Company Quick10K Filing
Sasol
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 0 $0
20-F 2019-10-28 Annual: 2019-06-30
20-F 2018-08-28 Annual: 2018-06-30
20-F 2017-08-28 Annual: 2017-06-30
20-F 2016-09-27 Annual: 2016-06-30
20-F 2014-09-29 Annual: 2014-06-30
20-F 2013-10-09 Annual: 2013-06-30
20-F 2012-10-12 Annual: 2012-06-30
20-F 2011-10-07 Annual: 2011-06-30
20-F 2010-09-28 Annual: 2010-06-30
SSL 2019-06-30
Item 17 o Item 18 o
Item 1. Identity of Directors, Senior Management and Advisers
Item 2. Offer Statistics and Expected Timetable
Item 3. Key Information
Item 4. Information on The Company
Item 4A. Unresolved Staff Comments
Item 5. Operating and Financial Review and Prospects
Item 6. Directors, Senior Management and Employees
Item 7. Major Shareholders and Related Party Transactions
Item 8. Financial Information
Item 9. The Offer and Listing
Item 10. Additional Information
Item 11. Quantitative and Qualitative Disclosures About Market Risk
Item 12. Description of Securities Other Than Equity Securities
Item 13. Defaults, Dividend Arrearages and Delinquencies
Item 14. Material Modifications To The Rights of Security Holders and Use of Proceeds
Item 15. Controls and Procedures
Item 16.A Audit Committee Financial Expert
Item 16.B Code of Ethics
Item 16.C Principal Accountant Fees and Services
Item 16.D Exemptions From The Listing Standards for Audit Committees
Item 16.E Purchases of Equity Securities By The Issuer and Affiliated Purchasers
Item 16.F Change in Registrant's Certifying Accountant
Item 16.G Corporate Governance
Item 16.H Mine Safety Disclosure
Item 17. Financial Statements
Item 18. Financial Statements
Item 19. Exhibits
EX-1.1 a2239924zex-1_1.htm
EX-2.2 a2239924zex-2_2.htm
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EX-99.1 a2239924zex-99_1.htm
EX-99.2 a2239924zex-99_2.htm
EX-99.3 a2239924zex-99_3.htm
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Sasol Earnings 2019-06-30

SSL 20F Annual Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
CNQ
PBA
VET
PDS
CVE
OBE
BTE
BORR
CPG
ERF

20-F 1 a2239924z20-f.htm 20-F

Use these links to rapidly review the document
TABLE OF CONTENTS
Item 17. FINANCIAL STATEMENTS

Table of Contents

As filed with the Securities and Exchange Commission on 28 October 2019


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 20-F


o

 

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

ý

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934—for the year ended 30 June 2019

OR

o

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

o

 

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-31615

Sasol Limited
(Exact name of registrant as Specified in its Charter)

Republic of South Africa
(Jurisdiction of Incorporation or Organisation)

Sasol Place, 50 Katherine Street, Sandton, 2196
South Africa

(Address of Principal Executive Offices)

Paul Victor, Chief Financial Officer, Tel. No. +27 10 344 7896, Email paul.victor@sasol.com
Sasol Place, 50 Katherine Street, Sandton, 2196, South Africa

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)



Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of Each Class   Trading Symbol   Name of Each Exchange on Which Registered
American Depositary Shares   SSL   New York Stock Exchange
Ordinary Shares of no par value*   SSL   New York Stock Exchange
4,50% Notes due 2022 issued by Sasol Financing International Limited   SOLJAS   New York Stock Exchange
5,875% Notes due 2024 issued by Sasol Financing USA LLC   SOLJL   New York Stock Exchange
6,50% Notes due 2028 issued by Sasol Financing USA LLC   SOLJL   New York Stock Exchange
*
Listed on the New York Stock Exchange not for trading or quotation purposes, but only in connection with the registration of American Depositary Shares pursuant to the requirements of the Securities and Exchange Commission.



Securities registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None



            Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report:
624 696 971 Sasol ordinary shares of no par value
6 331 347 Sasol BEE ordinary shares of no par value



            Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý    No o

            If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes o    No ý

            Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

            Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232 405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý    No o

            Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of "large accelerated filer," "accelerated filer," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ý   Accelerated filer o   Non-accelerated filer o   Emerging growth company o

            If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. o

The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

            Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP o   International Financial Reporting Standards as issued
by the International Accounting Standards Board ý
  Other o

            If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 o    Item 18 o

            If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No ý

   


Table of Contents


TABLE OF CONTENTS

 
   
  Page  

ITEM 1.

 

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

    6  

ITEM 2.

 

OFFER STATISTICS AND EXPECTED TIMETABLE

    6  

ITEM 3.

 

KEY INFORMATION

    6  

ITEM 4.

 

INFORMATION ON THE COMPANY

    33  

ITEM 4A.

 

UNRESOLVED STAFF COMMENTS

    62  

ITEM 5.

 

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

    62  

ITEM 6.

 

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

    76  

ITEM 7.

 

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

    77  

ITEM 8.

 

FINANCIAL INFORMATION

    78  

ITEM 9.

 

THE OFFER AND LISTING

    79  

ITEM 10.

 

ADDITIONAL INFORMATION

    79  

ITEM 11.

 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    93  

ITEM 12.

 

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

    95  

ITEM 13.

 

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

    96  

ITEM 14.

 

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

    96  

ITEM 15.

 

CONTROLS AND PROCEDURES

    96  

ITEM 16A.

 

AUDIT COMMITTEE FINANCIAL EXPERT

    99  

ITEM 16B.

 

CODE OF ETHICS

    99  

ITEM 16C.

 

PRINCIPAL ACCOUNTANT FEES AND SERVICES

    100  

ITEM 16D.

 

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

    101  

ITEM 16E.

 

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

    101  

ITEM 16F.

 

CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT

    101  

ITEM 16G.

 

CORPORATE GOVERNANCE

    101  

ITEM 16H.

 

MINE SAFETY DISCLOSURE

    101  

ITEM 17.

 

FINANCIAL STATEMENTS

    101  

ITEM 18.

 

FINANCIAL STATEMENTS

    102  

ITEM 19.

 

EXHIBITS

    H-1  

LOCATION MAPS

    M-1  

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PRESENTATION OF INFORMATION

        We are incorporated in the Republic of South Africa as a public company under South African company law. Our audited consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB).

        As used in this Form 20-F:

    "rand" or "R" means the currency of the Republic of South Africa;

    "US dollars", "dollars", "US$" or "$" means the currency of the United States (US);

    "euro", "EUR" or "€" means the common currency of the member states of the European Monetary Union; and

    "CAD" means Canadian dollar, the currency of Canada.

        We present our financial information in rand, which is our reporting currency. Solely for your convenience, this Form 20-F contains translations of certain rand amounts into US dollars at specified rates as at and for the year ended 30 June 2019. These rand amounts do not represent actual US dollar amounts, nor could they necessarily have been converted into US dollars at the rates indicated.

All references in this Form 20-F to "years" refer to the financial years ended on 30 June. Any reference to a calendar year is prefaced by the word "calendar".

        Besides applying barrels (b or bbl) and standard cubic feet (scf) for reporting oil and gas reserves and production, Sasol applies the Système International (SI) metric measures for all global operations. A ton, or tonne, denotes one metric ton equivalent to 1 000 kilograms (kg). Sasol's reference to metric tons should not be confused with an imperial ton equivalent to 2 240 pounds (or about 1 016 kg). Barrels per day, or bpd, or bbl/d, is used to refer to our oil and gas production.

        In addition, in line with a South African convention under the auspices of the South

African Bureau of Standards (SABS), the information presented herein is displayed using the decimal comma (e.g., 3,5) instead of the more familiar decimal point (e.g., 3.5) used in the UK, US and elsewhere. Similarly, a hard space is used to distinguish thousands in numeric figures (e.g., 2 500) instead of a comma (e.g., 2,500).

        All references to the "group", "us", "we", "our", "company", or "Sasol" in this Form 20-F are to Sasol Limited, its group of subsidiaries and its interests in associates, joint arrangements and structured entities. All references in this Form 20-F are to Sasol Limited or the companies comprising the group, as the context may require. All references to "(Pty) Ltd" refers to Proprietary Limited, a form of corporation in South Africa which restricts the right of transfer of its shares and prohibits the public offering of its shares.

        All references in this Form 20-F to "South Africa" and "the government" are to the Republic of South Africa and its government. All references to the "JSE" are to the JSE Limited or Johannesburg Stock Exchange, the securities exchange of our primary listing. All references to "SARB" refer to the South African Reserve Bank. All references to "PPI" and "CPI" refer to the South African Producer Price Index and Consumer Price Index, respectively, which are measures of inflation in South Africa. All references to "GTL" and "CTL" refer to our gas-to-liquids and coal-to-liquids processes, respectively.

        Unless otherwise stated, presentation of financial information in this annual report on Form 20-F will be in terms of IFRS. Our discussion of business segment results follows the basis used by the Joint Presidents and Chief Executive Officers (the company's chief operating decision makers) for segmental financial decisions, resource allocation and performance assessment, which forms the accounting basis for segmental reporting, that is disclosed to the investing and reporting public.

        "Financial Review" means the Chief Financial Officer's Finance Overview included in Exhibit 99.3.

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        "Headline earnings per share (HEPS)" refers to disclosure made in terms of the JSE listing requirements.

        "Core headline earnings per share (CHEPS)" refers to a disclosure based on HEPS above, calculated by adjusting headline earnings with once-off items, period close adjustments and depreciation and amortisation of capital projects (exceeding four billion rand) which have reached beneficial operation and are still ramping up and share-based payments on implementation of Broad-Based Black Economic Empowerment (B-BBEE) transactions. Period close adjustments in relation to the valuation of our derivatives at period end are to remove volatility from earnings as these instruments are valued using forward curves and other market factors at the reporting

date and could vary from period to period. We believe core headline earnings is a useful measure of the group's sustainable operating performance. However, this is not a defined term under IFRS, should not be viewed as a substitute for earnings for the year or earnings per share and may not be comparable with similarly titled measures reported by other companies. The aforementioned adjustments are the responsibility of the directors of Sasol. The adjustments have been prepared for illustrative purposes only and due to their nature, core headline earnings may not necessarily be indicative of Sasol's financial position, changes in equity, results of operations or cash flows.

        "EBIT" refers to earnings before interest and tax.

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FORWARD-LOOKING STATEMENTS

        We may from time to time make written or oral forward-looking statements, including in this Form 20-F, in other filings with the US Securities and Exchange Commission, in reports to shareholders and in other communications. These statements may relate to analyses and other information which are based on forecasts of future results and estimates of amounts not yet determinable. These statements may also relate to our future prospects, developments and business strategies. Examples of such forward-looking statements include, but are not limited to:

    the capital cost of our projects, including the Lake Charles Chemicals Project (including material, engineering and construction cost) and the timing of project milestones;

    our ability to obtain financing to meet the funding requirements of our capital investment programme, as well as to fund our ongoing business activities and to pay dividends;

    changes in the demand for and international prices of crude oil, gas, petroleum and chemical products and changes in foreign currency exchange rates;

    statements regarding our future results of operations and financial condition and regarding future economic performance including cost-containment and cash-conservation programmes;

    statements regarding recent and proposed accounting pronouncements and their impact on our future results of operations and financial condition;

    statements of our business strategy, business performance outlook, plans, objectives or goals, including those related to products or services;

    statements regarding future competition, volume growth and changes in market share in the industries and markets for our products;

    statements regarding our existing or anticipated investments (including the Lake

      Charles Chemicals Project, Mozambique exploration and development activities, the GTL joint ventures in Qatar and Nigeria, chemical projects and joint arrangements in North America and other investments), acquisitions of new businesses or the disposal of existing businesses, including estimates or projections of internal rates of return (IRR) and future profitability;

    statements regarding our estimated oil, gas and coal reserves;

    statements regarding the probable future outcome of litigation and regulatory proceedings and the future development in legal and regulatory matters including statements regarding our ability to comply with future laws and regulations;

    statements regarding future fluctuations in refining margins and crude oil, natural gas and petroleum product prices;

    statements regarding the demand, pricing and cyclicality of oil, gas and petrochemical product prices;

    statements regarding changes in the fuel and gas pricing mechanisms in South Africa and their effects on prices, our operating results and profitability;

    statements regarding future fluctuations in exchange and interest rates and changes in credit ratings;

    statements regarding total shareholder return;

    statements regarding our growth and expansion plans;

    statements regarding our current or future products and anticipated customer demand for these products;

    statements regarding acts of war, terrorism or other events that may adversely affect the group's operations or that of key stakeholders to the group;

    statements and assumptions relating to macro-economics;

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    statements regarding tax litigation and assessments; and

    statements of assumptions underlying such statements.

