Sasol CEO plans US chemical revival, IPO potential

Key Topics.Sasol plans to revive its chemical unit, boosting earnings and IPO prospects.CEO Simon Baloyi targets the US Lake Charles facility for cash generation.Focus on fixing coal quality issues and cutting wasteful coal purchases..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..The seventh BizNews Conference, BNC#7, is to be held in Hermanus from March 11 to 13, 2025. The 2025 BizNews Conference is designed to provide an excellent opportunity for members of the BizNews community to interact directly with the keynote speakers, old (and new) friends from previous BNC events – and to interact with members of the BizNews team. Register for BNC#7 here..If you prefer WhatsApp for updates, sign up to the BizNews channel here.By Paul Burkhardt.Sasol Ltd. is looking to revive its international chemical business, including a sprawling US complex, to boost earnings and open up an option to potentially list it, according to the company's chief executive officer..The company's shares jumped as much as 12% in Johannesburg, the most since March 2021. The South African maker of fuel and chemicals from coal reported its first loss since 2020 last year and took billions of dollars in writedowns. The company has about $4 billion of debt and suspended dividend payouts. Its shares tumbled 55% in 2024. .Sasol CEO Simon Baloyi, a two-decade veteran of the company who took over the role in April, sees the $12.8 billion Lake Charles chemicals facility in Louisiana playing a significant role in generating cash and raising investor confidence.."It's a fantastic asset that Sasol has and we have to make sure it starts making money," he said in an interview at Bloomberg's office in Johannesburg. The company separated the international chemical business from operations in South Africa and has set targets to increase its contribution to earnings and strengthen it as a standalone entity. While chemicals make up about a third of earnings, the regional contribution of the US is just 6%.."In the future, at the peak of the chemical market, it's going to give us lots and lots of strategic options to create shareholder value, where you can have an option to either list it by itself or you can merge it with someone else," said Baloyi, 48. .Success could mean revising a dark chapter in the company's history. The Lake Charles chemicals project was originally designed to expand Sasol's operational footprint abroad, but suffered from mismanagement issues, hurricanes and billions of dollars in cost overruns that ballooned the company's debt. .In 2020, the year it reached completion, Sasol sold a $2 billion stake in the US based-chemicals business to form a joint venture with LyondellBasell Industries NV to cut debt. It also accelerated an asset-sale program that wrapped up the following year..The company's shares have plunged for two straight years and its weighting on the FTSE/JSE Africa All Shares Index has dropped to 0.9% from 3.2% a decade ago. .Baloyi pledged to avoid "a fire sale of assets" that he considers "value destruction." .A review he announced in August, when the company took a 56.7 billion-rand writedown largely on low chemical prices, is intended in the next three to four years to make the units capable of sustaining their own operating costs and help pay interest on debt..Sasol is also looking at all assets to determine which "are bleeding cash," which require fixing, and which have to be shut down if they can't be improved, he said..What Bloomberg Intelligence Says…A plan to revive Sasol's international chemical operation "signals the company's focus on bolstering a critical part of its business — which has proven to be on a slow, albeit gradual, path to recovery — while a potential IPO of the unit emphasizes confidence in its stand-alone value and could attract new capital. These proactive measures could bolster sentiment."— Salih Yilmaz and Darja Lema..Another unanticipated obstacle to emerge for Sasol in recent years is the declining quality of coal it produces and uses to feed its Secunda manufacturing hub in South Africa..That's become another priority and Sasol has taken a final investment decision on a de-stoning project to improve the coal quality, according to Baloyi..To make up for this, Sasol has bought about 4 million tons of the fuel annually, something he considers a waste of money. ."We shouldn't be buying coal because we have the infrastructure, we have the people, we have everything to mine the coal," he said. .Read also:.🔒 FT: China's oil demand peaks – A turning point for global energy marketsIthala faces imminent closure as Prudential Authority moves for liquidation, Treasury steps in to protect depositorsFlySafair's claim all SA airlines overbook like them is rubbish – Miles vd Molen.© 2025 Bloomberg L.P.

Sasol CEO plans US chemical revival, IPO potential

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