Sasol to Increase Coal Plant Output While Expanding Renewable Energy Use

Sasol Ltd., a top global producer of synthetic fuel from coal, plans to run its main plant at full capacity while increasing the use of renewable energy. The company aims to balance coal use with more clean energy to grow its business and reduce carbon emissions.

The Secunda plant in South Africa has a production capacity of 7.6 million tons per year. Sasol wants to operate the facility as close to this capacity as possible while reducing greenhouse gas emissions by 30% by 2030. The company plans to increase its renewable energy capacity to 2,000 megawatts, about two-thirds more than current levels. It will also use carbon offsets to maintain fossil fuel operations for as long as possible.

Sasol’s plan comes during a volatile oil market and ongoing tariff changes by the US government that affect supply chains. The company’s stock has fallen in the past year, leading investors to seek a clear strategy for the future. Sasol is focusing on improving coal quality at Secunda and cutting costs to support higher output.

The company also aims to grow its chemical business, hoping to increase annual earnings to $1 billion in five years, which is more than three times the current level. Sasol invested $12.8 billion in its Lake Charles chemicals plant in Louisiana and is working to improve the performance of this business segment.

Sasol has put protections in place to manage risks from crude oil price changes and currency fluctuations. The company’s oil-hedging program for 2024 sets a price floor near $60 per barrel, covering most oil volumes for the year. It is also lowering the net debt level needed before restarting dividend payments to $3 billion by fiscal 2027, down from $4 billion. The company passed this limit in 2024 and did not pay a final dividend last year.

Originally, Sasol estimated that cutting emissions by 30% would cost up to 25 billion rand ($1.4 billion). By choosing not to replace coal with liquefied natural gas at Secunda, the company has reduced this estimate to 7 billion rand.

Sasol has formed partnerships focused on clean energy, including a sustainable aviation fuel project with Topsoe, a gas aggregation agreement with Eskom, South Africa’s state power utility, and a clean energy platform with Discovery Green. The company plans to focus on renewables and gas-to-power projects while slowly moving away from fossil fuels.

This strategy aims to help Sasol balance strong production with environmental goals amid a changing energy market. Sasol’s investments in renewables and chemicals signal a long-term shift toward cleaner energy while maintaining its core synthetic fuel business.