        Words such as "believe", "anticipate", "expect", "intend", "seek", "will", "plan", "could", "may", "endeavour", "target", "forecast" and "project" and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements.

        By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and there are risks that the predictions, forecasts, projections and other forward-looking statements will not be achieved. If one or more of these risks materialise, or should underlying assumptions prove incorrect, our actual results may differ materially from those anticipated in such forward-looking statements. You should understand that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include among others, and without limitation:

    the outcome in pending and developing regulatory matters and the effect of changes in regulation and government policy;

    the political, social and fiscal regime and economic conditions and developments in the world, especially in those countries in which we operate;

    the outcome of legal proceedings including tax litigation and assessments;

    our ability to maintain key customer relations in important markets;

    our ability to improve results despite increased levels of competition;

    our ability to exploit our oil, gas and coal reserves as anticipated;

    the continuation of substantial growth in significant developing markets;
    the ability to benefit from our capital investment programme;

    the accuracy of our assumptions in assessing the economic viability of our large capital projects and growth in significant developing areas of our business;

    the ability to gain access to sufficient competitively priced gas, oil and coal reserves and other commodities;

    the impact of environmental legislation and regulation on our operations and access to natural resources;

    our success in continuing technological innovation;

    the success of our B-BBEE ownership transaction;

    our ability to maintain sustainable earnings despite fluctuations in oil, gas and commodity prices, foreign currency exchange rates and interest rates;

    our ability to attract and retain sufficient skilled employees;

    the risk of completing major projects like, for instance, our Lake Charles Chemicals Project (LCCP) within budget and schedule; and

    our success at managing the foregoing risks.

        The foregoing list of important factors is not exhaustive; when relying on forward-looking statements to make investment decisions, you should carefully consider the foregoing factors and other uncertainties and events, and you should not place undue reliance on forward-looking statements. Forward-looking statements apply only as of the date on which they are made and we do not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise. See "Item 3.D—Risk factors"

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ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES

        We are a public company incorporated under the company law of South Africa. Most of our directors and officers reside outside the US, principally in South Africa. You may not be able, therefore, to effect service of process within the US upon those directors and officers with respect to matters arising under the federal securities laws of the US.

        In addition, most of our assets and the assets of most of our directors and officers are located outside the US. As a result, you may not be able to enforce against us or our directors and officers judgements obtained in US courts predicated on the civil liability provisions of the federal securities laws of the US.

        There are additional factors to be considered under South African law in respect of the enforceability, in South Africa (in original actions or in actions for enforcement of judgements of US courts) of liabilities predicated on the US federal securities laws. These additional factors include, but are not necessarily limited to:

    South African public policy considerations;

    South African legislation regulating the applicability and extent of damages and/or penalties that may be payable by a party;

    the applicable rules under the relevant South African legislation which regulate the recognition and enforcement of foreign judgements in South Africa; and

    the South African courts' inherent jurisdiction to intervene in any matter which such courts may determine warrants the courts' intervention (despite any agreement amongst the parties to (i) have any certificate or document being conclusive proof of any factor, or (ii) oust the courts' jurisdiction).

        Based on the foregoing, there is no certainty as to the enforceability in South Africa (in original actions or in actions for enforcement of judgements of US courts) of liabilities predicated on the US federal securities laws.

ITEM 1.    IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

        Not applicable.

ITEM 2.    OFFER STATISTICS AND EXPECTED TIMETABLE

        Not applicable.

ITEM 3.    KEY INFORMATION

3.A Selected financial data

        The following information should be read in conjunction with "Item 5—Operating and financial review and prospects" and the consolidated financial statements, the accompanying notes and other financial information included elsewhere in this annual report on Form 20-F.

        The financial data set forth below for the years ended as at 30 June 2019 and 2018 and for each of the years in the three-year period ended 30 June 2019 has been derived from and should be read in conjunction with our audited consolidated financial statements included in Item 18.

        Financial data as at 30 June 2017, 2016 and 2015, and for the years ended 30 June 2016 and 2015 have been derived from the group's previously published audited consolidated financial statements, which are not included in this document.

        The audited consolidated financial statements from which the selected consolidated financial

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data set forth below have been derived were prepared in accordance with IFRS.

 
  30 June
2019(1)
  30 June
2018(1)
  30 June
2017(1)
  30 June
2016(1)
  30 June
2015(1)
 
 
  (Rand in millions)
(except per share information and weighted
average shares in issue)

 

Income Statement data:

                               

Turnover

    203 576     181 461     172 407     172 942     185 266  

Earnings before interest and tax

    9 697     17 747     31 705     24 239     46 549  

Earnings attributable to owners of Sasol Limited

    4 298     8 729     20 374     13 225     29 716  

Statement of Financial Position data:

                               

Total assets

    469 968     439 235     398 939     390 714     323 599  

Total equity

    225 795     228 608     217 234     212 418     196 483  

Total liabilities

    244 173     210 627     181 705     178 296     127 116  

Share capital(2)

    9 888     15 775     29 282     29 282     29 228  

Per share information (rand):

                               

Basic earnings per share

    6,97     14,26     33,36     21,66     48,71  

Diluted earnings per share

    6,93     14,18     33,27     21,66     48,70  

Dividends per share(3)

    5,90     12,90     12,60     14,80     18,50  

Weighted average shares in issue (in millions):

                               

Average shares outstanding—basic(4)

    616,6     612,2     610,7     610,7     610,1  

Average shares outstanding—diluted(5)

    620,3     615,9     612,4     610,7     610,2  

(1)
From 1 July 2018 the group has applied IFRS 15 'Revenue from Contracts with Customers' using the modified retrospective approach, by recognising the cumulative effect of initially applying IFRS 15 as an adjustment to the opening balance of equity. For the comparative financial years, 2015 to 2018, the principles of the previous revenue standard, IAS 18 'Revenue', were applied.

(2)
For information regarding the share repurchases and cancellations please refer to "Item 18—Financial Statements—Note 15 Share capital".

(3)
The total dividend includes the interim and final dividend. Dividends per share in dollars are as follows: $0,42 for 30 June 2019, $0,97 for 30 June 2018, $0,95 for 30 June 2017, $1,03 for 30 June 2016 and $1,43 for 30 June 2015.

(4)
Increase in basic average shares outstanding is due to shares issued as long-term incentives (LTIs) to employees.

(5)
The number of shares outstanding is adjusted to show the potential dilution if the LTIs and Sasol Khanyisa Tier 1 were settled in Sasol Limited shares. The Sasol Khanyisa Tier 2 and Khanyisa Public schemes are anti-dilutive in 2019.

3.B Capitalisation and indebtedness

        Not applicable.

3.C Reasons for the offer and use of proceeds

        Not applicable.

3.D Risk factors

Our large projects are subject to schedule delays and cost overruns, and we may face constraints in financing our existing projects or new business opportunities, which could render our projects unviable or less profitable than planned

        We are progressing with the construction of our Lake Charles Chemicals Project (LCCP) in the US and indications are that the cost of the project will remain within the updated market guidance of US$12,6 - 12,9 billion. As at the end of June 2019, engineering, equipment fabrication and procurement were substantially complete and construction progress had reached 94% completion and overall the project completion is 98% with capital expenditure amounting to US$11,8 billion. During the financial year, we achieved first steam production in August 2018, followed by beneficial operation of our linear low density polyethylene (LLDPE) unit in February 2019, the ethylene oxide/ethylene glycol (EO/EG) unit in May 2019 and the ethane cracker in August 2019. The cracker remains stable at approximately 50% - 60% of design capacity, limited by operating issues with the acetylene removal system. A two to three week planned shutdown to replace the acetylene reactor catalyst is expected to address these issues. Normal production ramp up will occur after the acetylene reactor issues are resolved. These units, combined with the utilities that support them, comprise approximately 65% of LCCP's total capital cost. The progressive commissioning and start-up of the remainder of the derivative units is ongoing, with our low-density polyethylene (LDPE) facility anticipated to reach beneficial operation during the remainder of calendar year 2019 and our Ziegler alcohol, ethoxylates and Guerbet alcohol facilities completed shortly thereafter, to bring the LCCP to full completion during the remainder of 2020. Progress on the LCCP units is reviewed and considered internally and by third party consultants regularly, with past reviews identifying increased scope and slower construction and commissioning ramp-down curves as units reached start-up. As the start-up of the remaining units continues, we will update guidance in the event we confirm a materially different view of unit startup and/or cost.

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        In Mozambique, Phase 1 and Phase 2 drilling activities in the Production Sharing Agreement (PSA) licence area have been completed. In total, 11 wells were drilled comprising of seven oil wells and four gas wells. We forecast recoverable volumes of light oil to be around the low end of the range presented in the field development plan, 8MMbbl compared to the midpoint of 55MMbbl. This has required a review of the development programme. While Phase 1 gas results confirmed gas resources cover for the planned Central Termica Temane (CTT), formerly Mozambique Gas to Power Project (MGtP), Phase 2 appraisal drilling results however indicate gas volumes to be at the lower end of our initial estimates. We plan to submit a revised field development plan encompassing an integrated oil, gas and LPG development for the whole licence area in 2020.

        The development of these projects involve capital-intensive processes carried out over long durations. It requires us to commit significant capital expenditure and allocate considerable management resources in utilising our existing experience and know-how.

        Projects like the LCCP and PSA are subject to the risk of delays and cost overruns inherent in any large construction project, including as a result of:

    shortages or unforeseen increases in the cost of equipment, labour and raw materials;

    unforeseen design and engineering problems, contributing to or causing late additions and/or increases to scope;

    unforeseen construction problems;

    unforeseen failure of mechanical parts or equipment;

    unforeseen technical challenges on start-up causing delays in beneficial operations being achieved;

    inadequate phasing of activities;

    labour disputes;

    inadequate workforce planning or productivity of workforce;

    inadequate change management practices;
    natural disasters and adverse weather conditions, including excessive winds, higher-than-expected rainfall patterns, tornadoes, cyclones and hurricanes;

    failure or delay of third-party service providers; and

    regulatory approvals and compliance obligations, including changes to regulations, such as environmental regulations, and/or identification of changes to project scope necessary to ensure safety, process safety, and environmental compliance.

        In addition, significant variations in the assumptions we make in assessing the viability of our projects, including those relating to commodity prices and the prices for our products, exchange rates, import tariffs, interest rates, discount rates (due to change in country risk premium) and the demand for our products, may adversely affect the profitability or even the viability of our investments.

        As the LCCP capital investment is particularly material to Sasol, any further cost overruns or adverse changes in assumptions affecting the viability of the project could have a material adverse effect on our business, cash flows, financial condition and prospects. We have updated the LCCP economics with the latest view of long-term market assumptions obtained from independent market consultants. Due to the uncertainty and volatility in the market, the views from the independent market consultants differ significantly from period to period. Views provided also differ on ethane price assumptions in the long term. This divergence in views makes it more difficult to accurately evaluate the project economics and increases the risk that the assumptions underlying our assessment of the viability of the project may prove incorrect.

        Our operating cash flow and credit facilities may be insufficient to meet our capital expenditure plans and requirements, depending on the timing and cost of development of our existing projects and any further projects we may pursue, as well as our operating performance and the utilisation of our credit facilities. As a result, new sources of capital may be needed to meet the

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funding requirements of these projects and to fund ongoing business activities. Our ability to raise and service significant new sources of capital will be a function of macro-economic conditions, our credit rating, our gearing and other risk metrics, the condition of the financial markets, future prices for the products we sell, the prospects for our industry, our operational performance and operating cash flow and debt position, among other factors.

        In the event of unanticipated operating or financial challenges, any dislocation in financial markets, any downgrade of our credit ratings by ratings agencies or new funding limitations, our ability to pursue new business opportunities, invest in existing and new projects, fund our ongoing business activities and retire or service outstanding debt and pay dividends, could be constrained, any of which could have a material adverse effect on our business, operating results, cash flows and financial condition.

Fluctuations in crude oil, natural gas, ethane and petroleum product prices and refining margins may adversely affect our business, operating results, cash flows and financial condition

        Market prices for crude oil, natural gas, ethane and petroleum products fluctuate as they are subject to local and international supply and demand fundamentals and other factors over which we have no control. Worldwide supply conditions and the price levels of crude oil may be significantly influenced by general economic conditions; industry inventory levels; technology advancements; production quotas or other actions that might be imposed by international associations that control the production of a significant proportion of the worldwide supply of crude oil; weather-related damage and disruptions; competing fuel prices and geopolitical risks, including warfare; especially in the Middle East, North Africa and West Africa.

