Sasol to sell air separation business to Air Liquide for about R8.5 billion

Air Liquide will take full ownership and overall responsibility for managing the air separation units.

Sasol has concluded negotiations with Air Liquide to dispose of its air separation business in Secunda and entered into a sale of business agreement for about R8.5 billion to be settled in US dollars. 

Sasol announced in July that its major subsidiary, Sasol South Africa (SSA) had signed an exclusive negotiation agreement with Air LIquide for the sale of SAA’s sixteen air separations units and associated business in Secunda. 

The business set for disposal comprises sixteen air separation units and related assets with a combined capacity of up to 42,000 tons of oxygen per day, which provide oxygen for Sasol’s fuels and chemical production processes. 

The units also produce various other gases utilised at Secunda and rare gases sold externally.

As part of the arrangement, employees at the business will transfer to Air LIquide. Subsequent to the transaction, Air Liquide will supply various gases to Sasol South Africa’s operations under a long-term gas supply agreement with an initial term of 15 years.

According to the statement by Sasol, Air Liquide will take full ownership and overall responsibility for managing the air separation units, including all future capital and operating requirements, to maintain the agreed quantity and quality of gases supplied to Sasol. “Total estimated capital expenditure of R8 billion to R12 billion would have been spent by Sasol over the next 15 years. The air separation units require significant capital to sustain reliable operations, as well as improved efficiencies to enable decarbonisation.”

The deal forms part of Sasol’s expanded and accelerated divestment programme announced in March.

Read more: Sasol has identified ten assets that will be prioritised for sale 

Sasol said it anticipated that the transaction would result in additional cash outflow for it of approximately R650 million to R1.2 billion per annum in real terms, over the term of the agreement. “This estimate is largely dependent on the energy efficiency benefits which are achieved over time,” the statement read.

The deal is subject to approval by competition authorities and the South African Reserve Bank, as well as provision by Sasol of a guarantee in favour of Air Liquide, as security for Sasol South Africa’s obligations under the gas supply agreement.