Sasol Form 20-F for the year ended 30 June 2021 - Book - Page 41
Our ability to compete may partly depend on
our timely and cost-effective implementation of new
technological advances. It will also depend on our
success in commercialising these advances irrespective
of competition we face. Failure to do so could result in
a material adverse effect on our business, operating
results, cash flows and financial condition.
Increasing competition in relation to products
originating from countries with low production and
logistical costs may adversely affect our business,
operating results, cash flows and financial condition
Certain of our chemical production facilities
are located in developed countries, including the US
and in Europe. Economic and political conditions in
these countries result in relatively high labour costs
and, in some regions, relatively inflexible labour
markets. Increasing competition from regions with
lower production costs and more flexible labour
markets, for example the Middle East, India and China,
exerts pressure on the competitiveness of our chemical
products and, therefore, on our profit margins. This
could result in the withdrawal of particular products or
the closure of specific facilities, which may have a
material adverse effect on our business, operating
results, cash flows and financial condition.
Our ambition to become a green hydrogen
supplier in South Africa, Africa and possibly more
broadly will be impacted by the company’s ability to
partner with others in the hydrogen value chain to
effectively shorten the learning and development curve
and get products to market. This market also has to be
created and it will be critical for Sasol to recognise the
investments required for these new or incremental lines
of business so that Sasol can be on the front end of the
winning technologies and skills development.
Over time, hydrogen is anticipated to be a
feedstock for the green products that Sasol will
increasingly look to produce however, this will depend
on the affordability of green hydrogen and Sasol’s
ability to procure the technology cost effectively. Our
effort to become a green hydrogen supplier may be
unsuccessful and the process may lead to increased
operational costs and may negatively impact other
growth strategies. Refer to “Item 3.D—Our ability to
respond to climate change could negatively impact our
growth strategies, reduce supply/demand for our
products, increase our operational costs, reduce our
competitiveness, negatively impact our stakeholder
relations and adversely affect our legal licence to
operate and our access to capital and financing” for
more information.
We may not be able to exploit technological
advances quickly and successfully or competitors
may develop superior technologies
Many of our operations, including the
manufacture of synthetic fuels and petrochemical
products, are dependent on the use of advanced
technologies. The development, commercialisation and
integration of the appropriate advanced technologies
can affect, among other things, the competitiveness of
our products, the continuity of our operations, our
feedstock requirements and the capacity and efficiency
of our production.
It is possible that new technologies or novel
processes may emerge and that existing technologies
may be further developed in the fields in which we
operate. Unexpected advances in employed
technologies or the development of novel processes can
affect our operations and product ranges in that they
could render the technologies we utilise or the products
we produce obsolete or less competitive in the future.
Difficulties in accessing new technologies may impede
us from implementing them and competitive pressures
may force us to implement these new technologies at a
substantial cost.
Risk related to information management
We may face the risk of information security
breaches or attempts to disrupt critical information
technology services, which may adversely impact
our operations
The increasing use of information technology
to enable digital processes in operations is making all
industries, including the energy and chemicals
industries, much more susceptible to cyber threats and
information security breaches. As digitalisation
expands to include our financial, commercial,
transacting and production systems, so the cyber
security risk increases. While Sasol has an information
security programme in place, cyber security threats we
face consistently evolve and emerge to expose the
organisation, both in business and operating systems, to
In addition to the potential technological
challenges, expansion projects are often integrated
across our value chain. Delays with the development of
an integrated project might, accordingly, have an
impact on more than one business segment.
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