        During 2019, the dated Brent crude oil price averaged US$68,63/bbl and fluctuated between a high of US$86,16/bbl and a low of US$50,21/bbl. This compares to an average dated Brent crude oil price of US$63,62/bbl during 2018, when it fluctuated between a high of US$80,29/bbl and a low of US$46,53/bbl.

        A substantial proportion of our turnover is derived from sales of petroleum, natural/piped gas and petrochemical products, prices for which have fluctuated widely in recent years and are affected by crude oil prices, the price and availability of substitute fuels, changes in product inventory, product specifications and other factors.

        The South African government controls and/or regulates certain fuel prices. The pump price of petrol is regulated at an absolute level. Furthermore, maximum price regulation applies to the refinery gate price of liquefied petroleum gas (LPG) and the sale of unpacked illuminating paraffin. South African liquid fuels are valued using the "Basic Fuel Price" (BFP) mechanism. BFP is a formula-driven price that considers, amongst others, the international prices of refined products (petrol, diesel, jet fuel and illuminating paraffin), the rand/US dollar exchange rate and the logistical cost of transporting liquid fuels to South Africa. The BFP is then used as a component in the regulated prices that are published by the government on a monthly basis. Piped gas prices are regulated through the approval of maximum piped gas prices by the National Energy Regulator of South Africa (NERSA) from time to time.

        Through our equity participation in the National Petroleum Refiners of South Africa (Pty) Ltd (Natref) crude oil refinery, we are exposed to fluctuations in refinery margins resulting from fluctuations in international crude oil and petroleum product prices. We are also exposed to changes in absolute levels of international petroleum product prices through our synthetic fuel operations.

        Prolonged periods of low crude oil, natural gas and petroleum prices could also result in projects being delayed or cancelled, as well as the impairment of certain assets. In North America, softer ethylene and global mono-ethylene glycol prices and an increase in the capital cost of our LCCP in Louisiana, US, resulted in the impairment of our Tetramerization and EO/EG cash generating units (CGU) by R7,4 billion (US$ 526 million) and R5,5 billion (US$ 388 million), respectively in 2019. Our shale gas assets in Canada were impaired by a further R1,9 billion (CAD181 million) as at 30 June 2019

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to a carrying value of R22 million (CAD2 million). The total cumulative impairments recognised between 2014 and 2018 on our Canadian shale gas assets were R19,3 billion (CAD1,8 billion), mainly due to the declining gas prices. The valuation of the ammonia value chain in Southern Africa in 2019 was negatively impacted by softer international ammonia sales prices and higher gas feedstock prices. This resulted in an impairment of R3,3 billion.

        We use derivative financial instruments to partially protect us against day-to-day and longer-term fluctuations in US dollar oil, export coal and ethane prices. The oil price affects the profitability of both our energy and chemical products. See "Item 11—Quantitative and qualitative disclosures about market risk". While the use of these instruments may provide some protection against fluctuations in crude oil prices, it does not protect us against longer-term fluctuations in crude oil prices or differing trends between crude oil and petroleum product prices.

        We are unable to accurately forecast fluctuations in crude oil, ethane, natural/piped gas and petroleum products prices. Fluctuations in any of these may have a material adverse effect on our business, operating results, cash flows and financial condition. Refer "Item 5A—Operating results" for the impact of the crude oil prices on the results of our operations.

Fluctuations in exchange rates may adversely affect our business, operating results, cash flows and financial condition

        The rand is the principal functional currency of our operations and we report our results in rand. However, a significant majority of our turnover is impacted by the US dollar and the price of most petroleum and chemical products is based on global commodity and benchmark prices which are quoted in US dollars.

        Further, as explained above, the components of the BFP are US dollar-denominated and converted to rand, which impacts the price at which we sell fuel in South Africa.

        A significant part of our capital expenditure and borrowings are US dollar-denominated, as

they relate to investments outside South Africa or constitutes materials, engineering and construction costs imported into South Africa. Fluctuations in the rand/US dollar exchange rate impacts our gearing and estimated capital expenditure.

        We also generate turnover and incur operating costs in euro and other currencies.

        Fluctuations in the exchange rates of the rand against the US dollar, euro and other currencies impact the comparability of our financial statements between periods due to the effects of translating the functional currencies of our foreign subsidiaries into rand at different exchange rates.

        Accordingly, fluctuations in exchange rates between the rand and US dollar, and/or euro may have a material effect on our business, operating results, cash flows and financial condition.

        During 2019, the rand/US dollar exchange rate averaged R14,20, fluctuating between a high of R15,44 and a low of R13,11. This compares to an average exchange rate of R12,85 during 2018, when it fluctuated between a high of R14,48 and a low of R11,55. At 30 June 2019 the closing rand/US dollar exchange rate was R14,08 as compared to R13,73 at 30 June 2018.

        The rand exchange rate is affected by various international and South African economic and political factors. Subsequent to 30 June 2019, the rand has on average weakened against the US dollar and the euro, closing at R14,63 and R16,21, respectively, on 25 October 2019. In general, a weakening of the rand would have a positive effect on our operating results. Conversely, strengthening of the rand would have an adverse effect on our operating results, cash flows and financial condition. However, given the significance of our foreign currency denominated long-term debt a weaker rand against the US dollar has a negative impact on our gearing. Refer to "Item 5.A—Operating results" for further information regarding the effect of exchange rate fluctuations on our results of operations. We engage in hedging activities which partially protects the balance sheet and our earnings against fluctuations in the rand exchange rate. While the use of these instruments may provide some protection against fluctuations in the rand exchange rate, it does not protect us against a

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longer term strong rand/US dollar exchange rate. Refer to "Item 11—Quantitative and qualitative disclosures about market risk".

        Although the exchange rate of the rand is primarily market-determined, its value at any time may not be an accurate reflection of its underlying value, due to the potential effect of, among other factors, exchange controls. For more information regarding exchange controls in South Africa see "Item 10.D—Exchange controls".

Cyclicality in petrochemical product prices and demand may adversely affect our business, operating results, cash flows and financial condition

        The demand for chemicals, especially products such as polymers, solvents, surfactants and fertilisers is cyclical. Typically, higher demand during peaks in the industry business cycle leads producers to increase their production capacity. Although peaks in the business cycle have been characterised by increased EBIT margins in the past, such peaks have led to overcapacity with supply exceeding demand growth. Low periods during the industry business cycle are characterised by excess capacity, which can depress EBIT margins. Currently, shorter term factors including the current US/China trade dispute, 'Brexit' the scheduled withdrawal of the United Kingdom from the European Union, business and consumer confidence trends as well as other geo-political tensions pose significant risks to demand. Supply is currently largely affected by the US-China trade tensions and the capacity overbuild taking place in China. Consequently, forecasting the timing of the industry business cycle, and prices for chemical products during downturns in the cycle, remain difficult and a deterioration in overall conditions may have a material adverse effect on our business, operating results, cash flows and financial condition.

Our access to and cost of funding is affected by our credit rating, which in turn is affected by the sovereign credit rating of the Republic of South Africa

        Our credit rating may be affected by our ability to maintain our outstanding debt and

financial ratios at levels acceptable to the credit ratings agencies; our business prospects; the sovereign credit rating of the Republic of South Africa and other factors, some of which are outside our control. The credit rating assigned by the ratings agencies is dependent on a number of factors, including the gearing levels of the group. In assessing these gearing levels, performance guarantees which have been issued by Sasol are taken into account as potential future exposure, which may impact the liquidity of the group. Our credit rating has been affected by movements in the sovereign credit rating of the Republic of South Africa.

        Any future adverse rating actions or downgrade of the South African sovereign credit rating may have an adverse effect on our credit rating, which could negatively impact our ability to borrow money and could increase the cost of debt finance.

Failure to comply with any debt covenant could have an adverse impact on our financial position and results and/or liquidity

        Our principal credit facilities contain restrictive covenants. These covenants limit, among other things, encumbrances on assets of Sasol and its subsidiaries, the ability of our subsidiaries to incur debt and the ability of Sasol and its subsidiaries to dispose of assets in certain circumstances. These restrictive and financial covenants could limit our operating and financial flexibility. Failure to comply with any covenant would enable the lenders to accelerate repayment obligations or may result in unfavourable changes to the credit facilities. Moreover, Sasol's credit facilities have standard provisions whereby certain events relating to other borrowers within the Group could, under certain circumstances, lead to acceleration of debt repayment under the credit facilities and the acceleration of debt repayment under the group's credit facilities and other borrowings under these cross-acceleration clauses could create liquidity pressures. In addition, the mere market perception of a potential breach of any financial covenant could have a negative impact on our ability to refinance indebtedness or the terms on which this could be achieved.

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We identified a material weakness in our internal control over financial reporting as of 30 June 2019, which we are still in the process of remediating. If we are unable to remediate this material weakness, or if we experience additional material weaknesses or other deficiencies in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately and timely report our financial results, which could cause shareholders to lose confidence in our financial and other public reporting, and adversely affect our share price

        Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for evaluating and reporting on the effectiveness of our system of internal control. As disclosed below under Item 15. Controls and Procedures, during 2019, management identified a material weakness in internal control over financial reporting with respect to the capital cost estimation process implemented in connection with the LCCP which resulted from the aggregation of a series of individual control and project related control environment deficiencies. As a result, management concluded that our internal control over financial reporting was not effective as of 30 June 2019. While we are currently implementing remedial measures, there can be no assurance that our efforts will be successful. The material weakness cannot be considered remediated until the remedial controls operate for a sufficient period of time and management has time to conclude, through testing, that these controls are operating effectively. As a result of the material weakness described above, our management also concluded that our disclosure controls and procedures were not effective as of 30 June 2019.

        We cannot be certain that any remedial measures we are currently in the process of implementing, or our internal control over financial reporting more generally, will ensure that we design, implement and maintain adequate controls over our financial processes and reporting in the future. Our failure to implement our remediation plan referred to above, or to implement newly required or improved controls or adapt our controls, or difficulties encountered in their operation, or difficulties in the assimilation

of acquired businesses into our control system, could prevent us from meeting our financial reporting obligations, including filing our periodic reports with the SEC on a timely basis and maintaining compliance with applicable NYSE listing requirements, or result in a restatement of previously disclosed financial statements.

        The material weakness identified during 2019 resulted in a revision of capital commitments as at 30 June 2018. If other currently undetected material weaknesses in our internal controls exist, it could result in material misstatements in our financial statements requiring us to restate previously issued financial statements. In addition, material weaknesses, and any resulting restatements, could cause investors to lose confidence in our reported financial information, and could subject us to regulatory scrutiny and to litigation from shareholders, which could have a material adverse effect on our business and the price of our ordinary shares or ADSs. Furthermore, the remediation of any such material weaknesses could require additional remedial measures including additional personnel, which could be costly and time-consuming. If we do not maintain adequate financial and management personnel, processes and controls, we may not be able to manage our business effectively or accurately report our financial performance on a timely basis, which could cause a decline in our share price and adversely affect our results of operations and financial condition. Failure to comply with the Sarbanes-Oxley Act of 2002 could potentially subject us to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.

        Certain of the factors identified as resulting in the material weakness discussed above, in particular, that certain persons within the LCCP project management team responsible for the management of the Company reported inaccurate capital cost projections to senior executives and the board, may also constitute a reportable irregularity in accordance with the South African Auditing Profession Act 26 of 2005, on the basis that such persons may not have acted with the necessary care, skill and diligence required, which failure has caused, or is likely to cause material financial loss to the entity or stakeholders in its dealings with the entity, or, alternatively, this

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activity may have constituted a material breach of fiduciary duties by such persons. As a result of this activity, the Company removed all work responsibilities and initiated disciplinary action against one individual and negotiated the separation of three additional individuals, and took other remedial actions. Management believe that actions taken effectively remediate the activities that gave rise to a reportable irregularity. PricewaterhouseCoopers Incorporated (PwC) reported a reportable irregularity to the Independent Regulatory Board for Auditors in South Africa and concluded that these matters have been remediated and are no longer continuing.

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 affect our future legal licence to operate

        Key manufacturing processes in South Africa, especially coal gasification and combustion, result in relatively high carbon dioxide emissions. Sasol is committed to reducing its overall impact on the environment, while developing and implementing an appropriate climate change management response to enable the long-term resilience of the company's strategy and business operations. Sasol's ability to develop and implement an appropriate climate change mitigation response poses a significant transitional risk for our business in South Africa. This is heightened by the necessity to appropriately address increasing societal pressures and shifts away from carbon intensive processes and products, as well as meeting new and anticipated policy and legislative requirements including carbon tax, budgets and reduction targets. It is particularly challenging in South Africa where access to lower carbon energies is limited and related infrastructure is under-developed.

