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Coal still the way forward
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23rd October 2009
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In an interview with Mining Weekly, petrochemicals giant Sasol CEO Pat Davies spoke about the group's coal-to-liquids project in China and the ongoing role of the use of coal for energy. In a discussion with Mining Weekly editor Martin Creamer, Davies points out the significance of the current feasibility study, in partnership with China's State-owned Shenhua, in Ningxia Hui Autonomous region, in China.

We see Sasol delivering quite a big cut on the world stage. What is the upside potential in China?

Coal-to-liquids (CTL) this time, not gas-to-liquids, is being used in China, where we are far advanced with the feasibility study. The plant is an 80 000-bl/d plant, which is huge. And, of course, if one of those works in China, they have huge coal reserves, they have a massive market, so of course there is a great upside opportunity to build more of those into the long-term future.

One of the big things on everyone's lips is carbon dioxide (CO2). CTL has a big carbon footprint. What do you see going forward to mitigate that?

CTL uses coal, so alongside the rest of the coal industry, carbon emissions are an issue. Sasol is an innovative company. We have a lot of clever scientists and engineers and I am sure that we are going to become a world leader in reducing carbon footprint on CTL plants and facilities. We are doing that by, first of all, improving our processes, reducing our energy inefficiency, in fact, by 2030, we will have reduced by 30% the carbon footprint of our new CTL offerings. In parallel to that we are studying and working together with several people around the world on carbon capture and storage. We are pretty reliant on that technology, which is a new technology becoming successful so that it can be used at scale and that can be used to mitigate our carbon footprint as well. That, and a number of renewable or low-carbon forms of energy we are looking at as well to make sure that our value proposition for growth in the future, which is dependent on CTL to an extent, is not blunted in anyway. We grow because the world needs energy, but, of course, that energy must be affordable, it must be sustainable, it must be done in a way that has less impact on the environment than the world has done so far.

Coal seems to be in the right place, while stranded gas is stranded. It was mentioned that in Secunda the ratio of 95% coal to 5% natural gas is used. Do you see coal still dominating in the future?

Coal is a very important part of the world energy going forward. Oil will remain a significant player for the next number of decades, there is more gas available and natural gas is going to be pretty important. Our main focus, until recently, has, in fact, been gas, with the work in Mozambique, Qatar and Uzbekistan now, but we are quite sure that coal will also be there. There will have to be quite a focus on coal going forward to ensure that the world, particularly the developing world, is able to improve the quality of life by having affordable energy. Coal must play into that space, we play into that space. It provides a great opportunity for us but it must be done in a responsible and sustainable way.

Is there any upside potential to this very low capital expenditure (capex) figure of R15-billion?

The low capex figure of R15-billion for the next couple of years a year is not a particularly low figure. And there are always more opportunities, and that is why our CFO emphasised our flexibility to our capex approach. So, as the opportunities come and as we have the balance sheet and as we have the cash flows to support it, clearly we can support a higher capex than that, should we wish to.



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Coal is a very important part of the world energy going forward

PAT DAVIES Coal is a very important part of the world energy going forward
Sasol’s main focus, until recently, has been gas, with the work in Mozambique

MOZAMBIQUE GAS-TO-LIQUIDS Sasol’s main focus, until recently, has been gas, with the work in Mozambique
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