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Sasol's green hydrogen - hot air or solid plan?
Small atoms, big costs
As Sasol announces yet another green hydrogen project – this time partnering with ArcelorMittal SA (AMSA) to explore green steel production – the market is not sure what to make of it, if anything.
Although it's the buzzword for the moment, the jury is still out on green hydrogen, which faces enormous challenges in relation to costs and transport.
In combination with green hydrogen, the companies also plan to use captured carbon from AMSA's Vanderbijlpark steelworks to produce fuel and chemicals at Sasolburg.
Carbon capture and utilisation is yet another technology which is way off from being commercially viable.
Sasol and AMSA consider themselves well-placed to develop such projects and are confident that, should they get these projects through the feasibility stages to take an investment decision, there will be no shortage of funders wanting to invest.
Fingers crossed that will be the case, as the companies' long-suffering shareholders will almost certainly not want to foot the bill for what will be a hugely expensive endeavour.
AMSA's shareholders have had a tough time with the company teetering on the brink of collapse, with the steelmaker's fortunes only reversing last year.
For Sasol's shareholders, the memory of the group's disastrous Lake Charles Chemicals Project will linger for a while still. After all, it's not terribly easy to forget how project costs ballooned from $8.1 billion (worth R147.7 billion today) to $12.9 billion, stretching Sasol's balance sheet to the point that it had to sell off half of the project to keep lenders at bay.
Difficult as the road ahead may be, these two companies, as the largest greenhouse gas emitters in the country after Eskom, admittedly have to do something to meaningfully decarbonise their energy-intensive businesses, which face challenges that cannot be solved by renewable energy alone.
It is admirable that they are taking matters into their own hands and leading the way in SA - it certainly makes for a PR’s dream - but the road ahead is unquestionably long and uncertain.
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— Wall Street Memes (@wallstmemes) October 18, 2022
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containership charter rates from @alphaliner show the falling-off-a-cliff precariousness of this sector of shipping. Boom and bust. pic.twitter.com/nQyFCIREYY
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containership charter rates from @alphaliner show the falling-off-a-cliff precariousness of this sector of shipping. Boom and bust. pic.twitter.com/nQyFCIREYY
— Michelle Wiese Bockmann (@Michellewb_) October 19, 2022
The chance of a US recession within the next 12 months, according to the latest probability models of Bloomberg Economics. A separate survey of 42 economists predicts this probability at 60%, which is up from 50% a month prior.
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