        A carbon tax was implemented in South Africa from 1 June 2019, which will significantly increase the operational costs of our South African operations post 2022. For the first phase to 2022, several transitional tax-free allowances are provided. The headline carbon tax is R120 per ton of CO2e (carbon dioxide equivalent) before

tax-free allowances, for emissions above the tax-free thresholds. At the same time the South African government is developing carbon budgets. Currently, there is uncertainty on how the mandatory carbon budget will be implemented and aligned to the carbon tax. The future risk that Sasol faces is how much the group will need to pay for either the carbon tax or possible penalties for exceeding the carbon budgets for the subsequent phases from 2023 onwards should the scale of mitigation not be possible in the timeframe required. Sasol's current carbon tax liability pre-tax is approximately R800 million to R1 billion per annum pre-tax in 2020, escalating at CPI + 2 percentage points until 2022. Considering South Africa's developmental challenges, the structure of its economy and the fact that the carbon tax design is not aligned with the carbon budget system, Sasol is supportive of carbon pricing but believes that alternative mechanisms could achieve the outcome sought by the proposed stand-alone carbon tax. In this instance, the alignment of the carbon budget with the carbon tax offers an efficient and effective solution for the South African economy to still grow while transitioning to a lower carbon economy. We continue to work to advocate for such a solution and actively engage with government and various stakeholders to appropriately manage these challenges that balance the need for economic development, job creation, energy security and greenhouse gas (GHG) emission reductions. Whilst we are not supportive of the Carbon Tax Act in its current form, Sasol is adhering to the Act and is participating in the relevant government process to develop the operating rules for the tax.

        The group sees a lower carbon emission world representing changes to energy demand, regulations and commodity consumption patterns (also seen in externally validated data). Companies that do not respond to these possible realities could find parts of their portfolios, or potentially their entire business model, becoming less robust over time. Through our scenario analysis, Sasol visualises the potential areas where our business might be less robust to further changes in demand patterns, regulations or technology changes. This enables proactive mitigation action to be taken so that our

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operations (and our overall value chain) remain robust, as the world transitions to a lower carbon future. Given future uncertainty, Sasol has used a rigorous process to develop a set of scenarios based on an understanding of global and national energy system fundamentals, including government policy and carbon risk. There are, however, risks associated with accuracy, completeness and correctness of various assumptions that are used as inputs to scenario analysis work undertaken, including scenarios developed to test resilience to climate change threats. Should these assumptions prove to be inaccurate, incomplete or incorrect this could potentially significantly impact our resilience. In addition, scenarios by their very nature are inherently risky as it relates to limited ability to predict future outcomes.

        Sasol's preliminary 2030 analysis of the Paris Agreement focuses our attention on reducing the use of coal to produce electricity as an immediate and critical mitigation opportunity for reducing emissions and will form part of a broader initiative to remain resilient. Sasol's foundation business portfolio in South Africa is sensitive to climate related risks if further reductions are not undertaken.

        Further, climate change poses a significant risk for both our South African and global business as it relates to potential physical impacts including change of weather patterns, water scarcity and extreme weather events such as, hurricanes, tornadoes, flooding and sea level rise. In this regard, work is underway to develop an adaptation strategy for the identified key priority regions such as the US Gulf Coast, Mozambique, and South African operations (Secunda and Sasolburg). Ongoing monitoring efforts accordingly also guide our interventions to improve our maintenance, asset integrity processes and response procedures. While we are in the process of implementing an emission reduction framework based on the three pillars of reducing our emissions, transforming our coal-based operations and shifting our portfolio to a lower-carbon business, this framework may not be adequate to enable us to fully comply with any current or future regulations over GHG emissions.

        Our international operations are less carbon-intensive and have been operating for some time in a more mature GHG regulatory regime. However, enhanced focus on issues concerning environmental quality and climate change may result not only in a more complex regulatory environment, but also additional legal risk, to the extent that damages relating to climate change and other air quality impacts are brought into judicial systems around the world. In addition our permits and operational licences are subject to public comment and/or input from stakeholders in certain of the jurisdictions in which we operate and there is an emerging trend by activists to use the public comment period to challenge a company's response to climate change.

Our coal, synthetic oil, natural oil and natural gas reserve estimates may be materially different from quantities that we eventually recover

        Our reported coal, synthetic oil, natural oil and gas reserves are estimated quantities based on applicable reporting regulations that, under present conditions, have the potential to be economically mined, processed, produced, delivered to market and sold.

        There are numerous uncertainties inherent in estimating quantities of reserves and in projecting future rates of production, including factors that are beyond our control. The accuracy of any reserve estimate is a function of the quality of available data, engineering and geological interpretation, costs to develop and produce, and market prices for related products.

        Reserve estimates are adjusted from time to time to reflect improved recovery and extensions, and also revised from time to time based on improved data acquired from actual production experience and other factors, including resource extensions and new discoveries. In addition, regulatory changes, market prices, increased production costs and other factors may result in a revision to estimated reserves. Revised estimates may have a material adverse effect on our business, operating results, cash flows and financial condition. See "Item 4.D—Property, plants and equipment".

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We may be unable to access, discover, appraise and develop new coal, synthetic oil, natural oil and natural gas resources at a rate that is adequate to sustain our business and/or enable growth

        Competition for suitable opportunities, increasing technical difficulty, stringent regulatory and environmental standards, large capital requirements and existing capital commitments may negatively affect our ability to access, discover, appraise and develop new resources in a timely manner, which could adversely impact our ability to support and sustain our current business operations. We acquire certain of these feedstocks through long term supply agreements and if the price levels at which replacement agreements are put into place are less favourable when such long term supply agreements come to an end it could adversely affect our business, cash flows and financial condition.

        Our future growth could also be impacted by these factors, potentially leading to a material adverse effect on our business, operating results, cash flows and financial condition.

We may not achieve projected benefits of acquisitions or divestments

        We may pursue acquisitions or divestments. With any such transaction, there is the risk that any benefits or synergies identified at the time of acquisition may not be achieved as a result of changing or inappropriate assumptions or materially different market conditions, or other factors. Furthermore, we could be found liable, regardless of extensive due diligence reviews, for past acts or omissions of the acquired business without any adequate right of redress.

        In addition, delays in the sale of assets, or reductions in value realisable, may arise due to changing market conditions. Failure to achieve expected values from the sale of assets, or delays in expected receipt or delivery of funds may result in higher debt levels, the underperformance of those businesses and the loss of key personnel.

There are country-specific risks relating to the countries in which we operate that could adversely affect our business, operating results, cash flows and financial condition

        Several of our subsidiaries, joint arrangements and associates operate in countries and regions that are subject to significantly differing political, social, economic and market conditions. See "Item 4.B—Business overview" for a description of the extent of our activities in the main countries and regions in which we operate. Although we are a South African-domiciled company and the majority of our operations are located in South Africa, we also have significant energy businesses in other African countries, chemical businesses in Europe, the US, the Middle East and Asia, a joint venture GTL facility in Qatar, joint operations in the US and Canada and a 10% indirect economic interest in the Escravos GTL (EGTL) project in Nigeria, which is an upstream joint venture between Chevron Nigeria Limited (CNL) and Nigerian National Petroleum Corporation (NNPC).

        Particular aspects of country-specific risks that may have a material adverse impact on our business, operating results, cash flows and financial condition include:

(a) Political and socioeconomic issues

    i. Political, social and economic uncertainty

        We have invested, or are in the process of investing in, significant operations in Southern African, Western African, European, North American, Asian and Middle Eastern countries that have in the past, to a greater or lesser extent, experienced political, social and economic uncertainty.

        South Africa faces ongoing challenges in improving the country's long-term growth potential and weak public sector revenue growth, stabilising debt levels and addressing weaknesses at state-owned enterprises and other institutions. These factors continue to pose a risk to South Africa's sovereign credit rating outlook. In Mozambique, there has been an improvement in economic conditions. However, very high levels of public sector debt, insufficient governance, accountability and transparency, the need to

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strengthen institutions, security concerns and extreme weather events are expected to remain significant risks to the sovereign credit and operational outlook for the foreseeable future.

        At a global level, the trade dispute between the US and China, the evolution of the Brexit process, geo-political tensions and conflicts, potential financial vulnerabilities that have been built up over years due to low-to-zero interest rates, abrupt shifts in financial conditions and weakening economic growth can also all have an influence on the macro-economic outlook in the countries in which we operate.

        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 in which 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 and such changes may therefore have an adverse effect on our operations and financial results.

        Sasol's strategic objective to progressively grow a resilient oil-based portfolio in selected West African countries, inherently carries frontier basin exploration and new country entry risks, offset by potential high reward through unlocking of new exploration plays. Sasol manages the associated exploration and new country risks through building a balanced portfolio of exploration and production assets, rigorously ensuring compliance with all corporate and legislative governance requirements, and following its internal technical and business quality assurance processes.

    ii. Transformation and local content

        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 country-specific 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.

        In South Africa, there are various transformation initiatives 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 initiatives 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 rating).

        The 2018 Mining Charter was published for implementation on 27 September 2018. On 19 December 2018 certain amendments 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, the Minerals Council commenced with a judicial review of certain aspects of the 2018 Mining Charter. Sasol Mining will monitor the outcome of this process which may either result in the status quo being retained or certain amendments being made to the 2018 Mining Charter that may address the Minerals Council's concerns. For more information refer to "Item 3.D—Risk Factors—South African mining legislation may have an adverse effect on our mineral rights".

        The revised Codes of Good Practice for Broad-Based Black Economic Empowerment (B-BBEE) (the Revised Codes), which came into effect on 1 May 2015, provide a standard framework for the measurement of B-BBEE across all sectors of the economy, other than sectors that have their own sectorial transformation charters (e.g. the mining and liquid fuels industries). The Revised Codes provide more stringent targets, which negatively impacted on Sasol's B-BBEE contributor status. The liquid fuels industry is currently developing the

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"Petroleum and Liquid Fuels Sector Charter" (PLFSC) which will regulate B-BBEE in the liquid fuels and gas sector. While it is too early to assess the impact of the PLFSC, the PLFSC will be required to set industry-specific targets that cannot be more lenient than those in the Revised Codes.

        Since our September 2017 announcement of plans to unwind the Sasol Inzalo B-BBEE transaction and introduce the Sasol Khanyisa B-BBEE transaction, we placed specific management focus on engaging with trade unions on issues pertaining to employee share ownership levels. Two of the five Sasol trade unions, Solidarity and CEPPWAWU, declared disputes relating individually to Sasol Khanyisa and the unwind of Sasol Inzalo which, if not resolved, might result in industrial action, which could adversely affect our operations and could give rise to costs which would impact earnings. In the case of the Solidarity trade union, the Sasol Khanyisa dispute is similar to disputes the trade union has with three other large employers in South Africa. The President of the Labour Court requested the various employers to prepare a stated case in order to allow the Labour Court to give guidance in this regard. It is therefore not a Sasol only matter in South Africa and affects other large companies as well. The Sasol Inzalo dispute lodged by the CEPPWAWU trade union has lost its momentum and it is no longer regarded as a major threat to Sasol. The time frame within which the matter was to be continued has become stale.

        On 6 May 2019, Sasol received a statement of claim filed by the trade union Solidarity with the Labour Court in Johannesburg, alleging that the Sasol Khanyisa Employee Share Option Plan (ESOP) element of the Sasol Khanyisa transaction is discriminatory as it does not include white employees in South Africa and employees working for Sasol outside South Africa. This litigation is ongoing and we are unable at this time to assess the potential effect the ultimate outcome of the matter may have on the Sasol Khanyisa B-BBEE transaction. In addition, the Department of Mineral Resources and Energy may not recognise the ownership component of Sasol Khanyisa in which case we may be unable to fully comply with the 2018 Mining Charter requirements related to

new or amended licence applications, or the B-BBEE Commissioner may not recognise that the vendor financing mechanism allows us to be allocated points on Enterprise Supplier Development. Although Sasol Mining has applied for recognition of the Sasol Khanyisa ESOP to meet the ownership requirements contained in the 2018 Mining Charter, the Department of Mineral Resources and Energy has not yet formally responded to the request. The litigation instituted by Solidarity is of importance since the Department of Mineral Resources and Energy might be awaiting the outcome thereof before a final decision will be taken in respect of Sasol Khanyisa. At this stage all applications submitted prior to the 2018 Mining Charter becoming effective are being processed based on Sasol Mining's historic ownership level.

