Falling Sasol share price could fuel job cuts: Unions
Trade unions have expressed concern that the free falling share price of Sasol could inevitably result in a jobs bloodbath.
Their fears come as the share price of the 70-year-old petrochemical giant collapsed by approximately negative 94% to R35 yesterday from a peak of R576 in August 2018.
While the National Union of Mineworkers believes organised labour should have an urgent meeting with company management to find solutions of the falling share price, the SA Federation of Trade Unions said the time is ripe for a state takeover.
Sasol in statement released on Thursday said it was considering selling off some assets to raise cash.
NUM secretary general David Sipunzi told Sowetan yesterday he hadn't been aware of the challenges faced by the Sasol share price.
“It is unfortunate that Sasol management have decided to keep information about its share price challenges to themselves. This makes it difficult for us as a union to come up with recommendations on how the company could be saved.
“Our worry is that if things continue as they are, the next thing we will see is the company coming to us with letters to retrench workers..
“However, since [Sowetan] has brought this matter to our attention, we will request the management to meet with us,” said Sipunzi, adding that the meeting could take place as soon as Monday.
Created in 1950 by the apartheid government, Sasol has grown into a multinational that was privatised in 2000.
The company operates in more than 20 countries and employs over than 31 000 people.
It exports various products like diesel, petrol, jet fuel, gas, alcohols, polymers, sulphur, illuminating paraffin and bitumen, to over 100 countries.
The company's share price woes began with construction delays and cost overruns relating to the hyped-up Lake Charles Chemical Complex project, US, and a staggering R120-billion debt, which saw its two chief executives being forced to resign last year.
Another blow came when Opec, a cartel of major oil producers last week declined to cut production despite some of the developed economies virtually being on a standstill due to the coronavirus, resulting in the oil price plummeting.
Zwelinzima Vavi, the secretary general of South African Federation of Trade Unions, said government should consider using its cash-flushed entities to buy the troubled petrochemicals giant Sasol.
Vavi said he was worried that if the Public Investment Corporation, Development Bank of SA or Industrial Development Corporation, among other state-owned entities, don't purchase Sasol, it could start retrenching workers.
“Sasol is currently in a crisis and I believe that the state should not let this crisis go to waste,” he said.
Vavi, who believes Sasol should have never been privatised and listed on the Johannesburg Stock Exchange, said the company was ripe for a state takeover.
“We are all in a massive job loss environment and we all know if Sasol keeps on performing like this it will start handing out retrenchment notices,” he said.
The company on Thursday released a statement crying foul that the unprecedented "set of combined challenges driven by COVID-19 and the significant decline in the oil price have come at a time when Sasol is in a peak gearing phase as the company completes LCCP".
The company said it had cash and available facilities of approximately US$2.5bn and Sasol had no significant debt maturities before May 2021.
The company said it was prioritising business optimisation to reduce costs, working capital optimisation, re-scheduling some capital expenditure, expanding the scope of, and accelerating, the asset disposal programme to realise proceeds in excess of the current US$2 billion target.
"Sasol will update the market on the conference call at 15:00 SA on Tuesday, 17 March, with detail on the comprehensive package of actions," read the statement.
Sasol chief executive Fleetwood Grobler said: “The disruption in the global oil market, coupled with the ongoing impact of COVID-19 has significantly changed the outlook in just a few weeks.
"It is critical that we keep matters within our control by acting quickly and decisively so that stakeholders don’t lose sight of the significant underlying value in this business.
"We are therefore working towards a package of measures to ensure that the business is profitable even at low oil prices and that we continue to have a strong balance sheet to support it,” he said.
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