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| Journey from the interior |
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| This is the story of how a country at the southern end of Africa
launched an industry half a century ago in defiance of expert
opinion elsewhere, and lived to see its courage bear rich fruit. |
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| The country was South Africa and the purpose of the industry was
to produce petrol, diesel and industrial chemicals from coal. The
company that pioneered the industry in Africa is known as Sasol. |
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| It was a bold undertaking for several reasons. |
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| First, though petrol, diesel and chemicals had been produced
from coal in Germany, there was no evidence that it had been
economic to do so. Whether it could be made competitive with
crude oil-derived products remained to be seen. |
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| Second, South Africa was still little developed industrially. There
were few people living there with the scientific skills to solve
whatever technical problems might arise in scaling up existing
oil-from-coal plant to the size planned for South Africa. |
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| Finally, the initial estimate of the capital cost of the project was
huge by South African standards, for the country's economy
was small compared with, say, Europe's industrially developed
countries. Yet, as the enterprise got under way and began
facing serious technical problems, that cost estimate proved alarmingly inadequate. Sasol found itself astride a financial
tiger from which it could not dismount. With millions of pounds
already spent, there could be no turning back. |
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| So it pressed on. Eventually, it overcame those technical
problems and began showing a profit. When crude oil prices
began to rise steeply in the first half of the 1970s, it was
sufficiently confident of its technology and management skills
to accept the government's proposal that it build a second oil-from-coal plant, one that would produce 10 times as much
petrol as the first. And then, in the late 1970s, when the Shah
of Iran fell from power and a second oil crisis exploded, it received government approval for replicating its second plant
with a third. |
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| To finance the third plant, the company, until then a parastatal
enterprise, went public. Its offer of shares in 1979 was heavily
oversubscribed. Those who acquired them at that time and still
hold them have seen their real (inflation-adjusted) market
value and dividends rise considerably. |
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Construction of Sasol’s factory and employee housing
- early 1950s |
In 1959 Sasol’s technology was demonstrated at the Rand Easter Show |
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| Sasol is no stranger to large and complex projects.
Its Secunda factory, for example, is the world's largest
petrochemical complex built at one time on a single site |
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| The main reason is that Sasol has, since the mid-1980s, been
increasingly successful in improving its cost base by creating
ever more value, through its huge reactors, from the gas it produces from coal; value that has lain in a growing variety
of industrial chemicals. The latter now number more than
200 - notwithstanding that Sasol supplies 29 per cent of
South Africa's motor fuel needs from coal - and fetch far
higher prices in world markets than their value as
components of petrol or diesel. |
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| Both cost reduction and product proliferation are the result
of intense and ongoing research into new technologies. It has
not only produced chemicals that find loyal markets around
the world. Recently, too, it has opened the way for Sasol to
participate in projects for obtaining commercial value from
other countries' natural gas resources. Using a technique
developed by its researchers, it will feed processed gas into
its reactors to yield a product that can then be turned into
premium-quality diesel for sale around the world. |
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| Sasol is no stranger to large and complex projects. Its
Secunda factory, for example, is the world's largest
petrochemical complex built at one time on a single site.
The exploitation of natural gas by Sasol in joint ventures
with other oil companies could also lead to projects of
record-breaking size. |
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| Many of Sasol's early pioneers, from senior managers to
engineers and plant operators who accepted almost inhumanly
long working hours and physical danger as the price of turning
theory into viable reality, are no longer alive. Would that they
were, for they would be proud to see how that squalling,
recalcitrant infant has blossomed into a world-class enterprise,
still the only one of its kind, that employs more than 31 000
people. In its most recent financial year it produced a turnover
of just over R41 billion (in September 2001 about US$4 850
million), of which R15 billion came from exports and foreign
sales. On total turnover, Sasol made a 26 per cent operating
profit and a record pre-tax profit of R10,5 billion — 72 per cent
up on fiscal 2000 (which, in turn, had been 60 per cent higher
than 1999). |
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| How it got there, through the efforts of its people and the
technologies they developed, is told in this book. So that
everyone will now, for the first time, be able to understand
what Sasol's remarkable achievements are really all about,
we have described them in layman terms. |
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| So, enjoy! It’s a fascinating story. |
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