JOHANNESBURG – Sasol now expects the Lake Charles Chemical Project (LCCP) to swing to a loss of up to $100million (R1.9billion) in 2020 due to the significant weakness of chemical prices despite the plant ramp-up as it said yesterday that executives would make salary sacrifices due to the Covid-19 pandemic.
The petrochemicals giant revised the earnings before interest, taxes, depreciation and amortisation (Ebidta) contribution from the LCCP to a loss of between $50m to $100m from the previous guidance of a positive Ebidta of up to $100m. Chemical prices have deteriorated as a result of the slump in oil prices and the Covid-19 global demand reduction.
The reduction in the Ebitda forecast is the latest setback after the LCCP Low-density polyethylene (LDPE) unit was rocked by a fire in January.
Investors were also concerned that the LCCP unit hads been an albatross for the group amid project and cost overruns that have resulted in ballooning debt.
However, the company said beneficial operations of the Guerbet and Ziegler units remained on track for the end of June 2020 and the LDPE unit, which was planned for the second half of the calendar year 2020, was now targeted to be on-line by the third quarter of calendar year 2020. “The acceleration of this timeline will ensure that Sasol captures the additional contribution margin above ethylene, given the current low ethylene prices achieved in the market,” it said.