Sasol Form 20-F for the year ended 30 June 2021 - Book - Page 23
Accidents and acts of terror may result in
damage to our facilities and may require the shutdown
of the affected facilities, thereby disrupting production
and increasing production costs and may in turn disrupt
the mining, gas, chemicals and oil businesses which
make up a significant portion of our total income.
Furthermore, accidents or acts of terror at our
operations may have caused, or may in future cause,
environmental contamination, personal injuries, health
impairment or fatalities and may result in exposure to
extensive environmental remediation costs, civil
litigation, the imposition of fines and penalties and the
need to obtain or implement costly pollution-control
technology.
and/or input from stakeholders in certain of the
jurisdictions in which we operate and there is an
emerging trend by activists to use the public comment
process to challenge the issuance or renewal of a
company’s permit based on its response to climate
change and social issues such as human rights and
community impacts. The increased use of litigation
against companies for compensation or to force action
related to climate change and associated social issues
could adversely impact the resilience of Sasol’s
operations and our continued licence to operate.
Risks related to our safety and operations
We may face potential costs in connection with
industry and value chain-related operational
interruptions, accidents or deliberate acts of terror
or civil unrest causing property damage, personal
injury or environmental contamination
Sasol operates the Pande and Temane gas
fields in Mozambique. Gas is produced from a portfolio
of wells, and then processed through a Central
Processing Facility (CPF). Gas is sold to our operations
in Secunda and Sasolburg as well as to external
customers in Mozambique and South Africa. The
production of gas through wells, pipelines and a
processing plant is inherently exposed to the risk of
integrity failures which may result in a loss of
containment and/or a disruption of gas supply to our
own and/or customers’ operations. The risk of any well,
pipeline or plant equipment failure is managed through
a structured, continuously ongoing maintenance and
management programme. Short- and medium-term
interruptions (e.g. COVID-19) are managed by means
of existing contractual mechanisms. Were Sasol’s
Mozambique gas wells or facilities to experience a
catastrophic, simultaneous, long-term outage,
particularly if we were then unable to offset such
outages through existing contractual gas sales
agreement mechanisms, this could have a material
adverse effect on our revenue, cash flows and costs.
Operational interruptions impacting our
business or value chains may have a material adverse
effect on volumes produced and costs. These impacts
could be caused by the failure of critical assets, extreme
weather events or natural disasters, lack of feedstock
(coal, natural gas, ethane, ethylene), supply chain
disruption (inbound and outbound), utility interruption
(electricity, water, oxygen, steam, hydrogen, nitrogen)
or a breach of our licence to operate (non-compliance
with regulatory requirements or permits).
We operate coal mines, explore for and
produce oil and gas and operate a number of plants and
facilities for the manufacture, storage, processing and
transportation of oil, chemicals and gas, related raw
materials, products and waste materials. These facilities
and their respective operations are subject to various
risks, such as fires, explosions, hurricanes, releases and
loss of containment of hazardous substances, soil and
water contamination, flooding, land subsidence, and
geological complexity, among others. As a result, we
are subject to the risk of, and in the past have
experienced, industry-related incidents. Such incidents
can be subjected to inspections by relevant authorities,
with the associated potential consequences of
enforcement action, including directions to temporarily
cease and desist operations and/or the imposition of
fines and penalties. This may have a material adverse
effect on our business.
Our products are ultimately sold to customers
around the world and this exposes us to risks related to
the transportation of such products by road, rail,
pipelines and/or marine vessels or the nefarious use of
our products for illegitimate purposes, such as the
manufacture of illicit drugs and chemical weapons, or
the use of explosives for violent and criminal acts. Such
activities would generally take place in the public
domain, exposing us to incident risks over which we
have limited control.
It is Sasol’s policy to ensure effective service
provider management and procure appropriate
insurance cover for property damage and business
interruption for its production facilities. The policy is to
procure cover above acceptable deductible levels at
Our facilities are also subject to the risk of
deliberate acts of terror.
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