Shares of Sasol, the chemicals and energy conglomerate, dropped nearly 6% on Tuesday following the announcement that its coal purchases surged by 53% in the first quarter due to operational and quality issues at its mines.
In a report released Tuesday, Sasol revealed that external coal purchases rose to 2.9 million tonnes in the three months ending in September, up from 1.9 million tonnes in the previous quarter. This increase in reliance on external coal sources came alongside a 17% decline in external coal sales to export markets.
The company, valued at just under R70 billion on the JSE, saw its shares fall by 5.8% in morning trading, contributing to an alarming 58% decrease over the past year.
Despite Sasol’s own coal mines producing a steady 7.5 million tonnes, production is projected to remain flat, with full-year estimates between 30 million and 32 million tonnes. The rise in external coal purchases stems from “ongoing coal quality and operational challenges,” pushing mining costs per tonne to the upper market guidance of R600 to R640.
While Sasol reported a 2% decline in annualized production at its Secunda operation, the company maintained its full-year guidance across its divisions. Its Chemicals Africa segment saw an 11% rise in prices, counterbalancing a 5% drop in volumes, despite facing pressures from currency fluctuations and volatile oil prices. The company continues to implement self-help measures to navigate these challenges.