Buoyed by nearly R890 billion in investment pledges announced at the sixth South Africa Investment Conference (SAIC), President Cyril Ramaphosa has raised the country’s investment target to R3 trillion.
Speaking at the close of this year’s conference, Ramaphosa struck a bullish note, saying the scale of commitments from business and government showed that South Africa’s economy was entering a new phase of growth. “There is a strong case for investment in South Africa,” he said.
Established by Ramaphosa in 2018 to mobilise domestic and foreign investment and convert it into jobs, growth and economic opportunity, the SAIC has now secured R1.56 trillion in pledges over five years, exceeding its original target by 26%.
This year’s conference attracted local and international business leaders from more than 50 countries, with R889.8 billion in pledges announced across the broader SAIC ecosystem.
Among the biggest commitments was Sasol’s R60 billion pledge, which Ramaphosa linked to the government’s policy and legislative reforms aimed at reducing bureaucracy and easing the cost of doing business in the country.
The government also used the conference to highlight its own planned spending, announcing a R3.35 trillion public investment pipeline over three years, including R1 trillion for infrastructure, R2.3 trillion for the energy sector, R870 billion for key transport reforms and projects, R11.7 billion from the Industrial Development Corporation (IDC) for energy and infrastructure and R37.2 billion through the infrastructure fund.
In an exclusive interview with the Mail & Guardian, Sasol president and chief executive Simon Baloyi said the global chemicals and energy giant’s R60 billion commitment would come from what it calls its “sustenance capital” – the money required to keep its operations running and prepare the company for the future.
“It’s the money that we’re going to spend in the next three years to ensure that we can continue with our operation. As a company, we have a choice. If the legislative environment is not supportive of business, you cannot almost waste the investors’ money.
“We spend money to renew our plants, making sure we’re preparing them to be ready for the future transition that’s coming.”
Baloyi said a significant portion of the investment would go into Natref, the National Petroleum Refiners of South Africa, as well as Sasol’s mining, fuel and chemical operations.
“Sasol is investing over $2 billion in Natref … just to prepare [it] to become a biofuels refinery,” he said.
Commissioned in 1971, Natref is a joint venture between Sasol (63.64%) and Prax (36.36%), producing about 108 500 barrels of oil a day to supply the inland fuel market.
“It’s called a hybrid refinery,” Baloyi said. “We’re spending over R5 billion to R6 billion to extend our mines. We have to renew those mines, extend the life of the mines because we have to continue mining.
“Because Sasol uses around 40 million tonnes of coal, we have to continue mining. We have to invest in our refinery or our massive complex in Secunda, in Mpumalanga – the largest of its kind in Africa, 13 square kilometres.
“In terms of size, it sits on almost 13 football grounds of [a] chemical complex – [there’s] nothing like it. It’s absolutely extraordinary [and] an area where we need to spend money.
“We need to spend money on our gas and chemical facility that makes methanol, acetone and plastics. We also make ammonia from Sasol,” he said.
Baloyi said Sasol remained central to South Africa’s energy security, particularly during periods of geopolitical instability and oil market disruption. “We make a third of the country’s liquid fuels, a third, which is a big number,” he said.
The country uses about 28 billion litres of petrol and diesel. “We do that from coal, which gives the country energy security. Energy security is national security, especially when you are in an energy crisis.”
He argued that without Sasol’s domestic production capacity, South Africa would be significantly more vulnerable to global supply shocks.
Without Sasol during the current oil crisis, “this country could have come down. Without Sasol there cannot be petrol, diesel or ammonia used for fertiliser or for explosives. We make lots of chemicals that are used in other industries, making us a cornerstone company.”
Founded in 1950 with financing from the IDC, Sasol was created to convert coal into fuel and reduce South Africa’s dependence on imported oil in the aftermath of World War II.
Baloyi has increasingly argued that Sasol should be treated more like a strategic national asset, similar to state-owned companies such as Eskom and Transnet, because of its role in energy and industrial production.
“We need to find legislation to make sure we support Sasol, because you can’t have a company like Sasol paying carbon tax,” he said.
“Eskom does not pay carbon tax – otherwise you have to shut it down. We favour a recycling mechanism for the tax on how carbon tax is used.”
Baloyi said the company’s confidence in South Africa’s regulatory environment was improving, even if it had not yet reached the level business wanted. “For us, confidence in the regulatory space is changing.
“It’s not where we want it to be but we’re thinking that it’s starting to become supportive. Because of that, it gives us the confidence to say that we know that Sasol in its current form will be here up to 2050 and we can continue with those investments.”
Baloyi said the R60 billion investment would also help preserve jobs and unlock further green industrial financing.
“This is especially during the phase where you’re busy, during the maintenance and other project phases. We think there’s an opportunity, which is not yet unlocked if our carbon tax is recycled.
“In the next five years, we are expected to pay in excess of R20 billion in carbon tax – money that could be recycled for other uses. We can multiply it with DFIs [development finance institutions] to almost R100 billion of investments in green hydrogen and more renewable energy – a huge potential.”
Sasol supported more than 500 000 jobs directly and indirectly and sustaining those operations was critical in a country with persistently high unemployment, he said.
“This money allows us to make sure that those jobs don’t disappear,” he said. “Sasol accounts for up to 6% of the country’s GDP.
“It’s a massive entity and we’re paying this money to make sure that things stay the same.
Unemployment in South Africa is already extremely high.”
He added that Sasol had already secured nearly 1.2 gigawatts of renewable energy capacity, with plans to expand that to 2 gigawatts as part of its energy transition.
“That was done on the back of Sasol signing a contract to say we will take that energy,” Baloyi said. “We are the largest private entity in terms of renewable energy, made possible because of our massive facility, using 1.5 gigawatts of coal-based energy. We will be transitioning to renewable energy.”