
  on Sasol was published on 16 October 2012. Sasol was
  downgraded in line with the downgrade of South Africa from
  BBB+ to BBB.     The downgrade of South Africa resulted
  primarily from the perceived deterioration of the country?s
  socioeconomic environment. Our foreign currency credit
  rating according to Moody's is Baa1/stable/P-2/stable and
  our national scale issuer rating is Aa3.za/P-1.za. The
  Moody?s latest credit opinion on the group was published on
  30 March 2012. Their rating was reaffirmed on 1 October
  2012.

  The credit ratings reflect our diversified and highly
  profitable domestic activities along the energy value chain,
  as well as our current strong financial risk profile and
  prudent financial policies.

  US dollar bond offering

  On 7 November 2012, we were very pleased to announce our
  US$1 billion bond issuance. The bond, with a tenure of 10
  years and a fixed coupon rate of 4,5%, was oversubscribed by
  3,47 times. This coupon is the lowest US dollar fixed coupon
  rate achieved by a South African domiciled corporate (non-
  state owned enterprise) with this term. The proceeds from
  this offering will be used for general corporate purposes,
  including the funding of our capital investments.

  What to expect from COP18

  The outcomes of COP17, held in Durban in December 2011,
  comprised a set of work programmes to allow parties to reach
  agreement over a longer period of time on issues relating to
  adaptation   and   mitigation   targets,  and   measurement,
  reporting and verification processes. With the COP18 meeting
  entering its second week in Qatar, we do not anticipate that
  significant decisions will be taken as the work programmes
  provide for ongoing work between now and COP21, to be
  convened during the 2015 calendar year.

  Polymers competition enquiry

  As reported previously, the South African Competition
  Commission (the Commission) alleges that Sasol Chemical
  Industries Limited charged excessive prices for propylene
  and polypropylene in the South African market from 2004 to
  2007. We continue to dispute the Commission?s allegations.
  In 2010, the matter was referred by the Commission to the
  Competition Tribunal. The trial was originally set down to
  be heard before the Competition Tribunal from 16 July 2012
  to 10 August 2012. However, as a result of an application
  brought by the Commission to postpone the hearing, the trial
  is now set down for 13 May to 7 June 2013.

  Liquid fuels competition enquiry

  The South African Competition Commission (the Commission),
  referred its diesel fuel market investigation to the South
  African Competition Tribunal at the end of October 2012. We
  began engaging with the Commission in 2008 as part of our
  group-wide competition law compliance review, which preceded
  the Commission?s investigation into the liquid fuels sector.
  At the time, we found no evidence to support the
  Commission?s concerns of possible anti-competitive conduct
  in the diesel market. Our view was informed by a rigorous
  internal review process, as well as external legal opinion
  and expert economic analysis.
  We have reviewed the referral and do not agree with the
  Commission?s allegations. We are, accordingly, defending the
  matter.

  Our activities in Iran

  In November 2011, we announced that we had entered into
  preliminary talks for a possible divestiture of our share in
  Arya Sasol Polymer Company (ASPC). The plant produces
  integrated ethylene and polyethylene products for export.
  The products are not used in the development of petroleum or
  natural gas resources or nuclear power in Iran. We continue
  to engage with a number of interested parties who include
  business and government stakeholders. Further announcements
  will be made once sufficient progress has been made.
  
  In October 2012, the Export-Import Regulation Office of
  Iranian Trade Promotion Organization, issued an order
  prohibiting the export of certain products. The list of 52
  prohibited export products includes polymers. In terms of
  ASPC?s business licence, they are compelled to export its
  production and may not trade in the local market. Sasol and
  ASPC engaged with the Iranian government in order to obtain
  approval to continue exporting polymer. On 6 November 2012,
  the Iranian government revised the export ban on the 52
  products. Polyethylene is amongst those products on which
  the restriction has been removed.
  
  The Iranian environment, in which we operate, remains
  uncertain, coupled with the devaluation of the Iranian
  currency. This will potentially negatively impact our
  earnings.

