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Sasol moves to restore investor sentiment

IOL - BUSINESS REPORT - COMPANIES / 02 JULY 2020 - 13.13 / DINEO FAKU

JOHANNESBURG – Sasol has partnered with Enaex, Chile’s 100-year-old blasting services provider for large-scale mining, to establish a new explosives joint venture that will explore opportunities on the African continent.

Sasol said on Wednesday that it had concluded the transaction to sell a 51 percent stake in its explosive business to Enaex as part of its accelerated divestment programme focused on core assets, which would enable the repositioning of the group over the next two years.

Sasol has partnered with Enaex, Chile’s 100-year-old blasting services provider for large-scale mining, to establish a new explosives joint venture. Photo: Bloomberg

The troubled petrochemicals giant in March unveiled a planned $6 billion (R104bn) cash-raising initiative by the end of the 2021 financial year as it seeks to reduce debt levels from the Lake Charles Chemicals Project, among other woes.

Enaex is Enaex Africa’s majority shareholder and has management and operational control of the entity.

Enaex Africa, which began operations yesterday, comprises certain assets and associated activities spun off from the explosives and rock fragmentation value chain of the base chemicals business of Sasol South Africa.

Enaex provides blasting services to major mining firms, including Anglo American, BHP, Codelco, KGHM, Glencore and Vale.

Francisco Baudrand, Enaex Africa’s chief executive, said the deal was a milestone for the group and a gateway to the continent.

“This is truly an incredible day for Enaex, with a new venture on a new continent. This joint venture is a platform of growth for Enaex not only in southern Africa, but also for us to become the leaders in explosives and blasting services for the mining industry on the African continent,” said Baudrand.

He said meaningful participation for black economic empowerment had also been catered for in the shareholding structure, in line with South Africa’s transformation agenda.

“We understand and respect and believe the compliance requirements in this country. In the coming month we will engage our empowerment partner,” he said.

Sasol would sell shares to an empowerment partner, which could obtain a 26 percent shareholding, said Baudrand.

Sasol president and chief executive Fleetwood Grobler said the joint venture included the associated business activities in South Africa and other countries in Southern Africa.

“We are delighted to announce that on July 1, 2020, Enaex Africa, in association with Sasol, will officially start operating in South Africa and on the African continent.”

Sasol said it was divesting its interests in the Republic of Mozambique Pipeline Investment Company’s pipeline and the Central Termica de Ressano Garcia gas-fired power plant in Mozambique, and discussions in relation to the Base Chemicals assets in the US were far advanced.

But Peet Serforntein, the head of research at Unum Capital, said Sasol was not out of the woods in terms of investor confidence.

“A share that plummeted so severely remains a risky investment for me. For me, it is all about a breakdown in investor confidence, and that must be restored,” said Serforntein.

Sasol shares closed 1.66 percent lower at R130 on the JSE on Wednesday.

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LINK : https://www.iol.co.za/business-report/companies/sasol-moves-to-restore-investor-sentiment-50246161

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