- Sasol CEO Fleetwood Grobler says the completion of Lake Charles project will accelerate the company's transformation to a specialty chemicals-focused company.
- The low-density polyethylene unit is one of the three LCCP plants that form part of the Sasol-LyondellBasell joint venture announced in October.
- The LDPE unit is used to manufacture plastic bags, shrink wrap and stretch film, coatings for paper cups and cartons, container lids, squeezable bottles, and other applications.
Sasol's Lake Charles Chemicals Project (LCCP) in the US, which has been beset by a series of delays and cost overruns which contributed to its recent financial woes, is now fully operational, the petrochemicals group announced on Monday.
The project reached completion after its seventh low-density polyethylene unit reached beneficial operation over the weekend. The project's total capital cost came in at $12.8 billion, against an initial estimate of $8.1billion in 2014 when the development was announced under the tenure of then-CEO David Constable.
The Louisiana project expanded Sasol's footprint to the US and, despite its cost, the petrochemical giant has maintained that it remains a good investment.
"This milestone safely brings our Lake Charles Chemicals Project to a close and sets the stage for the next step in the evolution of our chemicals business," said Sasol Chief Executive Fleetwood Grobler in a statement.
Sasol says the low-density polyethylene unit is used to manufacture plastic bags, shrink wrap and stretch film, coatings for paper cups and cartons, container lids, squeezable bottles, and other applications.
The company said that, with the last unit coming online, 100% of the total nameplate capacity of the LCCP is operational.
"The completion of this unit and its impending transition to our joint venture with LyondellBasell will accelerate our transformation to a more specialty chemicals-focused company with a strong presence of base chemicals in our portfolio," said Grobler.
According to the company, the total capital expenditure of $12.8 billion was within previous guidance. The financial and governance challenges associated with the development of the project contributed to the resignation in October 2019 of Constable's successors, Stephen Cornell and Bongani Nqwababa.
The company said at the time that Cornell and Nqwababa, then joint CEOs, were not personally guilty of any wrongdoing despite their departure.
Cornell and Nqwababa's departure ended the joint CEO culture at the group. The company in 2019 appointed Grobler as sole chief executive and president.
The LDPE unit is one of the three LCCP plants that will form part of the Sasol-LyondellBasell Louisiana Integrated Polyethylene joint venture. Sasol in October announced that it had sold 50% of the base chemicals unit at Lake Charles to LyondellBasell for $2 billion.
The company has in recent months been selling some of its prime assets in the country as it attempts to address its R189.7 billion debt.
Sasol stocks on the JSE peaked briefly at R113 after Monday morning opening, before falling to trade at R108.18 at 09:55.