August 20, 2009
Sasol may close phosphoric acid plant
The South African phosphoric acid plant of Sasol in Phalaborwa may close by the end of October due to the declining phosphoric acid market.
The plant's profitability is mainly determined by a combination of the feedstock prices of phosphate rock and sulphur, phosphoric acid sale volumes and international phosphoric acid prices.
But the declining market and current feedstock prices has rendered the plant's ongoing operation unsustainable. On the back of this continued decline of global and local phosphoric acid prices, as well as increased feedstock prices, Sasol Nitro is projecting significant losses for 2009 from its Phalaborwa operations.
The possible plant closure will affect 245 Sasol Nitro employees at the plant, and another 250 service provider employees. Sasol has initiated talks with unions and authorities to explore options to mitigate the impact of a potential closure.
The plant is designed to produce 325,000 tonnes of phosphoric acid for fertiliser and animal feed, of which 100,000 tonnes capacity put out of production due to declining demand.
It is anticipated that consultations and negotiations with stakeholders will continue in August to October. If no alternative usage for the plant can be found, operations will terminate at the end of October 2009. The plant may also be dismantled and the site rehabilitated if suitable buyers are not found.
