Simon Baloyi: Yes, Fleetwood. There was two questions to – two parts to Chris’s question. The first one was, what is the volume of coal that Secunda operation will use post 2030? That number is, we’ve previously communicated. We’re going down from 40 million tonnes on average to 30 million tonnes. So that’s where we’re going to be post 2030. And that 10 million tonne space is what Fleetwood is referring to – he say we’ll have to look at, an alternative ways and sources to try and fill that gap. And the second question is on the on the 12A. You remember what we’re asking for on the 12A is for the site to be regulated, I mean, on a log basis versus a concentration basis. So that that’s what you’re asking for. We hope, I mean, and believe that I mean represents, the best possible solution for us going forward.
If, the Minister were to, upheld the decision of the NAQO, what we will do, we’ll have to follow due process because I mean, there is a process to try and resolve the issue. So, we will continue with that, I mean, to try and find, dynamical solution to both parties.
Fleetwood Grobler: And I might just add, Chris, that we we’ve got confidence that it is not a better solution only for Sasol. It’s a better solution for the outcome of that pollutant in terms of the communities and areas that we operate in in Secunda. Because we’ve got, other precedents where the mass base, assessment on these emissions are practiced and is a very effective way of dealing with it. And so, we in that process, we believe we’ve got a very clear substantial benefit, and we will, present that as part of the process and suffice to say there are also other areas where we are, regulated on a low basis. For example, in the U.S. that is also a practice that’s been accepted.
Chris Nicholson: Thanks Fleetwood. I think it’s very clearly explained on your website. I was just wondering in the worst-case scenario, whether we would have a negative impact on production volumes if you didn’t get that relief from the minister.
Fleetwood Grobler: Yes. I think it is about the license of the operations. So it is a dire outcome. If it’s – the license is withdrawn, it will imply a phased shutdown of the facility, which we believe is not in the interest of everyone, given that we believe our solution is going to be a superior outcome that will not require to phase shutdown.
Chris Nicholson: Thanks very much, Fleetwood.
Tiffany Sydow: Thank you for your questions, Chris. I’m going to move to Alex Comer, please, also on Chorus Call.
Operator: Alex Comer from JPMorgan. Please go ahead, sir.
Alex Comer: Can you hear me?
Tiffany Sydow: Yes. Thank you. Alex, go ahead.
Alex Comer: Yes. Look, another question on the write-down and following on from the excellent questions from Gerhard and Chris. Look, I don’t want to labor the point here. But if you look at that fuels business, it is probably making, I don’t know, ZAR 20 billion of free cash flow. So incredibly strong cash flows at the oil price and rand you’ve indicated in the next sort of five, six years and then a collapse. So you’ve given us this 6.7 million tonnes production number in 2030. So what happens to production over the next 20 years? Are you still expecting to hold that number or putting second, or does it drop dramatically? I just wondered if you’d changed that. Also, what is the oil price assumption. We know that it’s $88 real to 2030? What is it after that? And then also, what is the carbon tax assumption that you’ve got embedded into these numbers? Thanks.
Hanré Rossouw: Thanks, Alex. So effectively, just to start perhaps with the oil price, the ZAR 88 is an average of the – dollar, sorry, let’s make it dollars. $88 a barrel is the average long-term nominal price. So it is – I think it’s in line with a real price that is close to consensus. I think it’s not a – certainly not an outlandish price. And I think that does bring sort of margin squeeze into that business. The key is – I think you’re spot on that, we are generating strong cash flow now beyond 2030, given that we now then have a tale of negative cash flows over the period, for example, if I look at the 2030 to 2040, we’ve got about negative ZAR 13 billion discounted kind of value in that part and then a further negative cash flow, ZAR 40 million to ZAR 50 million.
That brings the carrying value then to zero as we’ve discussed before. I think the last part in terms of — and certainly, the other assumption, uncertainty is carbon tax. And again, there, we’ve used the current trajectory, $20 going to $30 per tonne of C02, the key uncertainty is then what does one do with the carbon tax allowances. So there, we’ve also just used an extension of what we know at the moment, but that remains a critical assumption also going forward, that will underpin the kind of that carrying value.
Fleetwood Grobler: And then the last part, Hanré, is that up to 2030, the assumption is that there is a range between 7.1 million tonnes, 7.2 million tonnes thereabouts is the assumption. And therefore, the point that I made is that we’re working on a whole host of issues. So if you restore the coal quality, we believe that would work against the impairment because then we would be able to generate cash where it matters most in the near six years or when we implemented destoning, say from FY ’25 or calendar year ’25 on, that will restore to more historic volumes. The ASU operations would also then contribute to offset some of the woes.
Hanré Rossouw: And yes, just to confirm that 6.7 million tonnes is flat from 2030 to 2050. But I think, for example – and we are looking at various technologies to back that out. For example, if we can get a carbon capture and you can revert that volume’s back to 7 million tonnes or more, kind of pushes out the – if it pushes out the need to reduce the 30% by capturing CO2. And we’ve got a really available streams of carbon that we can capture. Those are the kind of opportunities that we’re working on then ultimately to offset that reversal. And it’s not just 2030, but it’s really that journey to net zero ambition in 2050 as well that we will continue to progress the various technology solutions.
Simon Baloyi: Yes, Hanré, if I may add, yes, we’ve now introduced the 6.7 million tonnes number. The critical assumption underpinning the 6.7 million tonnes is also the grid emission effect of the South African grid. So we also see, I mean, an upside of up to 300 kilotons if grid emission effect has, I mean, improves. So I think holding the 6.7 million tonnes or they’re up to 2050, there will be a critical assumption that we must take into account. So we see as the grid, I mean, does improve that you can access that.
Alex Comer: Sorry, Hanré, I just wanted to – sorry, no, I just want to just confirm one thing. Because if I look at Note 8 in your account, it says the oil price assumption of $88 a barrel is for five years. Are you saying that, that real $88 price is the 2050? Or is there some other oil price post-2030 assumption?
Hanré Rossouw: So that’s the average long term. We can take it off-line, but the detail there.