        We expect that the long-term benefits of Sasol Khanyisa to the company and South Africa should outweigh any possible adverse effects, such as dilution to existing shareholders, but we cannot assure you that future implications of compliance with these requirements or with any newly imposed conditions will not have a material adverse effect on our shareholders or business, operating results, cash flows and financial condition. See "Item 4.B—Empowerment of historically disadvantaged South Africans".

        Value creation, if any, to the majority of the Khanyisa shareholders at the conclusion of the transaction is exposed to the inherent business risks of Sasol South Africa during the empowerment period. This could potentially have an impact on dividend distributions to those Khanyisa shareholders that are required to settle funding obligations or otherwise negatively impact the valuation of the Sasol South Africa business on conclusion of the transaction.

    iii. Disruptive industrial action

        The majority of our employees worldwide belong to trade unions. These employees comprise mainly of general workers, artisans and technical operators. While Sasol believes its labour relations are currently stable, the South African labour market remains volatile and can be characterised by major industrial action in key sectors of the economy especially during wage negotiations.

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        In Sasol South Africa, only the industrial chemicals sector is scheduled for wage negotiations during 2019. The petroleum sector is covered by a three-year wage agreement effective 1 July 2018 to 30 June 2021.

        Sasol Mining concluded a three-year wage agreement with all five of its participating trade unions in August 2017 valid until June 2020, paving the way for stable labour relations over the duration of three years.

        Although we have positive relationships with our employees and their unions, significant labour disruptions could occur in the future and our labour costs could increase significantly in the future.

(b) Fiscal and monetary policies

        Macro-economic factors, such as higher inflation and interest rates, could adversely impact our ability to contain costs and/or ensure cost-effective debt financing in the countries in which we operate.

        Our sustainability and competitiveness is influenced by our ability to optimise our cost base. As we are unable to control the price at which our products are sold, an increase in inflation in countries in which we operate may result in significantly higher future operational costs.

        South African consumer price inflation averaged 4,6% in 2019, from 4,5% in 2018. During the year, inflation was impacted mainly by muted food price increases, electricity tariff hikes and higher fuel prices. Despite relatively stable inflation, the South African Reserve Bank decided to hike the policy interest rate by 25 basis points to 6,75%, citing potential upside inflationary pressures emanating from tightening global financial conditions, exchange rate weakness, higher wage growth, global oil price trends and possible above-inflation target electricity and water tariff adjustments as reasons for the decision. The policy interest rate was maintained at 6,75% for the rest of 2019.

        South Africa's economic outlook remains constrained as policy uncertainty, weak levels of business and consumer confidence, and a generally weaker global outlook weigh on the

country's growth prospects. Ongoing economic weakness and subdued inflation already prompted the Reserve Bank to cut the policy interest rate by 25 basis points to 6,50% in July 2019.

        The exchange rate remains a key risk to the inflation outlook. Global financial conditions, trade disputes, emerging market sentiment swings and domestic political and policy developments are likely to contribute to ongoing currency volatility.

        The already weakening global growth outlook is clouded by the US and China trade dispute, while the Brexit process, weak euro area growth prospects and heightened geo-political tensions could result in even weaker than currently expected global growth. South African policy uncertainty, potential electricity supply constraints, limited fiscal space and low confidence levels are likely to constrain the country's near-term growth prospects. Against this background, Sasol's product sales in key markets are likely to remain under pressure for the foreseeable future.

(c) Legal and regulatory

    i. Exchange control regulations

        South African law provides for exchange control regulations which apply to transactions involving South African residents, including both natural persons and legal entities. These regulations may restrict the export of capital from South Africa, including foreign investments. The regulations may also affect our ability to borrow funds from non-South African sources for use in South Africa, including the repayment of these borrowings from South Africa and, in some cases, our ability to guarantee the obligations of our subsidiaries with regard to these funds. These restrictions may affect the manner in which we finance our transactions outside South Africa and the geographic distribution of our debt. See "Item 10.D—Exchange controls" and "Item 5.B—Liquidity and capital resources". We may also be impacted by new exchange control regulations affecting our operations in Gabon. See "Item 4.B—Business overview—Regulation—Safety, health and environment—Regions in which Sasol operates and their applicable legislation—Gabon".

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    ii. Tax laws and regulations

        We operate in multiple tax jurisdictions globally and are subject to both local and international tax laws and regulations. Although we aim to fully comply with tax laws in all the countries in which we operate, tax is a highly complex area leading to the risk of unexpected tax uncertainties. Tax laws are changing regularly and their interpretation may potentially result in ambiguities and uncertainties, in particular in the areas of international taxation and transfer pricing. Where the tax law is not clear, we interpret our tax obligations in a responsible way, with the support of legal and tax advisors as deemed appropriate. Tax authorities and courts may arrive at different interpretations to those taken by Sasol, which may lead to substantial increases in tax payments. Although we believe we have adequate systems, processes and people in place to assist us with complying with all applicable tax laws and regulations, the outcomes of certain tax disputes and assessments may have a material adverse effect on our business, operating results, cash flows and financial position.

        We could also be exposed to significant fines and penalties and to enforcement measures, including, but not limited to, tax assessments, despite our best efforts at compliance. In response to tax assessments or similar tax deficiency notices in particular jurisdictions, we may be required to pay the full amount of the tax assessed (including stated penalties and interest charges) or post security for such amounts notwithstanding that we may contest the assessment and related amounts.

        In particular, two of our subsidiaries, Sasol Oil (Pty) Ltd ("Sasol Oil") and Sasol Financing International (SFI), have received assessments in relation to international business activities. The litigation in respect of the Sasol Oil matter has been resolved with Sasol no longer exposed to a potential liability and the litigation proceedings relating to the assessments in respect of SFI are still ongoing.

        For more information regarding pending tax disputes and assessments see "Item 4.B—Business overview—Legal proceedings and other contingencies".

        Any of these risks may materially and adversely affect our business, results of operations, cash flows and financial condition.

    iii. Ownership rights

        We operate in several countries where ownership of rights in respect of land and resources is uncertain and where disputes in relation to ownership or other community matters may arise. For example, the South African government is considering the expropriation of land without compensation to enhance land reform and redistribution. The impact of these policy intentions and related disputes are not always predictable and may cause disruption to our operations or development plans.

    iv. Legal and regulatory uncertainties

        Some of the countries where we have already made investments, or other countries where we may consider making investments are in various stages of developing institutions and legal and regulatory systems that are characteristic of democracies and market economies.

        The procedural safeguards of the legal and regulatory regimes in these countries in many cases are still being developed and, therefore, existing laws and regulations may be applied inconsistently. In some circumstances, it may not be possible to obtain the legal remedies provided under those laws and regulations in a timely manner.

(d) Transportation, water, electricity and other infrastructure

        Our operations are located in multiple regions across the world and are reliant upon stable supply of electricity, availability of water and access to transportation routes in order to optimally run our operations and/or move our products. The infrastructure in some countries in which we operate, such as rail infrastructure, inland water systems, electricity and water supply, may need to be further upgraded and expanded, and in certain instances, possibly at our own cost. Should we not have access to reliable electricity supply, or should we have limited access to water or experience infrastructure challenges in the regions in which we operate, this could have a

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material adverse effect on our business, operating results, cash flows, financial condition and future growth.

        Reliable supply of electricity is important to run our plants optimally. The South African power system specifically remains tight. Unplanned power outages as we experienced at our South African plants in 2019 have a negative impact on our production volumes, cost and profitability. Backup systems increase the cost of production and while we have the capacity to generate the majority of our own requirements, this only mitigates the risk partially as we remain dependent on external electricity supply.

        Water, as a resource, is becoming increasingly limited as global demand for water increases. A significant part of our operations, including mining, chemical processing and others, requires use of large volumes of water. South Africa is generally an arid country and prolonged periods of drought or significant changes to current water laws could increase the cost of our water supplies or otherwise impact our operations. Water use by our operations varies widely depending largely on feedstock and technology choice. Water to our South African operations is supplied from the Integrated Vaal River System (IVRS), making up 86% of Sasol's total water demand. While the water supply to these operations remains secure the revised water balance for the IVRS continues to show a worsening of the water supply imbalance which may result in an increasing probability of water restrictions being imposed. Although various technological advances may improve the water efficiency of our processes they are capital intensive. We may experience limited water availability and other infrastructure challenges related to our South African operations which could have a material adverse effect on our business, operating results, cash flows, financial condition and future growth.

        Transportation of inbound materials to plants and products to customers is reliant on the region's available infrastructure. Numerous factors like natural disasters or extreme weather events may impact on transportation modes which could have a material adverse effect on our business, operating results, cash flows, financial condition and future growth.

(e) Stakeholder relationships

        Sasol has a complex network of stakeholders, often with competing interests. Our stakeholders are persons or groups who are directly or indirectly affected by our operations, as well as those who have interests in our business and/or the ability to influence its outcomes. Stakeholders may include members of local communities and their representatives, national, provincial or local government authorities, officials at all spheres of government, government agencies, multilateral organisations, regulators, political and religious leaders, civil society organisations and groups with special interests, suppliers, investors, business partners, customers, employees, trade unions, academics and media. Failure to manage relationships with our stakeholders may harm our reputation as well as our ability to conduct our operations effectively. Our stakeholder objective is to position Sasol as a credible partner and build trust with all our stakeholders. Our engagement approach is premised on open and effective communication, clear feedback, mutually beneficial outcomes where possible, as well as inclusiveness and integrity. However, we cannot assure you that the strategy will mitigate the risk fully and therefore, actions taken by stakeholders could have a material adverse effect on our business, operating results, cash flows, financial condition and future growth.

(f) Contract stability

        Host governments in some of the resource-rich countries in which we operate or consider making investments may display tendencies of wanting to change existing contracts through early terminations, non-renewal or cancellation of contractual rights, or we may not be able to fully enforce our contractual rights in those jurisdictions or enforce judgements obtained in the courts of other jurisdictions, should they hold the view that these contracts are not beneficial to their countries.

(g) Other specific country risks that are applicable to countries in which we operate and which may have a material adverse effect on our business include:

    acts of warfare and civil clashes;

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    the loss of control of oil and gas field developments and transportation infrastructure;

    failure to receive new permits and consents;

    expropriation of assets;

    lack of capacity to deal with emergency response situations;

    social and labour unrest due to economic and political factors in host countries;

    terrorism, xenophobia and kidnapping threats;

    security threats to assets, employees and supply chain;

    possible demands to participate in unethical or corrupt conduct that lead us to forgo certain opportunities;

    feedstock security of supply; and

    sanctions against countries in which we operate.

Actual or alleged non-compliance with laws could result in criminal or civil sanctions and could harm our reputation

        Non-compliance with competition laws, anti-corruption laws, sanction laws and environmental laws have been identified as our top four legal risks.

    Anti-corruption and anti-bribery laws

        Ethical misconduct and non-compliance with applicable anti-corruption laws could result in criminal or civil sanctions and could have a material adverse impact on our reputation, operations and licence to operate.

        Petrochemical and energy companies need to be particularly vigilant with regard to the risk of bribery, especially when the scale of investments and the corruption perception of the countries where operations take place are considered. We, like other international petrochemical companies, have a geographically diverse portfolio and conduct operations in countries, some of which have a perceived high prevalence of corruption. Our operations must comply with applicable

anti-bribery laws, such as the US Foreign Corrupt Practices Act as well as similar anti-corruption and anti-bribery laws of South Africa and other applicable jurisdictions. There has been a substantial increase in the global enforcement of these laws. In particular, major investments in countries with a high corruption risk are subject to an elevated risk in dealing with other private companies, governments or government-controlled entities. Although we have an anti-corruption and anti-bribery compliance programme in place which is designed to prevent and reduce the likelihood of violations of such laws by our employees and companies associated with us, any violation could result in substantial criminal or civil sanctions and could damage our reputation.

    Sanctions laws

        Our international operations require compliance with applicable trade and economic sanctions or other restrictions imposed by governments, such as the US and United Kingdom, or organisations, including the United Nations, the European Union (EU) and its member countries. These trade and economic sanctions are not always aligned and this increases the complexities when a company has operations in various countries. Under economic and trading sanctions laws, governments may seek to impose modifications to business practices, and modifications to compliance programmes, which may increase compliance costs, and may subject us to fines, penalties and other sanctions.

        Although we believe that we are in compliance with all applicable sanctions and embargo laws and regulations, and intend to maintain such compliance, there can be no assurance that we will be in compliance in the future, particularly as the scope of certain laws may be unclear and may be subject to frequent amendments or changing interpretations.

