(Bloomberg) -- Sasol Ltd.’s shares are poised for their worst annual performance on record as investors weigh plans by South Africa’s biggest fuel and chemical maker to reduce environmental and operational risks.
The Johannesburg-based company primarily uses coal as part of a synthetic-production process at its Secunda operation — the world’s largest single-point emitter of greenhouse gas. It plans to lower emissions 30% by 2030, which hinges on replacing some of the dirtiest fossil fuel with gas, but Sasol’s gas fields in Mozambique are in decline.
Sasol’s shares extended losses on Monday and were down an unprecedented 56% for the year, creating a challenge for Chief Executive officer Simon Baloyi, who took over in April. In comments to a local newspaper, Baloyi indicated that the company’s emissions target might be more realistic as a range, a notion decried by environmental groups.
Baloyi also announced that the company would review its assets after booking 56.7 billion rand ($3 billion) of impairments on its US and South African operations.
More write downs at the Secunda plant “appear inevitable, given the company’s need to reduce coal use to meet emissions-reduction targets,” Bloomberg Intelligence analysts wrote last month.
Sasol — until last year South Africa’s biggest company by revenue — needs a larger shift in strategy by 2050, when it plans to reach net zero emissions.
The company has a “large exposure to carbon transition risk,” which requires significant investments, Moody’s Ratings said in a periodic review report on Oct. 10.
Baloyi’s predecessor, Fleetwood Grobler, outlined plans to use green hydrogen — a developing technology that burns without generating climate-warming greenhouse gases and is produced by splitting water using renewable energy.
That remains prohibitively expensive, according to BloombergNEF.
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--With assistance from Khuleko Siwele.
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