Sasol’s CTL project in China ahead of South Africa’s CTL project
miningweekly.com
By: Martin Creamer
Published on 24th October 2008
Sasol’s proposed coal-to-liquids (CTL) project in China is ahead of its CTL project in South Africa.
The project in China is at feasibility stage whereas the one in South Africa is still at prefeasibility stage.
The Chinese CTL has a physical site whereas the prefeasibility study for South Africa’s Mafutha project includes determining whether or not the site under study in western Limpopo is suitable.
Both are targeting an 80 000 bl/d capacity, which is half the capacity of Sasol’s flagship synfuels plant in Secunda, which is being enlarged by 4% while an additional 16% extension is at prefeasibility stage.
Sasol Synfuels’ fuels output should have grown by several percentage points more than the moderate 1,1% in the 12 months to June 30, 2008, but Sasol CEO Pat Davies assures that the company has plans to do better in the current financial year.
In China, Sasol has agreed to focus on only one CTL project with China’s State-owned Shenhua.
“We will focus only on the Ningxia project,” says Davies.
This project is in China’s Ningxia Hui Autonomous Region and is one of “ten and 20 CTL projects that were on the go in China”, Davies reveals.
But the Chinese government has given approval to only two CTL projects – and Sasol’s is one of them.
Moreover, Sasol’s is the only one involving foreign investment; the other is 100% Chinese.
“This gives us a lot of comfort about the priority that the Chinese government is placing on this project going ahead.
“We are pretty excited about it – we can focus our resources on it and do it as quickly and as efficiently as we possibly can,” he says.
An analyst expressed concern that the Chinese may try to copy Sasol’s proprietary technology, but Davies says that the “copying” risk is being given Sasol’s “very serious attention”.
“We are quite happy in this feasibility stage that we are taking sufficient precautionary measures, but, clearly, as we go into the execution and actual running phase, there are long and short answers.
“The short version of it is that we are dealing with Shenhua, which is the largest coal company in the world and is listed on stock exchanges, and Shenhua has to play the game, otherwise it just won’t be accepted in the international community,” Davies says.
He adds that he has had personal assurances from the Premier of China on the copying issue.
Moreover, China is a signatory to the World Trade Organisation. “[They] cannot have their companies going around pinching technologies in the dark of night. The two are just not compatible,” says Davies.
A commercial agreement will also be put in place, Davies says, to disincentivise China from “stealing the technology, if we can use that phraseology”.
“The way we do that is to grant payment for a master licence so that, for a fee, the Chinese can go and build other plants if they want to build them without our direct involvement.
“That’s something that is under discussion with the Chinese as well. “A risk, yes, but we think it is a manageable one,” Davies reiterates.
Sasol notes that the greater focus on Ningxia means that Sasol’s Shaanxi feasibility study will not proceed at this stage.
Davies believes it correct to focus all attention and resources on ensuring the planning and construction of the integrated Ningxia CTL plant, in which Sasol is a full partner.
The feasibility study for this is expected to be completed by the end of 2009 and transport fuel produced by 2016.
Allowing only the joint Shenhua Ningxia Coal Group and Sasol project in the Ningxia Hui Autonomous Region is seen as a Chinese effort to reduce investment in the sector to ease a tight coal supply position.
Sasol says that the advant-ages of a focused approach were demonstrated at Secunda in the seventies when Sasol introduced the phased construction of the Sasol Two and Sasol Three projects.
Renewed global interest in CTL, despite the propensity of the process to emit large volumes of carbon dioxide, has arisen as coal-rich countries seek to diversify their transport-fuels mix away from the current heavy reliance on crude oil imports, and to ensure greater energy security.
Editor: Shannon O’Donnell |
