(Updates with closing shares in last paragraph.)
Sept. 12 (Bloomberg) -- Sasol Ltd., the largest producer of motor fuels from coal, abandoned plans for a factory in China in favor of other investment opportunities after government delays.
“We have so many investment opportunities that we need to move on and look elsewhere at this time,” said Chief Executive Officer David Constable in an interview.
Sasol, based in Johannesburg, was planning a $10 billion coal-to-liquids plant with Shenhua Ningxia Coal Industry Group Ltd., a unit of China’s biggest producer of the fuel. Funding will be moved to other developments and staff redeployed, Sasol said. The two partners haven’t received any response from the Chinese government since they submitted a project application report in December 2009, according to Constable.
“They’re still looking at how to use their coal, whether for chemicals or power or liquid fuels,” he said. “There are technology questions on whether or not they’d like to develop the technology themselves. I think with all of those unknowns, I can see why they would be slow in their decision making.”
Sasol, which saw a 25 percent gain in annual profit today, will expand its other businesses in China, mainly chemicals manufacturing and marketing, Constable said in a presentation.
The company, which uses proprietary technology to make jet fuel, gasoline and diesel, is shifting to making products abroad from natural gas, instead of South African coal, to help counter the effect of a rising currency. Its foreign businesses, mainly assets in Mozambique, Qatar and Iran, made up 36 percent of group operating profit in the year ended June 30.
Sasol expects to announce a planned gas-to-liquids plant in Uzbekistan with its partners Petroliam Nasional Bhd and state- run Uzbekneftegaz “in the very near term,” probably before the end of the year, Constable said. The parties will meet with President Islam Karimov of Uzbekistan on Sept. 19, he said.
The Sasol board has provisionally agreed to proceed with engineering and design for the facility, Constable said.
The group’s other main international plans include gas-to- liquids plants in the U.S. and western Canada, currently in the feasibility stage, and a coal-to-liquids factory in India. The pre-feasibility study for the India project, a partnership with Tata Group, should be complete by end-2011, Constable said.
Nigeria’s Escravos gas-to-liquids plant, jointly developed with Chevron Corp., is due to begin production in 2013, he said.
Sasol slid 0.5 percent to 322.50 rand by the 5 p.m. close in Johannesburg. The FTSE/JSE All Share Index fell 1.9 percent.
--Editors: Tony Barrett, John Viljoen
To contact the reporter on this story: Jana Marais in Johannesburg at firstname.lastname@example.org
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