        We are monitoring developments in the US, the EU and other jurisdictions that maintain sanctions programmes, including developments in implementation and enforcement of such sanctions programmes. Expansion of sanctions programmes, embargoes and other restrictions in the future (including additional designations of persons, entities and countries subject to

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sanctions), or modifications in how existing sanctions are interpreted or enforced, could have a material adverse effect on our business, operating results, cash flows and financial condition.

    Environmental laws and regulations

        In recent years, the environmental legislation in South Africa has resulted in significantly stricter standards. For instance, by 1 April 2020, our existing plants are required to meet more stringent point source standards for air quality emissions applicable to newly commissioned plants. Meeting some of these requirements will require retrofitting of some of our existing plants, we continue to invest significant capital and are on track with the implementation of committed roadmaps intended to bring us into compliance with most of the new plant standards by 2025, supported by pending postponement applications for extension of compliance timeframes. We submitted these to the National Air Quality Officer in the first quarter of 2019. The new plant standard for boiler sulphur dioxide could pose significant compliance challenges for our existing plants beyond 2025 from a technical and financial feasibility point of view. Accordingly, Sasol continues discussions with key stakeholders, including support to the technical panel of experts being appointed by the Department of Environment, Forestry and Fisheries to provide strategic and technical guidance towards effective management of sulphur dioxide emissions from old plants. These efforts are aimed at the identification of sustainable longer-term solutions and technologies to enable us to comply and advance the necessary environmental compliance and improvement roadmaps.

        To mitigate associated air quality compliance risks in the short and long term, Sasol will be reliant on mechanisms available in law and decisions thereon by the relevant authorities to obtain postponements on the requisite compliance timeframes. We also rely on other mechanisms, such as the implementation of air quality offsets as per our approved plans, to achieve our compliance obligations. We recognise that existing standards may become stricter over time which may pose a risk to some of our maturing operations in South Africa. This may, in some

cases, adversely affect our business, financial condition, results of operations and cash flows.

        The outcome of these processes and applications cannot be guaranteed and may be successfully challenged by third parties. Non-compliance may result in the violation of licence conditions with the associated consequence of administrative enforcement action, which may include directions to cease operations, fines and penalties including criminal prosecution. This may have a material adverse impact on our business.

        Some of our South African operations are carried out in declared air quality priority areas which are further subject to the requirements of the Vaal Triangle Air-Shed Priority Area Air Quality Management Plan and the Highveld Priority Area Air Quality Management Plan. These plans are currently under review, subject to the completion of source apportionment studies. Accordingly, further emission reduction commitments may be required from Sasol and are likely to trigger additional cost for air quality improvements in these priority areas.

        Outside of South Africa, we operate a number of plants and facilities for the storage and processing of chemical feedstock, products and wastes. These operations are subject to numerous laws, regulations and ordinances relating to safety, health and the protection of the environment which may also affect our operating results and financial condition. The essential objectives of these legal frameworks are largely consistent with that of the South African framework, although regulatory and permitting requirements are more established and entrenched in some regions.

    Competition laws/Anti-trust laws

        Violations of competition/anti-trust legislation could expose the group to administrative penalties, civil claims and damages, including punitive damages by companies which can prove they were harmed by the violation of competition/anti-trust legislation. Such penalties and damages could be significant and have an adverse impact on Sasol's business, operating results, cash flows and financial condition. In addition, Sasol's reputation could be damaged by findings of such contraventions and individuals could be subject to imprisonment or fines in countries where

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competition/anti-trust violations are a criminal offence.

        On 16 June 2017, Sasol Germany GmbH received a request for information issued by the European Commission. The request for information related to agreements and /or concerted practices regarding the purchasing of ethylene since 2008. On 31 July 2017, Sasol Germany GmbH responded to the request for information. On 5 March 2019, the European Commission confirmed that Sasol Germany GmbH was not a party to the investigations.

        Although it is Sasol's policy to comply with all laws, and notwithstanding training and compliance programmes, we could inadvertently contravene competition/anti-trust laws and be subject to the imposition of fines, criminal sanctions and/or civil claims and damages. We endeavour to remain compliant with competition/anti-trust legislation in all the jurisdictions in which we operate to avoid any material adverse impact on our reputation, business, operating results, cash flows and financial condition.

South African mining legislation may have an adverse effect on our mineral rights

        The Minister of Mineral Resources has indicated Government's intention to withdraw the Mineral and Petroleum Resource Development Amendment Bill in order to separate oil and gas related matters from that of mineral related matters. It is anticipated that the new "Petroleum Bill" will be introduced to the South African parliament formed following the elections held in May 2019. The impact thereof on our operations will be considered once we have clarity on the nature of the amendments.

        The Broad-Based Socio-Economic Empowerment Charter for the Mining and Minerals Industry, 2018 (2018 Mining Charter) was published on 27 September 2018 for implementation. The 2018 Mining Charter contains a number of changes compared to the previous Mining Charter including but not limited to an increase in the BEE shareholding requirement from 26% to 30% in respect of new

mining right applications. Furthermore, recognition is given to mining right holders who have achieved 26% BEE shareholding and whose shareholders exited prior to commencement of the 2018 Mining Charter. Such recognition is however only applicable for the duration of the right and not for subsequent renewals in which instance a 30% BEE shareholding is required. The 2018 Mining Charter contains more stringent compliance criteria than the previous Mining Charter, especially in respect of applications for new mining rights and the requirements in respect of procurement of mining goods which may have a material adverse effect on Sasol Mining. The potential impact on Sasol Mining may be two-fold: higher cost of production and the risk of being in non-compliance with the requirements of the 2018 Mining Charter which could lead to the suspension or cancellation of Sasol Mining's mining and/or prospecting rights. If a holder of a prospecting right or mining right in South Africa conducts prospecting or mining operations in contravention of the MPRDA, the converted mining rights can be suspended or cancelled by the Minister of Mineral Resources. The entity, upon receiving a notice of breach from the Minister, has a specific period of time to remedy such breach.

        The MPRDA and applicable provisions in the National Environmental Management Act and National Water Act impose additional responsibilities with respect to environmental management as well as the prevention of environmental pollution, degradation or damage from mining and/or prospecting activities.

        The effect of the possible future amendments to the MPRDA, associated regulations to be promulgated and the 2018 Mining Charter on our mining and petroleum rights in the future may have a material adverse effect on our business, operating results, cash flows and financial condition. See "Item 4.B—Business overview—The Mining Charter and the Mineral and Petroleum Resources Development Amendment Bill".

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Legislation in South Africa on petroleum and energy activities may have an adverse impact on our business, operating results, cash flows and financial condition

Regulation of Petroleum Products

The Petroleum Products Amendment Act

        The Petroleum Products Amendment Act (the Petroleum Products Act) requires persons involved in the manufacturing, wholesale and retail sale of petroleum products to obtain relevant licences for such activities. Sasol Oil, Natref and Sasol South Africa Limited have submitted applications for their respective operations. The Sasol Oil wholesale licence and Sasol South Africa Limited manufacturing licence applications have been approved and the licences issued. The Sasol Oil manufacturing licence application has been accepted, however the licence has not yet been issued. As provided in the Petroleum Products Act, Sasol Oil continues to act as a deemed licence holder in relation to its manufacturing activities. The Natref manufacturing licence application is also still under review by the Department of Mineral Resources and Energy.

        Accordingly, Sasol Oil and Natref continue to operate as being persons who, as of the effective date of the Petroleum Products Act, are deemed to be holders of a licence until their applications have been finalised. Until these applications have been finalised, we cannot provide assurance that the conditions of the licences may not have a material adverse impact on our business, operating results, cash flows and financial condition.

        The Petroleum Products Act entitles the Minister of Energy to regulate the prices, specifications and stock holding of petroleum products and the status in this regard is as follows:

    The retail-pump prices of petrol, maximum refinery gate price of liquid petroleum gas (LPG) and the single maximum national price of illuminating paraffin are regulated. Prices are adjusted monthly according to published working rules and pricing formulae.
    The Department of Mineral Resources and Energy is currently reviewing the BFP mechanism. Revisions to the formula used to calculate the BFP could significantly impact revenue derived from liquid fuel sales in South Africa.

    Regulations to better align South African liquid fuels specifications with those prevailing in Europe were intended to become effective on 1 July 2017. As none of the local refineries, including those of Sasol, would have been able to comply with these new specifications, the Minister of Energy rescinded and amended the regulations and will announce a new implementation date in due course. There is a significant risk that the market demand and imported supply of cleaner fuels could overtake the regulatory date of the introduction of these fuel specifications and/or the date by which we can upgrade our plants to meet this demand. Compliance with these new fuel specifications will require substantial capital investments at both Natref and Secunda Synfuels Operations. The amount of capital investment required has not yet been finalised and discussions with the South African government regarding potential investment incentives are on-going.

    While regulations obliging licensed manufacturers to blend bio fuels with petrol and diesel are in force in South Africa, the enabling legislation to enable bio-fuels manufacturing has however not been enacted. The effect of bio-fuels blending on Sasol's liquid fuels production and sales and our financial condition cannot be determined at this time.

Regulation of pipeline gas activities in South Africa

The Gas Act

        The Gas Act provides that the National Energy Regulator of South Africa (NERSA) has the authority to issue licences for construction and operation of gas pipelines and trading in gas. NERSA also has the authority to approve gas transmission tariffs and maximum gas prices that may be charged by gas traders, where there is

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inadequate competition as contemplated in the South African Competition Act. The Gas Act further gives NERSA the authority to impose fines and other punitive measures for failure to comply with the licence conditions and/or the provisions of the Gas Act. Future regulation of maximum gas prices may have a material adverse effect on our business, operating results, cash flow and financial condition.

        Pursuant to the 2013 NERSA decisions approving the Sasol Gas maximum gas prices and transmission tariffs, Sasol Gas implemented a standardised pricing mechanism in its supply agreements with customers in compliance with the applicable regulatory and legal framework. NERSA approved further maximum gas prices and transmission tariffs based on the same pricing and tariff mechanisms in November 2017.

        Seven of Sasol Gas's largest customers initiated a judicial review of the 2013 NERSA decisions relating to its maximum price and tariff methodologies and NERSA's decision on Sasol Gas's maximum price and transmission tariff applications. The review application proceedings were completed and the High Court upheld the NERSA-approved pricing methodology. The gas customers appealed this outcome in the Supreme Court of Appeal (SCA). In May 2018 the SCA upheld the appeal. NERSA appealed the SCA decision to the Constitutional Court. Sasol supported NERSA in this appeal. On 15 July 2019 the Constitutional Court handed down its decision. The Constitutional Court overturned the 2013 NERSA maximum price decisions and ordered NERSA to revise its decisions. The new decision by NERSA regarding the maximum gas price to be approved for Sasol will apply retrospectively from 26 March 2014 when the original decisions (now overturned) became effective. Pursuant to the decision by the Constitutional Court, Sasol will in terms of the process to be determined by NERSA bring a revised application for the approval of maximum gas prices for approval by NERSA.

        The current contractual agreements with the Sasol Gas customers remain in place in terms of the November 2017 maximum price and transmission tariff decisions of NERSA. However, following the abovementioned outcome of the

appeal to the Constitutional Court, NERSA has to approve new maximum gas prices for Sasol in terms of the provisions of the Gas Act. The future implementation of such a new maximum gas price could have a material adverse effect on our business, operating results, cash flows and financial condition. If the new maximum gas price approved by NERSA for the period of the overturned decision is lower than the actual price charged to customers, then a retrospective liability may arise for Sasol Gas as a result. It is not possible to determine at this time what the outcome of such a price decision by NERSA will be. Therefore, the likelihood of a future obligation cannot be determined currently and neither can an amount for such a possible obligation be reliably estimated. Therefore, no provision has been raised at 30 June 2019.

Changes in safety, health, environmental and chemical regulations and legislation and public opinion may adversely affect our business, operating results, cash flows and financial condition

        We are subject to a wide range of general and industry-specific environmental, health and safety and other legislation in jurisdictions in which we operate. See "Item 4.B—Business overview—Regions in which Sasol operates and their applicable legislation".

