Tiffany Sydow: We’ll confirm for you, Alex, and get back to you on that assumption. Thanks for your questions. We are talking to you later today. So hope to get more of them there. I’m going to just finally wrap up on the impairment topic with two more questions, Hanré, which has come through, and then we can move over to more strategic questions. I think Adrian from SBG just wanted to confirm what is the potential upside? What is included in the impairment assessment in terms of feedstock and any upside potential from the PSA and coal brigading projects, et cetera. And I think another important question is from Shoaib at Aluwani Capital. If the Secunda fuel and chemical components are so integrated, why are they tested separately for impairment purposes?
Hanré Rossouw: Thanks. I think perhaps just to start on the capital assumptions, Page 21, and this is where my eyesight – failing eyesight is the falling short, but there’s a little footnote that details the exchange rate assumption for our capital guidance. So just to reiterate capital guidance for the year is ZAR 32 billion, ZAR 33 billion on a maintain and sustained basis, ZAR 1 billion on a growth basis. We’ve got about ZAR 10 billion of that is in U.S. dollar denominated, so that relates to our Mozambican investment. And of course, also our international chemicals business, and that’s set at just over ZAR 16 to the dollar. So given, of course, the current weakness in the rand, there is some risk to that. But we’ll continue to manage risk both from an exchange rate inflation to really push for capital efficiency in the delivery of that.
Tiffany Sydow: The other question on the integrated nature of fuels and chemicals on impairment assessment?
Hanré Rossouw: So again, that’s the risk now of getting caught in the vagaries of IFRS. So yes, it is – I think it’s always a debate how to define a cash-generating unit given our integrated value chain, and we will continue to reassess that. I think the fact that we take the smaller, more granular approach gives us more clarity in terms of where there is headroom and deficits in the carrying value relative to the value and use. And I think our disclosure to that extent is also extensive enough that the reader can then aggregate or disaggregate the numbers. But it is a valid point. I think the point we made previously, to the extent that we then show significant value still in the chemical value chain does give a good insight into the way that we manage the business. and the strategic options available to us going forward. If we just aggregated that, it will be much less difficult to understand those strategic options.
Fleetwood Grobler: And I may add that in terms of the way that you define the boundary limits on the cash-generating unit, is that you have to have a definable market. So if your unit is linked to basically known fuel and slate markers, then it becomes quite easy to define that, but you can’t now patch in there something like a comonomer market, which is totally driven by other dynamics in market demand and supply. And therefore, that also informs how we define the cash-generating units in Secunda.
Tiffany Sydow: Thank you, Fleetwood. I’m going to shift gear a little bit to sustainability. There are — there’s a question from Desmond Medupe from Ashburton on how is Sasol tracking against the just transition plan. We have already covered the air quality question, Desmond, which was your second question. And then I think another question from Herbert Kharivhe on the progress of our green hydrogen projects and SAF suite of projects.
Fleetwood Grobler: Thank you. Thank you, Tiffany. So I’m going to deal with the first one and ask that Priscillah weighs in on the hydrogen and SAF projects. I will touch on the joint venture that also covers on SAF. So Desmond, in terms of the just transition, we have made quite progress over the last year. We have defined our just transition strategy, which we had supported by the Board. We’ve started our just transition office, we started to collaborate and engage with many stakeholders from the region, Mpumalanga to other stakeholders in business in terms of the just transition pathway that we want to follow. We’ve identified a number of areas where we have to prepare to address the just transition. So I think early stages, strategy in place, we’re starting to execute on that.
We’ve got the offers going. So I think there are progress steps that we can bank. So with respect to the SAF projects, Priscillah will weigh in on the South African landscape. But in the international landscape, as we get the merger control approval on the joint venture with Topsoe, we believe there are exciting prospects that we are working on ranging from projects in Europe to projects in the U.S. And of course, the whole objective is to look at it on a joint venture basis, and the partners are quite keen to start maturing some of those. Of course, it is informed by the feedstock location and the offtakes but we are making progress there. And once we got operational steps in forming the joint venture, we then can really take off by joining our forces.
Priscillah Mabelane: Thanks, Fleetwood. From a South African perspective, to start building on Fleetwood, on the SAF, with now our joint venture has been shortlisted for submission of the bid to the HG Global in terms of off-tax. And we are preparing for that. It’s expected to be by end of this financial – calendar year 2024. We continue to be concerned, however, in terms of the EU regulations. So we have a team that’s working better closely with both HG Global as well as [indiscernible] to ensure that we are progressing these two projects in line with those regulations as well. So those developments are ongoing, but we’re encouraged by the positive shortlisting of the project. In terms of the first hydrogen project in Sasol bank, which is quite key for us because it’s our catalytic project.
We’re making good traction in the second quarter of this year, we will be launching the hydrogen mobility with partners. And we hopefully, as we start to progress with the finalization of that, we’ll start to bring in more a broader consortium that can actually start to demonstrate and ensure that we’ve got a sustainable case study for the green hydrogen projects going forward. On the megaprojects, we’ve progressed the one that we really focused on. We finalized the master plan for the jointly with Northern Cape that has been handed over. We are now in terms of the next stage gates for the prefeasibility study. The key element of that was really the port development. So we’re watching that with interest. You’ve seen the recent developments.
So we will engage with all partners to understand what the next steps look like and make a decision afterwards.
Tiffany Sydow: Thank you. Thank you, Priscillah. I am going to take one last question on Chorus Call, and that’s from Adrian Hammond. Adrian?
Adrian Hammond: Morning. Thanks very much. Yes, I have two quick ones. Just to clarify further on the impairment and what it means for the future and how realistic this impairment really is because it seems quite self-punitive to me because of this premise of the climate change policy of your own. So just to be clear, does – what is the potential increase in recoveries from coal precutting? And is that factored into value calculation and as well as the PSAs expecting an update on the recoverable reserves from the PSA. So what’s happened with that? And then secondly, for Priscillah, there’s been some news flow from Connecticut regarding some recent discoveries of corporate methane. Is that an opportunity for Sasol? Thanks.
Fleetwood Grobler: Thank you, Adrian. So we will deal with it in two parts. The coal brigading, in terms of the recovery on feedstock base, Simon will deal with; and then PSA as well as the other question will be dealt with by Priscillah.
Priscillah Mabelane: I’ll start first, perhaps. Adrian, thank you. In terms of the assumptions for the impairment, we’ve assumed the extension of the plateau to FY ’28 as we’ve previously indicated. In terms of assumptions for all of our projects, PSA, [P50] as well as the current extensions that we are doing, we are assuming a P50 and that’s what has been built into the assumptions up to FY 2028. As Fleetwood has indicated earlier on, we are continuing with our exploration as well with our continued development around gas. And all of those opportunities, which we call contingent resources, which we believe will be able to take us beyond the 2030 are not yet built into the assumption. So we go through a very rigorous process before we actually extend the plateau and build assumptions in.
So just to indicate the actual petajoules, we’ve assumed 70 petajoule for Secunda going forward, which is currently in line with our current reforming capacity that we have. So that’s for Secunda and gas, specifically on PSA, we’ve actually made good progress in terms of the well that we’ve drilled. It’s now connected, as I’ve mentioned in the previous discussion during the half year. And in addition to that, we’ve now finalized the 3D seismic, and we’ve been doing a lot of detailed modeling to be able to understand the resources much better, and that is now in the process of being finalized. And our intention is that by the end of August into mid-September, we’ll be submitting a field development plan to the Mozambican government and that will go with the commercial increment of offtake for the guests that will come to South Africa.
