Sasol shares plummet as US project delayed

Sasol’s share price recorded its biggest one-day drop in nearly three years after the group announced yet another delay and cost increase at its chemicals project in Louisiana.

Less than four months after telling investors that its new Lake Charles chemical plant is on track to cost $11.13bn (R154.43bn), the company warned on Friday that it was now expected to cost between $11.6bn (R160.96bn) and $11.8bn (R163.73bn).

The start-up of the project’s first unit was also delayed by two months.

In response, the Sasol share price closed 6.5% lower on Friday at R384.78, reflecting its biggest one-day drop since September 2017.

More than R15bn in market value was wiped out by the time trading closed. The share is down 27% over the last six months, driven largely by the decline in the oil price.

The project – an ethane cracker and derivatives complex – has already faced a number of cost overruns and delays. On inception in 2014 it was expected to cost $8.9bn (R123.49bn) and to be in operation by 2018.

Lake Charles is Sasol ’s biggest project and is set to transform it from largely a fuel producer, with its main footprint in southern Africa, to a major global chemicals player.

Chemicals, used in the production of products ranging from plastics to cosmetics, are expected to contribute more than 70% to Sasol’s overall revenue once the complex is fully operational.

Sasol attributed the delays and cost overruns to excessive rainfall in the December quarter and high absenteeism in the same month.

Year worst as Sasol share price drops after another delay at chemicals project in US