Beleaguered energy giant Sasol is being forced to go cap in hand to external coal suppliers as persistent quality problems continue to plague its own mining operations in Secunda, sending shockwaves through the company’s production forecasts. The revelation, contained in a recent production and sales update, paints a grim picture of the challenges facing the petrochemical behemoth.
Already grappling with reduced output, Sasol has now slashed its coal production forecast for the current financial year yet again, anticipating a yield of just 28 to 30 million tons. This downturn is a direct consequence of the stubborn “quality problems” hindering extraction at its Secunda Operations, the sprawling complex where coal and gas are transformed into the fuels and chemicals that underpin a significant portion of South Africa’s economy.
Adding insult to injury, the cost of this compromised coal is also on the rise, with Sasol revising its coal cost range upwards to between R650 and R670 per ton. This double whammy of lower production and higher costs will undoubtedly put further strain on the company’s bottom line.
Hope, however, is on the horizon in the form of a major “destoning project” aimed at improving the lamentable quality of the coal. Sasol assures stakeholders that this ambitious undertaking, designed to remove rock fragments and other impurities – ominously referred to as “sinks” – is progressing smoothly and remains on track for completion in the first half of the 2026 financial year, all within a previously budgeted cost of under R1 billion.
But patience, it seems, has run thin. In a decisive move to safeguard the effectiveness of its gasifiers – the heart of its Secunda operations – management has taken the drastic step of further reducing its own coal production by an additional two million tons. This shortfall will be plugged by sourcing higher quality coal from external suppliers, specifically chosen for its lower “sinks” content.
The urgency of this intervention underscores the severity of the coal quality crisis. Sasol is essentially admitting that its own mines are currently unable to provide the consistent, high-grade feedstock required for optimal performance at Secunda.
The destoning project hinges on repurposing Sasol’s Twistdraai export coal plant into a dedicated 10-million-ton-a-year destoning facility. The goal is to blend the output of this plant with other coal sources to achieve a feedstock with a sink content of less than 12%. Material processed through the revamped Twistdraai is expected to boast a mere 1% sink content, a stark contrast to the problematic output currently being mined.
This initiative is also central to Sasol’s ambition to restore yearly output at Secunda Operations to above 7.4 million tons. Despite the coal woes, the company has maintained its production guidance for Secunda Operations this year at between 6.8 million and 7 million tons, suggesting that the reliance on purchased coal is intended to bridge the gap and maintain these targets.
The ripple effects of these operational challenges are already being felt in Sasol’s sales volumes. The company anticipates a 1% to 3% decrease in fuels sales volumes compared to 2024, attributing this to the supply disruptions caused by the coal quality issues, compounded by an unplanned outage at Secunda Operations and delays in the ramp-up following a fire at the Natref refinery in January.
Furthermore, Chemicals Africa sales volumes are projected to be 2% to 4% lower than the previous financial year, a consequence of the reduced production at Secunda and the looming uncertainty surrounding ongoing global tariff disputes. Sasol acknowledged that it is actively assessing the potential impact of US tariffs on its operations, supply chain, and pricing strategies, engaging with relevant stakeholders to mitigate potential disruptions and identify any potential advantages.
For Sasol, a company that has long prided itself on its integrated operations, the need to buy in significant quantities of coal is a stark admission of the deep-seated challenges within its mining division. As the destoning project inches towards completion, the market will be watching closely to see if this costly intervention can finally resolve Sasol’s coal calamity and restore stability to its crucial Secunda operations.
