What The U.S. Can Learn From Sasol

Business Week ^ | Feb 27 | By Stanley Reed, with Adam Aston in New York

[MRMEAN]

The company makes liquid fuel from coal, not Mideast oil. And its margins are huge Some 90 miles southeast of Johannesburg, the cooling towers and pipes of a giant industrial installation sprawl across five square miles. What happens at Secunda, as the place is known, is of great interest these days. At a time of sky-high oil prices, Sasol Ltd. ), Secunda's owner, churns out 160,000 barrels of gasoline, diesel fuel, and jet fuel a day, enough to cover 28% of South Africa's needs, without using a single drop of crude oil, imported or otherwise.

Sasol is not a household name, but maybe it should be. President George W. Bush wants to curb America's dependence on Middle East oil. Analysts worry about a future gap between supplies and relentless demand. Yet Sasol, with $11.2 billion in revenues, is already enjoying huge commercial success in an arena that has eluded U.S. companies -- making fuel from coal. It is embarking on a program to brew clean-burning diesel from natural gas. It may even link up with coal producers in the U.S. heartland. "What is coming out of the U.S. makes us think there is a real business opportunity for us," says Sasol CEO Pat Davies.

No wonder investors have boosted Sasol's New York Stock Exchange-traded shares by almost 60% in a year, to 34. "You have to tip your hat to them," says Bernard J. Picchi of New York's Foresight Research Solutions LLC. "They've been doing [synfuels] longer than anyone else."

[NormsRevenge]

Oh man. I spent a month by that place working at a fertilizer plant on a security project. Stink, Ohhh yeah.

It was kind of cool there too, temp wise, pretty barren as well as its in the TransVaal area.

The gasification plant had rocket nets around its perimeter to make it tougher for rebels to shoot rockets at the plant.

[Sonny M]

bump.

[jimbergin]

I have owned Sasol since Dec 18, 2001 at $6.25, but saying it has huge margins when its trailing PE is about 15 and its projected forward PE is around 10 is questionable. Many energy companies have had as big or bigger share increase over the past year as SSL, for example Petro China(PTR) and Petro Canada(PTZ). But the Fischer-Tropsch process is why I bought it in the first place. And the utilization of oil sands is why I bought PTZ.

[jimbergin]

Petro canada is PCZ not PTZ, sorry about that.

[Ursus arctos horribilis]

Old WW 2 Nazi technology, been made more productive, but it has been well known for many decades.

[timer]

Colorado got burned on syn-fuels years ago, currently Montana is looking seriously at it, but even then it will take 5 years to bring it on line, do we have 5 years before still another war over oil breaks out?

[backhoe]

From the Vault of memories:

Oil from Coal....Boon, Bane, or Boondoggle?