        One of our most material challenges is the ability to anticipate and respond to the rapidly changing regulatory and policy context and associated stakeholder challenges, in particular relating to environmental legislation in South Africa. Evolving legislation relating to air quality, climate change, water and waste management introduces profound regulatory challenges to our existing plants in South Africa. The quality, emission and disposal limit requirements imposed in our air quality, waste management and water use licences for our South African operations are consequently becoming increasingly stringent. These laws and regulations and their enforcement are likely to become more stringent over time in all jurisdictions in which we operate, although these laws in some jurisdictions are already more established than in others. These compliance challenges are further impacted by the fact that, in some instances, legislation does not adequately

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provide for sufficient and/or flexible transitional arrangements for existing plants to comply with the imposed more stringent requirements. Compliance with these requirements is a significant factor in our business. We continue to effectively invest in significant capital expenditures in order to comply with these requirements, our committed environmental roadmaps and offset commitments. We continue with transparent disclosures and engagements with our key stakeholders in an effort to address these challenges. A failure to comply could have an impact on our licence to operate, as well as result in administrative and criminal enforcement, and could harm our relationships with stakeholders.

        Sasol's highly energy intensive operations in South Africa exist in the midst of rapidly evolving national legislation on GHG emissions. In support of the Paris Agreement, the government has recently published the Draft Climate Change Bill, promulgated the Carbon Tax Act effective 1 June 2019 and has promulgated the Pollution Prevention Plan and Greenhouse Gas Mandatory Reporting Regulations. Sasol has submitted its GHG inventory data for South Africa in compliance with the regulations and successfully obtained internal approval for its first mandatory Pollution Prevention Plan. We subsequently submitted our first annual report on our Pollution Prevention Plan in March 2019. We envisage that compliance with carbon budgets will become mandatory in 2021. For further information on the impact of carbon taxes refer to "Item 3.D—Risk factors—Our ability to respond to climate change could negatively impact our growth strategies, reduce demand for our products, increase our operational costs, reduce our competitiveness, negatively impact our stakeholder relations and affect our future legal licence to operate".

        Changes to waste management legislation in South Africa, particularly around landfill prohibitions being progressively implemented, are compelling our South African operations to find alternative solutions to waste management and disposal. The changing regulatory landscape introduces increasingly stringent waste disposal restrictions and punitive fiscal reform measures including waste levies. We are quantifying the potential costs associated with meeting these requirements. We will be dependent on regulatory

authorities clarifying the interpretation and applicability of specific requirements to our waste streams, to determine whether there would be compliance challenges associated with technical and feasibility constraints. We may have to rely on mechanisms in law, such as exemption applications, to address potential waste management compliance challenges, the outcome of which cannot be guaranteed.

        Regarding the regulation of water activities, we have noticed an increase in the number of policy and regulatory documents issued by the Department of Human Settlements, Water and Sanitation for public consultation, proposing new institutional arrangements for governing water resources, economic regulation including the imposition of waste discharge limits and infrastructure investment. At present it is too early to gauge the likely impact on our operations, in particular in relation to access to water supply, once these are implemented.

        From a chemicals management perspective, our products are required to be registered in accordance with regulatory requirements for many of the countries in which we operate, and sold in line with permit conditions, amongst other considerations. This includes filing of REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) registrations for chemicals we produce or import into Europe, and chemical notifications for other regions, especially the United States, Canada and China, as well as South Korea, Taiwan and other Asian countries. South Africa is also in the process of localising international commitments on safe chemicals management in national regulations. This includes the adoption of the Globally Harmonized System of Classification and Labelling of Chemicals (GHS) through the Department of Employment and Labour's draft Hazardous Chemical Agents Regulations and anticipated changes to regulations regarding the phase-out and management of ozone-depleting substances in line with the Montreal Protocol.

        Although systems and processes are in place, monitored and improved upon, to ensure compliance with applicable laws and regulations applicable to Sasol and its obligations downstream in the value chain, we cannot assure you that we

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will be in compliance with all laws and regulations at all times. For example, non-compliance with environmental, health or safety laws may occur from system or human errors in monitoring our emissions of hazardous or toxic substances into the environment, such as the use of incorrect methodologies or defective or inappropriate measuring equipment, errors in manually capturing results, or other mistaken or unauthorised acts of our employees or service providers.

        Public opinion and awareness is growing and challenges are increasingly being raised on community and consumer health and safety associated with the manufacturing and use of chemicals and industries reliant on fossil fuels. Our manufacturing processes may utilise and result in the emission of or exposure to substances with potential health risks. We also manufacture products which may pose safety, health and environmental risks. Although we remain committed to apply a duty of care principle and implement measures to eliminate or mitigate associated potential risks, including through our commitment to the Responsible Care® programme and adoption of the GHS, we may be subject to liabilities as a result of the use or exposure to these materials or emissions. See "Item 4.B—Business overview—Regulation" for more detail.

        We recognise that evolving chemicals control regulations globally may require additional product safety evaluations with the potential for restrictions on product uses. Consequently, markets may apply pressure on us concerning certain of our products, feedstock, manufacturing processes, transportation and distribution arrangements. As a result of these additional pressures, the associated costs of compliance and other factors, we may be required to modify or withdraw certain products from the market, which could have a material adverse effect on our business, operating results, cash flows, financial condition and reputation.

        For example, the fast growth of plastics, combined with challenges in effective waste disposal, has resulted in a global problem associated with plastics waste in the environment. The main source of the problem is identified as

short-life consumer packaging-type applications, often referred to as single-use plastics. Consumer and regulator sentiment regarding the plastic pollution challenge may pose future responsibilities and business constraints on the wider industry, including Sasol, amongst other things through extended producer responsibility, bans on certain polymer product applications and reduced demand for polymers where alternatives are perceived to be more acceptable to the markets they serve.

We are subject to risks associated with litigation and regulatory proceedings

        As with most large corporations, we are involved from time to time as a party to various lawsuits, arbitrations, regulatory proceedings, investigations or other disputes. Litigation, arbitration and other such legal proceedings or investigations involve inherent uncertainties and, as a result, we face risks associated with adverse judgments or outcomes in these matters. Even in cases where we may ultimately prevail on the merits of any dispute, we may face significant costs defending our rights, lose certain rights or benefits during the pendency of any proceeding or suffer reputational damage as a result of our involvement. We are currently engaged in a number of legal and regulatory proceedings and arbitrations in various jurisdictions including the litigation relating to the Sasol Khanyisa B-BBEE transaction described under "—There are country specific risks relating to the countries in which we operate that could adversely affect our business, operating results, cash flows and financial condition—(a) Political and socioeconomic issues—ii. Transformation and local content" and the SFI tax proceedings described under "—There are country specific risks relating to the countries in which we operate that could adversely affect our business, operating results, cash flows and financial condition—(c) Legal and regulatory—ii. Tax laws and regulations", as well as described under "Item 4.B—Business overview—Legal proceedings and other contingencies". We could also face potential litigation or governmental investigations or regulatory proceedings in connection with the material weakness in our internal control over financial reporting or the reportable irregularity relating to the same matter (see "—We identified

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a material weakness in our internal control over financial reporting as of 30 June 2019 which we are still in the process of remediating. If we are unable to remediate this material weakness, or if we experience additional material weaknesses or other deficiencies in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately and timely report our financial results, which could cause shareholders to lose confidence in our financial and other public reporting and adversely affect our share price").

        There can be no assurance as to the outcome of any litigation, arbitration or other legal proceeding or investigation, and the adverse determination of material litigation could have a material adverse effect on our business, operational results, cash flows and financial condition.

We may not be successful in attracting and retaining sufficiently skilled employees

        In order for Sasol to deliver on its strategic objectives, sustainably grow into the future, and effectively operate and continuously improve existing and future assets and technologies, we are highly dependent on our human capital.

        While we maintain a focus on attracting and retaining sufficiently skilled and experienced employees, including critical or scarce skills like qualified scientists, engineers, project execution managers, artisans and operators and highly skilled employees in business and functional roles, there exist various risks that may impact our ability to attract and retain required skills.

        There is increasing competition in global labour markets for critical or scarce skills. The quality and availability of skills in certain labour markets may also be impacted by the challenges within the education and training systems in certain countries in which we operate. Localisation, diversity and other similar legislation in countries in which we operate are also key considerations in the attraction and retention of sufficiently skilled employees. The increasing use of digital technologies across our industry is placing increasing demand on data and digital technology skills. The availability and supply of these new skill sets are limited due to demand

outweighing supply. In addition, as the move into the digital space intensifies, future labour market dynamics may significantly change and we may fail to adequately or timeously anticipate and respond to such changes.

        Without adequate investment in, effective management and deployment of our human capital, and failure to adequately or timeously anticipate changing labour market dynamics, our ability to meet current and future business needs, deliver on our strategy, perform to expectations, remain competitive and deliver stakeholder value may be compromised.

Intellectual property risks may adversely affect our freedom to operate our processes and sell our products and may dilute our competitive advantage

        Our various products and processes, including most notably our specialty chemical and energy products and processes, have unique characteristics and chemical structures and, as a result, are subject to confidentiality and/or patent protection, the extent of which varies from country to country. Rapid changes in our technology commercialisation strategy may result in a misalignment between our intellectual property protection filing strategy and the countries in which we operate. The disclosure of our confidential information and/or the expiry of a patent may result in increased competition in the market for our products and processes, although the continuous supplementation of our patent portfolio reduces such risk to an extent. In addition, aggressive patenting by our competitors, particularly in countries like the US, China, Japan and Europe may result in an increased patent infringement risk and may constrain our ability to operate in our preferred markets.

        A significant percentage of our products can be regarded as commodity chemicals, some of which have unique characteristics and chemical structure which make the products suitable for different applications than typical commodity products. These products are normally utilised by ourselves or our customers as feedstock to manufacture specialty chemicals or application-type products. We have noticed a worldwide trend of increased filing of patents

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relating to the composition of product formulations and the applications thereof. These patents may create pressure on both Sasol and those of our customers who market these product formulations which may adversely affect our sales to these customers. These patents may also increase our risk to exposure from limited indemnities provided to our customers of these products in case there is a patent infringement which may impact the use of the product on our customers' side. Patent-related pressures may adversely affect our business, market reputation, operating results, cash flows and financial condition.

        We believe that our proprietary technology, know how, confidential information and trade secrets provide us with a competitive advantage. A possible loss of experienced personnel to competitors, and a possible transfer of know-how and trade secrets associated therewith, including the patenting by our competitors of technology built on our know-how obtained through former employees may negatively impact this advantage.

        Similarly, operating and licensing technology in countries in which intellectual property laws are not well established and enforced may result in an inability to effectively enforce our intellectual property rights. The risk of some transfer of our know how and trade secrets to our competitors is increased by the increase in the number of licenses granted under our intellectual property, as well as the increase in the number of licensed plants which are brought into operation through entities which we do not control. As intellectual property warranties and indemnities are provided under each new licence granted, the cumulative risk increases accordingly. These risks may adversely affect 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.

We may face potential costs in connection with industry and value chain-related operational interruptions, accidents or deliberate acts of terror causing property damage, personal injuries or environmental contamination

        Operational interruptions impacting our operations or value chains may have a material adverse effect on volumes produced and costs. This can be as a result of failure of critical assets, extreme weather events or natural disasters, lack of feedstock (coal, natural gas, ethane, ethylene), supply chain disruption (inbound and outbound), utility interruption (electricity, water, oxygen, steam, hydrogen, nitrogen) or a breach of our license to operate (non-compliance with regulatory requirements or permits).

        We operate coal mines, explore for and produce oil and gas and operate a number of plants and facilities for the manufacture, storage, processing and transportation of oil, chemicals and gas, related raw materials, products and wastes. These facilities and their respective operations are subject to various risks, such as fires, explosions, releases and loss of containment of hazardous substances, soil and water contamination, flooding and land subsidence, among others. As a result, we are subject to the risk of, and in the past have experienced, industry-related incidents. Such incidents can be subjected to inspections by relevant authorities, with the associated potential consequences of enforcement action, including directions to temporarily cease and desist operations and the imposition of fines and penalties. This may have a material adverse effect on our business.

        Our facilities are also subject to the risk of deliberate acts of terror.

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        Our main Secunda production facilities are concentrated in a relatively small area in Secunda, South Africa. The size of the facility is approximately 83 square kilometres (km2) with operating plants accounting for 9 km2. This facility utilises feedstock from our mining and gas businesses, while the chemical and energy businesses elsewhere also rely on the facility for the raw materials it produces. Accidents and acts of terror may result in damage to our facilities and may require the shutdown of the affected facilities, thereby disrupting production and increasing production costs and may in turn disrupt the mining, gas, chemicals and oil businesses which make up a significant portion of our total income. Furthermore, accidents or acts of terror at our operations may have caused, or may in future cause, environmental contamination, personal injuries, health impairment or fatalities and may result in exposure to extensive environmental remediation costs, civil litigation, the imposition of fines and penalties and the need to obtain or implement costly pollution-control technology.

