Sasol’s Secunda, a town built on coal, faces an uncertain future

In the heart of Mpumalanga, South Africa, the town of Secunda rose alongside Sasol Ltd.'s massive synthetic fuel plant, the world's largest coal-based fuel producer. Now facing environmental scrutiny and a 2050 net zero target, Sasol grapples with reducing emissions, raising uncertainty for the town's 40,000 residents. As the plant's fate hangs in the balance, the community awaits Sasol's decision on emissions at the annual general meeting, questioning the future of their intertwined lives and the town's economic resilience in the wake of changing industry dynamics..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..By Paul Burkhardt.A 90 minute drive southeast of Johannesburg in the province of Mpumalanga lies a town built on coal. The Secunda synthetic fuel plant is run by Sasol Ltd., the world's biggest fabricator of coal-based fuel. Its scale of production — made possible by technology utilized in Nazi-era Germany — enabled South Africa's apartheid government to circumvent oil import sanctions..It has also made Secunda the world's largest single-point emitter of greenhouse gas..Now, with environmental compliance issues hanging over the facility and the company staring down a net zero target of 2050, Sasol has no choice but to reduce the plant's emissions — a process that will almost certainly involve curbing some of its operations. That has left a big question mark hanging over the town that rose with the company, and the thousands of people whose lives are entwined with both. .At first glance, Secunda looks like a suburb that dropped out of the sky onto a large swath of farmland. When Sasol commissioned Swiss architect Max Kirchhofer to design the town in 1974, he envisioned it with around 13,000 residents. Yet as the facility grew over the decades, so did the population. It is now has more than 40,000 inhabitants, with many more living in the surrounding areas..Among them is Riaan Rademan, who joined Sasol as an engineer in 1981. At that time, the town didn't have tar roads or telephones. More than four decades later, a tree-lined main boulevard connects neighborhoods of bungalows built with tan bricks and painted in earth tones. Locals talk up the butcheries and cycling clubs, and a mall topped with solar panels, owned in part by the company pension fund, was built in recent years to help attract younger employees. Not far from the complex is an air strip and the main gate..Read more: Eskom's new Homeflex tariff: How to save and what's the catch?."We are extremely proud of the facilities that we have here," Rademan, now an executive vice president of mining, said during a site visit. "We're also so proud of the town.".Around 80% of Secunda works for Sasol in one form or another, while the rest of the residents have some tie to it, estimates Willem Oosthuizen, a vice president for gas production. Oosthuizen, who has worked for the company for about 22 years, moved there in the 1980s and has grown accustomed to running into colleagues and service providers around town. "Your life is very closely linked to the factory," he said. "It's like the plant follows you around.".It has even determined the course of some residents' lives. Sipho Maseko grew up in a nearby township during the apartheid era, the son of a coal miner whose employer supplied Sasol. As a Black boy, Maseko's opportunities were limited, but after winning an academic scholarship sponsored by the company, he was able to eventually secure a job there and rise through the ranks to become a senior vice president of operations and services..Yet communities in and around Secunda have paid a high price for such opportunities. A South African court found in 2022 that the government failed to enforce air quality compliance in an industrial zone that includes the town, and emissions from the complex — which is responsible for four-fifths of Sasol's overall pollution — may account for as many as 72 deaths a year, according to a 2019 study by Palo Alto-based Gray Sky Solutions..On the corporate level, the effects of the plant are also becoming harder to ignore. Sasol is waiting to find out whether it will be subject to a punitive carbon tax and has appealed a decision related to Secunda's sulfur dioxide emission limits..So far, there isn't a solid plan for how to decarbonize the plant with minimum impact to the thousands of people whose lives depend on it. Sasol leaders have announced their intent to reduce the group's emissions 30% by 2030 and lined up some renewable energy and clean power solutions, but investors have criticized the strategy as light on specifics..According to research by Cape Town-based Meridian Economics, the factory can follow one of three paths: Two involve using renewable energy to switch the plant's feedstock from coal to green hydrogen, and the third would see the entire operation taken offline in roughly a decade. But the latter option, says CEO Fleetwood Grober, is not on the table. "We're not going to run ourselves against a wall and then shut this place down," he said at Sasol's recreation center in Secunda..Read more: Finally some measured thinking on energy in South Africa – Andrew Kenny.The issue will be highlighted on Jan. 19, when the company holds its annual general meeting, which will include a resolution on addressing emissions. The meeting was rescheduled in November after climate protestors took the stage and refused to leave. .As Sasol decides what to do with the factory, the surrounding community has been left in limbo. Though far smaller than Detroit, Secunda is drawing comparisons to the former auto manufacturing hub, whose reliance on a single industry made it vulnerable to economic headwinds. According to the report, the company has done little to address this concern. "There is no concrete plan for these workers as the sector decarbonizes," researchers wrote, adding that a transitional training program should be developed. Sasol, in response, noted that it has identified a "series of phased steps" that must be taken, but did not provide further detail on what they would look like. .Even if environmental regulations weren't closing in, the company still would have had to find alternatives to the coal that has long powered both the plant and town. Secunda was built on top of sprawling underground mines whose once-prolific deposits are rapidly dwindling. It took a Bloomberg reporter 30 minutes of travel in an underground transport vehicle to reach the machines extracting coal deep in the Syferfontein mine. More accessible deposits have already been depleted..With the company's aims changing, the local population must adapt in turn. Over the decades, Maseko watched the township he grew up in expand with the plant. At the beginning, "Sasol presented a hope for us, for myself," he said. Now, he says, "There might be new thinking in terms of how are we going to be able to sustain ourselves.''.Read also:.Why South Africa's energy roadmap is deeply flawedKarpowership power plant gets environmental authorisation in South Africa, eases energy crisisDan Marokane faces herculean challenges as new CEO of Eskom.© 2024 Bloomberg L.P.

Sasol’s Secunda, a town built on coal, faces an uncertain future

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