Sasol Form 20-F for the year ended 30 June 2021 - Book - Page 34
In all countries, our operations are required to
comply with local procurement, employment equity,
equity participation, corporate social responsibility and
other regulations that are designed to address countryspecific social and economic transformation and local
content issues. Should we not meet or are perceived to
not be meeting country-specific transformation or local
content requirements or regulations, our ability to
sustainably deliver on our business objectives may be
impacted.
term growth potential, socio-economic inequalities,
weak public finances, corruption and addressing
weaknesses at state-owned enterprises and other
institutions. In addition, South Africa continues to face
actual events and potential future risks related to civil
and social unrest. In 2021, the country experienced
such events which significantly impacted the economy,
business as a whole and Sasol specifically across
various fronts including security threats to operations
and people, continuity risks in operations and business,
reductions in market demand for products, and
interruptions in supply chains. These factors remain a
significant risk to South Africa’s sovereign credit rating
outlook and future socio-economic stability.
In Mozambique, we have agreed Local
Content Plans (LCPs) with the GoM for our sustainable
operations and for our projects. Not delivering on the
key performance indicators of the LCPs may impact
our ability to sustainably deliver on our business
objectives in Mozambique.
In Mozambique, uncertainties around the
duration and intensity of the impact of COVID-19, high
levels of public sector debt, political conflict, severe
insurgency risks, lack of essential services, the need to
further strengthen institutions, insufficient fiscal
sustainability and extreme weather events are expected
to remain significant risks to the sovereign credit and
operational outlook for the foreseeable future.
In South Africa, there are various
transformation regulations with which we are required
to comply since Sasol operates in more than one sector
of the economy. The broad risks that we face should we
not comply with these transformation regulations
include the inability to obtain licences to operate in
certain sectors such as mining and liquid fuels, limited
ability to successfully tender for government and public
entity business and potential loss of customers (as
private sector customers increasingly require their
suppliers to have a minimum B-BBEE contribution
rating).
At a global level, COVID-19 and the supply,
equity and pace of the roll-out of vaccines, as well as
their efficacy against new strains pose ongoing risks to
economic activity, sentiment, global supply chains,
commodity demand and travel and tourism.
Uncertainties related to US and China relations remain
a risk. Furthermore, geopolitical tensions, financial
vulnerabilities, accentuated by COVID-19, abrupt shifts
in financial conditions and their impact on the socioeconomic outlook can also influence the countries in
which we operate.
The 2018 Mining Charter was published for
implementation on 27 September 2018. On 19
December 2018 certain amendments, as well as the
Mining Charter Guidelines, were published in the
Government Gazette which provided that existing
mining right holders must implement the 2018 Mining
Charter from 1 March 2019. Although the 2018 Mining
Charter is an improvement on the 2017 draft, on 29
March 2019 the Minerals Council South Africa
(Minerals Council) commenced with a judicial review
of certain aspects, which includes the ownership and
procurement elements, of the 2018 Mining Charter. The
review application was heard by a full bench of the
High Court from 3 May to 6 May 2021 and the
judgement is pending.
Other countries in which we operate could
from time to time face sovereign rating risks, which
may impact our counterparties’ ability to access
funding and honour commitments.
Government policies, laws and regulations in
countries where we operate, or plan to operate, may
change in the future. Governments in those countries
have in the past and may in the future pursue policies of
resource nationalisation and market intervention,
including through protectionism like import tariffs and
subsidies. The impact of such changes on our ability to
deliver on planned projects cannot be determined with
any degree of certainty. Such changes may therefore
have an adverse effect on our operations and financial
results.
In August 2020, the Minister withdrew the
notice of appeal to the Supreme Court of Appeal in
respect of the Minerals Council’s position on the “once
empowered always empowered” approach which the
court found in favour of the Minerals Council.
However, the Minister’s decision to withdraw the
notice of appeal has no bearing on the Minerals
ii. Transformation and local content
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