Wednesday, January 19

Sasol expects much lower production volumes from Secunda Operations

Sasol has revised down its forecast production volumes from Secunda Operations (SO) to 6.7 million tonnes to 6.8 million tonnes for fiscal 2022. “Based on actual performance and our purchasing strategy of coal, we expect mining operations to achieve an average productivity rate of between 950 and 1040 t / cm / s by financial year 2022, “he said in a trade update on Tuesday.

This follows an earlier review in October, when the fuel giant said it expected SO production volumes to be 7.3 to 7.4 million tonnes (from 7.4 to 7.5 million tonnes). . That reduction was attributed to “unforeseen delays during the end of September, interruption of Eskom’s power supply, poor quality of coal and other operational instabilities.”

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Read: Sasol Special Report Part 2: How do you solve a problem like Secunda?

In the December 14 update, Sasol says that after the end of October it found three major production impacts in Mining, resulting in more than 1 million tons of lost coal production.

“The most significant safety incidents that occurred since October 2021 include a fire at our Shondoni mine (no fatalities), an incident at a groundwater reservoir at our Bosjesspruit mine (three fatalities), and a high wall failure at our Syferfontein mine (no fatalities).

Together these incidents contributed to just over 50% of the coal production deficit. ”

In addition to security incidents, its operations were negatively impacted by adverse weather conditions and some significant operational challenges, as well as a slower-than-expected acceleration of Fulco.

“As a result, production rates fell below 1,000 t / cm / s and we had to use the coal reserve which, as a result, fell below our target stock level. The external supply of coal from our long-standing commercial supplier was also interrupted as a result of the humid weather, significantly affecting the supplier’s ability to provide us with our contracted purchase quantity. ”

Sasol says that lower coal availability hampered its ability to mix coal effectively, resulting in lower throughput rates in the SO gasification process.

Thus, it has reduced SO production rates until mining productivity rates increase, and its coal stock rebuilds well above threshold requirements.

This is a disappointing blow for the company, especially considering the ‘Sasol 2.0’ targets.

Read: Sasol charts his future


“We are committed to gradually raising production rates as coal availability improves, while carefully monitoring the balance of supply and demand,” he added.

Sasol says it will also supplement its production shortfall by purchasing coal on the open market, however it is not possible to determine the shortfall at this time.

“Our first objective is to ensure that we restore the integrity of the reserve to a level greater than ~ 1.2 million tons by the end of the first quarter of calendar year 2022. After this, we plan to gradually increase the pure gas loads through increased supply of coal to SO in an effort to improve execution speed.

“Our target is a storage level of ~ 1.5 million tonnes and we will further improve SO gas loads by the second quarter of calendar year 2022. Improving the quality of coal will take some time and we will update the market on our progress. during the following months. ”

Sasol says operational instabilities in its OS have largely been resolved (as of December 13) and it has seen major improvements in gasifier and boiler availability at the Synfuels facility over the past three months.

Palesa Mofokeng is a Moneyweb intern.

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