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Sasol's Giant U.S. Plant Delayed as Cost Blows Out Again

Sasol's Lake Charles Plant Delayed, Cost Grows to $11.8 Billion

(Bloomberg) -- Sasol Ltd. said capital costs at its Lake Charles chemicals project in Louisiana have increased once again, to as much as $11.8 billion, and the startup will be delayed by as many as five months.

  • The previous cost estimate for the project, which will convert ethane into plastics and other products, was about $11.1 billion. Sasol cited “several factors within and beyond our control” for the revision.

Key Insights

  • Lake Charles is Sasol’s largest project and will transform the South African company’s production mix once up and running. Yet it’s faced repeated setbacks, including a 25 percent cost hike in 2016 to $11 billion -- a price tag the then-chief executive officer called a “worst-case scenario.”
  • Friday’s announcement will disappoint investors after the company said as recently as October that project costs were within market guidance.
Sasol's Giant U.S. Plant Delayed as Cost Blows Out Again

Market Reaction

  • Sasol shares sank as much as 5.7 percent on Friday and traded down 5.4 percent at 389.4 rand as of 10:13 a.m. in Johannesburg. It was the worst performer on the FTSE/JSE Africa All Share Index.

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  • Sasol also released a trading update on Friday, saying headline earnings, which exclude one-time items, probably rose as much as 34 percent in the six months through December from a year earlier.
  • See key figures from Sasol’s trading statement here.

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To contact the reporter on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net

To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Amanda Jordan, Rakteem Katakey

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