Sasol to Begin Reducing External Coal Purchases as Destoning Plant Raises Quality

Why It Matters

Reducing reliance on costly imported coal improves Sasol’s margin and secures feedstock quality for its Fischer‑Tropsch operations, while the shift influences South Africa’s coal market dynamics.

Key Takeaways

• Destoning plant cuts coal impurity to 12% sinks
• External coal purchases expected 4‑6 Mt annually
• Internal coal output target 32‑34 Mt by FY2027
• Secunda gasifier output rose 10% to 3.7 Mt
• Sasol leasing Richards Bay terminal export entitlement

Pulse Analysis

The destoning upgrade at Sasol’s Twistdraai facility marks a strategic pivot from low‑grade imported coal to a cleaner, domestically sourced feedstock. By removing rock fragments and other impurities, the plant delivers coal with a 12% sink content, directly mitigating wear on Secunda’s gasifiers. This quality boost translates into higher conversion efficiencies for the Fischer‑Tropsch process, allowing the complex to generate more synthetic fuels and chemicals per tonne of coal while operating at lower maintenance costs.

Financially, the move supports Sasol’s goal of curbing external coal spend, which has hovered around R700 per tonne. With internal production slated to reach 28‑30 million tonnes in FY2026 and climb to 32‑34 million tonnes thereafter, the company expects to slash annual import volumes to 4‑6 million tonnes. The freed‑up export entitlement at the Richards Bay Coal Terminal is being leased, creating a modest revenue stream and further offsetting procurement expenses. These operational efficiencies are crucial as Sasol navigates a period of weaker earnings and significant impairments.

Beyond coal, Sasol’s energy portfolio is adapting to shifting gas dynamics in Mozambique. Delays in the PSA and Central Térmica de Temane projects have trimmed gas output, prompting the firm to develop a methane‑rich gas (MRG) bridging solution derived from coal. While the MRG price remains under regulator review, the strategy aims to sustain industrial gas supply in South Africa through 2028, complementing ongoing LNG import initiatives. This integrated approach underscores Sasol’s broader effort to balance domestic resource utilization with market volatility, positioning it for resilient growth in the regional energy sector.