Lake Charles project to cost $1.1bn more than expected, says Sasol
Sasol says the cost escalations at its Lake Charles project in the US are ‘extremely disappointing’. Picture: BLOOMBERG/WALDO SWIEGERS
Sasol’s shares were 10.8% lower at R384.25 in early trade on Wednesday after the company said its chemicals project in the US could cost as much as $1.1bn more than it expected just three months ago. The cost estimate for the group’s Lake Charles project in Louisiana has been revised to between $12.6bn and $12.9bn, which includes a contingency amount of $300m, the company said on Wednesday. Sasol said it had made adjustments to the February 2019 cost estimate of about $530m, while “additional events and remaining work” costing $470m had also been added to the previous forecast.
The new project leadership team had been “instrumental” in identifying and fixing issues with the project. Given the increase in capital costs and the latest market pricing outlook, the forecast internal rate of return for the Lake Charles project had declined from 7.5% to between 6% and 6.5%.
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