Table of Contents
Key Points
- Sasol shares dropped 56 percent in 2024, the worst annual performance on record.
- R56.7 billion ($3 billion) in impairments highlights financial challenges.
- CEO Simon Baloyi aims for net-zero emissions by 2050 amid mounting criticism.
Sasol Limited, South Africa’s largest fuel and chemical producer, has posted its worst stock performance on record, with shares plummeting by 56 percent in 2024. The Johannesburg-based company, which operates the world’s largest single-point emitter of greenhouse gases at its Secunda plant, is under intense scrutiny over its environmental strategy.
Founded in 1950, Sasol has long relied on coal-based synthetic fuel production, a process central to its Secunda operations. However, the company’s continued dependence on coal has attracted significant criticism from investors and environmental groups alike. CEO Simon Baloyi, who took over the role in April 2024, is steering the company toward a 30 percent reduction in emissions by 2030, with a net-zero target set for 2050. Despite these ambitious commitments, Sasol faces substantial challenges, including declining gas fields in Mozambique, which are critical to transitioning away from coal.
In addition to these environmental concerns, the company has recently announced R56.7 billion ($3 billion) in impairments related to its US and South African operations, with further write-downs anticipated at the Secunda plant.
Financial setbacks and strategic challenges loom
Once South Africa’s largest company by revenue, Sasol is now grappling with a sharp decline in investor confidence. In an October review, Moody’s Ratings noted that Sasol faces significant "large exposure to carbon transition risk," highlighting the necessity for the company to allocate substantial resources to reduce its carbon footprint.
CEO Simon Baloyi’s strategy includes assessing the company’s assets and shifting toward clean technologies such as green hydrogen. However, according to BloombergNEF, the cost of scaling up green hydrogen, which is produced using renewable energy, remains prohibitively high.
Sasol’s recent proposal to set a range for its emissions reduction target by 2030 has been condemned by environmental civil society organizations, who view it as a step backward from more definitive goals. As Sasol continues to increase its reliance on coal, analysts predict further operational impairments, which will add to the company’s financial pressures.
Sasol’s situation represents a critical pivot point for both the company and its stakeholders. Achieving its emissions targets and reaching net-zero by 2050 will require not only significant financial investment but also careful resource management in an increasingly carbon-constrained world.