6. Guidance for the full year

  We expect the global environment and South African economy
  to maintain a modest recovery into the financial year.
  However, weakening demand in Europe and lower growth in
  emerging markets and the US remain a concern. In addition,
  the US faces additional pressure following the aftermath of
  superstorm Sandy. In South Africa, the outcome of the
  governing   African  National   Congress   party?s elective
  conference in Mangaung, South Africa, in December 2012
  remains an area to be watched with interest.
  We expect an overall solid production performance for the
  2013 financial year with our production guidance remaining
  unchanged:
  - Sasol Synfuels? volumes will be between 7,2 and 7,4
    million tons;
  - The full year average utilisation rate at ORYX GTL in
    Qatar is expected to be between 80% and 90% of nameplate
    capacity; and
  - Full   year   production  at   ASPC   in  Iran will   be
    approximately 90% of nameplate capacity.
  - Our shale gas venture in Canada will continue to show
    flat volumes in line with the prior year;
  
  As costs are incurred to improve plant stability and the
  weaker rand continues to exert pressure on our South African
  businesses, we expect that our normalised fixed costs will
  increase above the South African producers price index (PPI)
  inflation. Cost control is a specific target within our
  short-term incentive scheme and, accordingly, management
  continues to focus on controllable cost elements. Oil prices
  are expected to remain volatile over the near term, due to
  weakening demand for oil in Europe, softer growth in
  emerging markets and the US, as well as stronger-than-
  expected   increases  in   supply.  Expected   currency  and
  commodity price volatility will impact the valuation of
  closing balances at year end.

  An update on earnings guidance will be provided once we have
  a reasonable degree of certainty on the interim results for
  the 2013 financial year, taking into account any adjustments
  arising from our half-year reporting closure process, as
  well as remeasurement effects, including the potential
  impact resulting from the ASPC impairment. This potential
  impairment will not have an impact on headline earnings per
  share.   The  increased   uncertainty   within  the  Iranian
  environment and the devaluation of the Iranian currency, may
  further negatively impact our earnings.
  The forecast financial information appearing in this update
  has not been reviewed or reported on by Sasol?s external
  auditors. We will release Sasol?s half-year results on
  Monday, 11 March 2013.

7. Other events 2013

  11 March      Half-year 2013 financial results release
  11 March      Dividend declaration
  10 June       CFO letter
  9 September   Full-year 2013 financial results release
  9 September   Dividend declaration
  22 November   Sasol Limited Annual General Meeting
  25 November   CFO letter

8. Investor Relations contacts

  Please feel free to contact us as follows:
  -    investor.relations@sasol.com
  -    +27 11 441 3113

  The Investor Relations team:

  -   Raj Naidu (Analyst Contact) Executive: Investor Relations
      and Shareholder Value Management
  -   Sam Barnfather (Financial Contact)
  -   Zanele Salman (Technical Contact)

Sponsor: Deutsche Securities (SA) (Pty) Ltd.

Forward-looking statements:

Sasol may, in this document, make certain statements that are
not historical facts and relate to analyses and other
information which are based on forecasts of future results and
estimates of amounts not yet determinable. These statements
may also relate to our future prospects, developments and
business   strategies.   Examples   of  such   forward-looking
statements include, but are not limited to, statements
regarding exchange rate fluctuations, volume growth, increases
in market share, total shareholder return and cost reductions.
Words such as ?believe?, ?anticipate?, ?expect?, ?intend?,
?seek?, ?will?, ?plan?, ?could?, ?may?, ?endeavour? and
?project? and similar expressions are intended to identify
such forward-looking statements, but are not the exclusive
means of identifying such statements. By their very nature,
forward-looking   statements   involve  inherent   risks   and
uncertainties, both general and specific, and there are risks
that the predictions, forecasts, projections and other
forward-looking statements will not be achieved. If one or
more of these risks materialise, or should underlying
assumptions prove incorrect, our actual results may differ
materially from those anticipated. You should understand that
a number of important factors could cause actual results to
differ materially from the plans, objectives, expectations,
estimates and intentions expressed in such forward-looking
statements. These factors are discussed more fully in our most
recent annual report under the Securities Exchange Act of 1934
on Form 20-F filed on 12 October 2012 and in other filings
with the United States Securities and Exchange Commission. The
list of factors discussed therein is not exhaustive; when
relying on forward-looking statements to make investment
decisions, you should carefully consider both these factors
and other uncertainties and events. Forward-looking statements
apply only as of the date on which they are made, and we do
not undertake any obligation to update or revise any of them,
whether as a result of new information, future events or
otherwise.

Date: 03/12/2012 07:05:00 Supplied by www.sharenet.co.za                     
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