Sa­sol con­firms Lake Charles blast

Business Day - - FRONT PAGE - Lisa Steyn Mining & En­ergy Writer [email protected]­nesslive.co.za

Syn­thetic fu­els and chem­i­cals group Sa­sol says there was an ex­plo­sion at its trou­bled US-based Lake Charles Chem­i­cals Project. The com­pany said the in­ci­dent oc­curred around mid­day on Jan­uary 13 at its low-den­sity poly­eth­yl­ene unit, which forms part of the mega-com­plex in Louisiana. “The fire was ex­tin­guished and all em­ploy­ees and con­trac­tors are safe and ac­counted for,” the com­pany said in a state­ment.

Syn­thetic fu­els and chem­i­cals group Sa­sol said on Mon­day that there was an ex­plo­sion at its trou­bled US-based Lake Charles Chem­i­cals Project (LCCP).

The com­pany said the in­ci­dent oc­curred around mid­day on Jan­uary 13 at its low-den­sity poly­eth­yl­ene (LDPE) unit, which forms part of the mega-com­plex in Louisiana.

“The fire was ex­tin­guished and all em­ploy­ees and con­trac­tors are safe and ac­counted for,” the com­pany said.

The Sa­sol share price had fallen 2.43% to R301 by the mar­ket close on Tues­day.

The JSE-listed com­pany has had a tough time at its yet-to-be com­pleted Lake Charles plant, which caused Sa­sol man­age­ment to draw the ire of in­vestors af­ter the project ex­pe­ri­enced nu­mer­ous de­lays and ran 45% over bud­get. An in­de­pen­dent probe was launched into what went wrong and in Oc­to­ber last year Sa­sol’s joint CEOs stepped down over the de­ba­cle.

In Tues­day’s state­ment, Sa­sol said the new LDPE unit had not yet achieved ben­e­fi­cial op­er­a­tion as planned for in De­cem­ber 2019 and was in the fi­nal stages of com­mis­sion­ing and start-up when the in­ci­dent oc­curred.

“The unit has been shut down and an in­ves­ti­ga­tion is un­der­way to de­ter­mine the cause of the in­ci­dent, the ex­tent of the dam­age and re­sult­ing im­pact on the LDPE unit’s ben­e­fi­cial op­er­a­tion sched­ule,” the com­pany said.

Ac­cord­ing to Ab­dul Davids, head of re­search at Kag­iso As­set Man­age­ment, the unit in ques­tion is re­spon­si­ble for about 30% of the LCCP’s to­tal pro­duc­tion. Although the unit had not yet reached ben­e­fi­cial op­er­a­tion, it was run­ning and Sa­sol is likely los­ing more than 1,000 tonnes of pro­duc­tion for ev­ery day the unit is shut down, Davids es­ti­mated.

At cur­rent prices for LDPE, he ex­pects the rev­enue ef­fect to be a loss of some $1.5m (R21.5m) a day. The wider sig­nif­i­cance is yet to be seen and will de­pend on how long the unit is shut down for, Davids said.

“If it is con­tained and they re­sume op­er­a­tions to­mor­row, it would be in­signif­i­cant.

“But it de­pends how long this sets them back for that’s the out­stand­ing ques­tion.”

The Cal­casieu.info re­port said sev­eral nearby build­ings had been dam­aged by the ex­plo­sion, in­clud­ing hur­ri­cane shut­ters for a nearby fire sta­tion.

In the state­ment, Sa­sol said all other Lake Charles units and pre­vi­ously com­mis­sioned LCCP units are un­af­fected and op­er­at­ing to plan.

The eth­ane cracker, which is the heart of the project, has achieved full ca­pac­ity af­ter the suc­cess­ful re­place­ment of the acety­lene re­ac­tor cat­a­lyst in the plant dur­ing De­cem­ber 2019.

Sa­sol said the re­main­ing three down­stream units, which are un­der con­struc­tion and will com­plete the in­te­grated LCCP site, are also un­af­fected and re­main within cost and sched­ule.

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