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By Paul Burkhardt
(Bloomberg) — Sasol Ltd. warned of a further delay at its giant U.S. chemicals project, pushing back the startup of the final unit by a couple of months.
The Lake Charles complex in Louisiana has been dogged by mismanagement and cost overruns, forcing the South African company to accelerate asset sales to reduce debt. The latest holdup follows a fire that damaged the site’s low-density polyethylene unit back in January.
“The unit is expected to achieve beneficial operation before the end of October,” rather than “before September” as previously planned, Sasol said Thursday. “Challenges were experienced in the completion of the restoration process, resulting in a slight delay.”
The company has piled on debt to develop the Lake Charles site, whose cost has risen sharply from early estimates to almost $13 billion. Setbacks at the development, coupled with oil’s crash amid the coronavirus pandemic, have dragged Sasol’s shares down more than 50% this year. The stock slipped 1.5% on Thursday at 10:53 a.m. in Johannesburg.
More trouble for Sasol.The historic crash in oil prices due to the demand destruction of #covid19 has turned the fortunes of its US Lake Charles operations this year to an expected loss of between $50m to $100m. Previously Sasol expected Lake Charles to be profitable @cnbcafrica
— Fifi Peters (@FifiPeters) April 23, 2020
Sasol expects a loss from the U.S. project in 2020 after the spread of the virus wiped out fuel demand and sent oil prices tumbling. The company has had a total of 774 Covid-19 infections, mainly in South Africa, with two related deaths, it said in a statement. A continuous increase in cases “could potentially impact our operations in the near term,” it said.
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