Sasol Gas

1
23 March 2009
2
Agenda

• Short Background to Project Mafutha
• RSA Liquid Fuels Market Gap
• Country benefit analysis of Mafutha
• Status
• Government participation
• Next steps

3
What options do we have as a country?

• Grow Secunda by 20 and
• We can import refined product
• It exposes us to supply risks
• Current account implications
• We can invest in a new coastal refinery
• Will require additional infrastructure to supply
  inland area
• It will become increasingly expensive to import
  the correct crude oil
• It will not improve South Africas energy
  security
• Decisions are made in Europe and elsewhere by
  people with different priorities
• To achieve economies of scale modern refineries
  are no smaller than 300,000 bbl/d
• We can expand our coastal crude oil refineries
• They are in built-up residential areas
• They are in sensitive environmental areas
• Crude oil refineries are inflexible in their
  product slate
• Decisions are made in Europe and elsewhere by
  people with different priorities
• Current account implications
• Invest in South Africas competitive advantage in
  Coal-to-Liquids technology - Project Mafutha

4
Project Mafutha - From Veld to Factory
-
5
Liquid fuel supply/demand balance (4.5 GDP
Growth)
Included Bio-Fuels, Excluded AOL Secunda
Expansion Mafutha
2018 balance Petrol -1.5 billion litre (11.4)
deficit Diesel -4.9 billion litre (34) deficit
Note Based on Sasol in-house projections
6
Liquid fuel supply/demand balance (4.5 growth)
Included Bio-Fuels Secunda expansion
Mafutha Excluded AOL
2018 balance with Secunda expansions
Mafutha Petrol 1.7 billion litre (13)
excess Diesel -1.8 billion litre (13) deficit
Note Based on Sasol in-house projections
7
Socio-Economic Benefit Analysis

• Positive impact on balance of payments
• R250 billion fuel import saving over the period
  2016-2025 (after 2025 this would be gt R 40
  billion p.a.)
• Positive impact upon GDP
• 1.1 increase in level of GDP worth during
  construction1
• 0.8 increase in level of GDP worth during
  operation1
• Job creation
• gt 26,000 direct jobs for peak period of
  construction
• Estimated 4,600 direct permanent jobs on the mine
  and CTL plant
• Approx 2,500-3,000 indirect permanent jobs to
  support the venture (direct contracting services,
  logistics support, town services)
• Skills development
• A large percentage of the 26,000 staff required
  for construction will have to be trained. This
  will create a skills pool for further development
  of the country

Note Data generated by Bureau for Economic
Research, 27 May 2007 1. Impact on GDP is
relative to a scenario where refined liquid fuel
products are imported
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Socio-Economic Benefit Analysis cont.

• Energy Security
• Produce 42.7 of the countries liquid fuels1
  requirements in 2018 through Mafutha, Synfuels,
  PetroSA and Bio-fuels
• Inland production base close to South Africas
  main market in Gauteng
• Future growth opportunities
• New Industrial Cluster with opportunities for
  future growth into chemicals or more fuels
• Possible closer cooperation with Eskom
• Technology Development
• A locally optimised technology will be used as
  the core of the project. This will further
  enhance the status of the technology and increase
  the leadership position of the technology
  worldwide
• RD through local universities and scientific
  institutions will benefit

Note 1. Refers to Diesel, Petrol, Illuminating
Paraffin and Jet Fuel
9
Preliminary Project Schedule

• 10 year project period
• First petrol and diesel to be produced at end of
  2016 calendar year
• Main capital expenditure during Engineering
  Procurement and Construction from 2013 to 2016
• How to fast track Project Mafutha?

10
Coal-to-Liquids Value Chain
Offices
,
Workshops
,
Maintenance services
,
Other plant support services
CO
Solution
2
Catalyst Plant
Coal Supply
CTL
Diesel Blend Stock
To Market
Petrol
Product
Mining
Beneficiation
Gasification
FT
Chemicals
Refinery
Logistics
Chemicals
Other
?
Utilities

Effluent
Treatment
Gas
?
Steam

Electricity Import
/
Export
Other markets
,
eg

-
power production
Water
-
metallurgical
Supply
-
export
Infrastructure

Area Development
(
for operators

logistics
)
Town

Residences, Municipal Services (inlc Water,
Electricity, Sewerage), Roads, Rail, Schools,
Medical Services, Community centres, Recreation
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Town sizing

• Mafutha 1 current household estimates
• Direct employees 4000
• Support population 1.333
• Low income/job seekers 5000
• Total Household Estimate 10333
• Mafutha 1 current population estimates
• 4.23 persons per household
• Total Population Estimate approximately 60000

12
Status

13
Government Engagement

• Presidency
• National Govt Depts
• National Treasury, DTI, DME, DWAF, DEAT, DST,
  Public Enterprises
• Provincial
• Premiers Office
• Local Government Housing
• Economic Development, Environment Tourism
• Trade Investment Limpopo
• Limdev
• Local Government
• Waterberg District Municipality
• Lephalale Local Municipality
• Other Agencies
• IDC, Eskom, DBSA, LDF

14
Mafutha Studies Done to Date

• Location studies
• Coal supply
• Final product specifications
• Preliminary process configurations
• Town infrastructure
• Water infrastructure- (40million m3/a vs Secunda
  111 million m3/annum)
• Mine studies
• Project schedule/timelines
• Economic evaluation and risk modelling
• Sound business case at Country level but the
  venture can only work as a Public Private
  initiative, with Government Industrial
  Facilitation and investment
• Sasol Ltd Board approved substantial amount to
  progress pre-feasibility phase on condition that
  Government support and participate in project

15
Public Private Partnership

• Objective
• Sasol and Government to work as partners to
  realise the Mafutha vision
• MOU
• IDC as equity partner
• Investment in Infrastructure eg Town, water,
  road, rail etc.
• Infrastructure studies
• Housing
• Water Sanitation infrastructure
• Solid Waste infrastructure
• Roads, Rail
• Social Infrastructure (Education, Health etc)
• Government services infrastructure (Home Affairs,
  Social Services etc)

16
Government Industrial Facilitation and
Participation

• Industrial facilitation that needs to be explored
• Direct investment in infrastructure- Central and
  Local Government
• Town, water supply, roads
• Tax benefits Preliminary evaluation of current
  and previous tax dispensations for industrial
  facilitation indicates that if fully applied to
  Mafutha, the venture could meet Sasols hurdle
  rate- needs to be discussed with DTI Treasury
• Other facilitation measures?
• Equity Participation
• With the large capital expenditure in the order
  of R160 billion EOJ, Government (IDC) could take
  an equity stake with large
• Possible transfer of significant equity to BEE at
  opportune time

17
Next Steps

• How to accelerate the implementation of the
  project, without sacrificing proper stakeholder
  engagement?
• Mineral rights
• Industrial facilitation
• Investment discussions
• Infrastructure-Eskom, rail, road, Town
  development, water, etc.
• Environmental impact assessments
• Land Acquisition
• Licensing
• Ongoing discussions with the inter-departmental
  task team led by the Presidency.

18
Thank You
19
Siting Considerations
Wind direction
Noise dust buffer
20
Lephalale Municipality SDF Latest (Extract)
Stockpoort Growth node
Steenbokpan Growth node
Lephalale Growth node