        Sasol operates the Pande and Temane gas fields in Mozambique. Gas is produced from a portfolio of wells, and then processed through a Central Processing Facility (CPF). Gas is sold to our operations in Secunda and Sasolburg as well as to external customers in Mozambique and South Africa. The production of gas through wells, pipelines and a processing plant is inherently exposed to the risk of integrity failures which may result in a loss of containment and/or a disruption of gas supply to our own and/or customers operations. The risk of any well, pipeline or plant equipment failure is managed through a structured, continuously ongoing maintenance and management programme. Were Sasol's Mozambique gas wells or facilities to experience a catastrophic, simultaneous, long-term outage, particularly if we are unable to offset such outages through existing contractual gas sales agreement mechanisms, this could have a material adverse effect on our revenue, cash flows and costs.

        Our products are ultimately sold to customers around the world and this exposes us to risks related to the transportation of such products by road, rail, pipelines or marine vessels or the nefarious use of our products for illegitimate

purposes, such as the manufacture of illicit drugs and chemical weapons, or the use of explosives for violent and criminal acts. Such activities would generally take place in the public domain exposing us to incident risks over which we have limited control.

        It is Sasol's policy to ensure effective service provider management and procure appropriate property damage and business interruption insurance cover for its production facilities above acceptable deductible levels at acceptable commercial premiums. However, full cover for all loss scenarios may not be available at acceptable commercial rates, and we cannot give any assurance that the insurance procured for any particular year would cover all potential risks sufficiently or that the insurers will have the financial ability to pay all claims that may arise.

        The costs we may incur as a result of the above or related factors could have a material adverse effect on our business, operating results, cash flows and financial condition.

Exposure related to investments in associates and joint arrangements may adversely affect our business, operating results, cash flows and financial condition

        We have invested in a number of associates and joint arrangements and will consider opportunities for further upstream oil and gas and downstream investments (including licensing opportunities), where appropriate, as well as opportunities in chemicals. The development of these projects may require investments in associates and joint arrangements, some of which are aimed at facilitating entry into countries and/or sharing risk with third parties. Although the risks are shared, the objectives of our associates and joint arrangement partners; their ability to meet their financial and/or contractual obligations; their behaviour; their compliance with legal and ethical standards; and the increasing complexity of country-specific legislation and regulations may adversely affect our reputation and/or result in disputes and/or litigation. All of these may have a material adverse effect on our business, operating results, cash flows and financial condition, and may constrain the achievement of our growth objectives.

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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 (IT) and digital infrastructure systems in operations is making all industries, including the energy and chemicals industries, much more susceptible to cyber threats and information security breaches. IT and digital systems with related services include our financial, commercial, transacting and production systems. Sasol has an information security programme in place to mitigate the risks that come with cyber threats and information security breaches but recognises that if there is a breach of information security we could experience disruptions of critical services, or in the worst case scenario, this could have a material adverse effect on our business, operating results, cash flows and financial condition and our disclosure control processes.

        In addition, we operate in countries that have data protection laws and regulations. Although it is our policy to comply with all applicable laws, and notwithstanding training, awareness and compliance programmes, non-compliance with data protection laws could result in fines and/or civil claims and damages. This could have a material adverse impact on our reputation and a consequential financial impact.

We may not pay dividends or make similar payments to shareholders in the future due to various factors

        As further described under Item 8. Financial Information, the company's dividend policy takes into consideration various factors, including overall market and economic conditions, the group's financial position, capital investment plans as well as earnings growth. Whether funds are available for distribution to shareholders depends on a variety of factors, including the amount of cash available and our capital expenditures and other liquidity requirements existing at the time. Under South African law, the company will be entitled to pay a dividend or similar payment to its shareholders only if it meets the solvency and liquidity tests set out in the Companies Act of South Africa 71 of 2008, and is permitted to do so

in terms of the Memorandum of Incorporation. Given these factors and our board's discretion to declare cash dividends or other similar payments, dividends may not be paid in the future.

        After careful consideration of our current leverage and the volatility in the macro-economic environment, we have decided to pass the final dividend in order to protect and strengthen our balance sheet. We may further consider the passing of the 2020 interim dividend based on the health of the balance sheet credit metrics at that stage.

        Our dividend cover for 2017 was 2,8 times based on HEPS and 2,8 times based on CHEPS for 2018. Interim dividend for 2019 was 6,5 times based on CHEPS. We usually distribute dividends twice a year.

We may not be able to exploit technological advances quickly and successfully or competitors may develop superior technologies

        Most of our operations, including the gasification of coal and the manufacture of synthetic fuels and petrochemical products, are highly 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.

        In addition to the technological challenges, a number of our expansion projects are integrated across our value chain. Delays with the development of an integrated project might,

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accordingly, have an impact on more than one business segment.

        Our ability to compete will 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. Any failure to do so could result in a material adverse effect on our business, operating results, cash flows and financial condition.

The exercise of voting rights by holders of American Depositary Receipts is limited in some circumstances

        Holders of American Depositary Receipts (ADRs) may exercise voting rights with respect to the ordinary shares underlying their American Depositary Shares (ADSs) only in accordance with the provisions of our deposit agreement (Deposit Agreement) with J.P. Morgan Chase Bank N.A. (J.P. Morgan), as the depositary (Depositary). For example, ADR holders will not receive notice of a meeting directly from us. Rather, we will provide notice of a shareholders meeting to J.P. Morgan in accordance with the Deposit Agreement. J.P. Morgan has undertaken in turn, as soon as practicable after receipt of our notice, to mail voting materials to holders of ADRs. These voting materials include information on the matters to be voted on as contained in our notice of the shareholders meeting and a statement that the holders of ADRs on a specified date will be entitled, subject to any applicable provision of the laws of South Africa and our Memorandum of Incorporation (MOI), to instruct J.P. Morgan as to the exercise of the voting rights pertaining to the shares underlying their respective ADSs.

        Upon the written instruction of an ADR holder, J.P. Morgan will endeavour, in so far as practicable, to vote or cause to be voted the shares underlying the ADSs in accordance with the instructions received. If instructions from an ADR holder are not received by J.P. Morgan by the date specified in the voting materials, J.P. Morgan will not request a proxy on behalf of such holder. J.P. Morgan will not vote or attempt to exercise the right to vote other than in accordance with the instructions received from ADR holders.

        We cannot assure you that you will receive the voting materials in time to ensure that you can instruct J.P. Morgan to vote the shares underlying your ADSs. In addition, J.P. Morgan and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that you may not be able to exercise your right to vote and there may be no recourse if your voting rights are not exercised as you directed.

Holders of Sasol's ordinary shares or ADSs may be subject to dilution as a result of any non-pre-emptive share issuance, and shareholders or ADS holders outside South Africa may not be able to participate in future offerings of securities (including Sasol's ordinary shares) carried out by or on behalf of Sasol

        Future share issuances by Sasol, with or without subscription rights, could (depending on how the share issuance is structured) dilute the interests of existing shareholders or require them to invest further funds to avoid such dilution.

        In the case of an equity offering with subscription rights, holders of Sasol's shares in certain jurisdictions may not be entitled to exercise such rights unless the rights and the related shares are registered or qualified for sale under the relevant legislation or regulatory framework. In particular, holders of Sasol's securities who are located in the United States (including those who hold ordinary shares or ADSs) may not be able to participate in securities offerings by or on behalf of Sasol unless a registration statement under the U.S. Securities Act of 1933 (the Securities Act) is effective with respect to such securities or an exemption from the registration requirements of the Securities Act is available thereunder. Holders of these shares in these jurisdictions may therefore suffer dilution of their shareholding should they not be permitted to, or otherwise choose not to, participate in future equity offerings with subscription rights.

Sales of a large amount of Sasol's ordinary shares and ADSs could adversely affect the prevailing market price of the securities

        Historically, trading volumes and the liquidity of shares listed on the JSE Limited (JSE) have

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been low in comparison with other major markets. The ability of a holder to sell a substantial number of Sasol's ordinary shares on the JSE in a timely manner, especially in a large block trade, may be restricted by this limited liquidity. The sales of ordinary shares or ADSs, if substantial, or the perception that these sales may occur and be substantial, could exert downward pressure on the prevailing market prices for Sasol ordinary shares or ADSs, causing their market prices to decline.

ITEM 4.    INFORMATION ON THE COMPANY

4.A History and development of the company

        Sasol Limited, the ultimate holding company of our group, is a public company. It was incorporated under the laws of South Africa in 1979 and has been listed on the JSE Limited (JSE) since October 1979. Our registered office and corporate headquarters are at Sasol Place, 50 Katherine Street, Sandton, 2196, South Africa, and our telephone number is +27 10 344 5000. Our agent for service of process in the US is Puglisi & Associates, 850 Library Avenue, Suite 204, P.O. Box 885, Newark, Delaware 19715.

        The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding Sasol that we file electronically with the SEC. To find the required information please visit www.sec.gov/. For further information please visit www.sasol.com. This website is not incorporated by reference in this annual report.

        For a description of the company's principal capital expenditures and divestitures refer to "Item 5.B—Liquidity and capital resources".

4.B Business overview

        Sasol is an international integrated chemicals and energy company that, through its talented people, uses selected technologies to safely and sustainably source, produce and market chemical and energy products competitively to create superior value for our customers, shareholders and other stakeholders.

        For details regarding the following sections, refer as indicated.

    for information regarding our Business Overview, refer "How we structure ourselves to create value" as contained in Exhibit 99.4;

    for information regarding our Strategy, refer "Integrated Report—Progressing on our value-based strategy" as contained in Exhibit 99.5; and "Integrated Report—Our integrated value chain" as contained in Exhibit 99.6;

    for a description of the company's operations and principal activities refer "How we structure ourselves to create value" as contained in Exhibit 99.4; "Integrated Report—Operational and Strategic Overviews" as contained in Exhibit 99.7; and Item 18—"Financial Statements—Segment information"; and

    for a description of our principal markets, refer to Item 18—"Financial Statements—Geographic segment information", which provides information regarding the geographic location of the principal markets in which we generate our turnover, as well as of our asset base.

Seasonality

        Sales volumes of our products are generally not subject to seasonal fluctuations, but tend to follow broader global industry trends and are therefore impacted by macro-economic factors. Sasol operates globally and in many diverse markets, and accordingly, no element of seasonality is likely to be material to the results of Sasol as a whole. For further information regarding cyclicality and prices and demand, refer to "Item 3.D—Risk Factors".

Raw materials

        In the Southern Africa value chain, the main feedstock components for the production of fuels and chemical products are coal obtained from Sasol Mining, natural gas obtained from Sasol Exploration and Production International and crude oil purchased from external suppliers.

        In our Chemicals business, the main feedstocks used are kerosene, benzene, ethane, ethylene, oleochemicals, slack wax and aluminium.

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Feedstocks are purchased externally, with the exception of a portion of ethylene which is produced at our Lake Charles facility and the Fischer-Tropsch-based feedstock used for our South African alcohol, wax, ammonia, phenolics, and co-monomer production. The pricing of most of these raw materials follow global market dynamics which relate to crude oil and energy prices.

Marketing channels and principal markets

        In our Operating Business Units, we make use of direct sales models, long-term marketing gas sales agreements and short-term crude oil sale and purchase agreements.

        Our Regional Operating Hubs channel their products through the Strategic Business Units to external markets.

        In our Strategic Business Units, marketing channels can be divided into the following main areas:

        Energy:

    liquid fuel sales to licensed wholesalers;

    liquid fuels direct marketing (retail and commercial markets in South Africa);

    piped gas marketing in South Africa (wholesale and commercial markets);

    liquid fuels overland exports into other parts of Southern Africa; and

    electricity sales to Electricidade de Moçambique (EDM) in Mozambique.

        Base Chemicals:

    polymer products produced in South Africa are sold mainly to customers in South Africa and internationally; polymer products produced in the United States are sold mainly to customers in the United States and internationally;

    solvents products are sold through 14 regional sales offices and 15 storage hubs in South Africa, Europe, South America, the Asia-Pacific region, the Middle East and the US; and
    fertilisers and explosives are sold entirely within Southern Africa.

        Performance Chemicals:

    the majority of products are sold globally, directly to business customers (B2B), a significant percentage under annual and multi-year contracts.

Factors on which the business is dependent

Intellectual property

        Our proprietary or licensed technologies, our software licences, procedures and protocols support Sasol's competitive advantage. These consist of:

    our patented technologies;

    skilled, experienced and technically qualified employees, industry thought leaders and experts that enable Sasol to respond to the constantly changing environment; and

    our business processes and management systems.
Intellectual Capital summary
  2019   2018

Number of new patents issued

  150   148

Total worldwide patents held

  2 500   2 409

Investment in research and development

  R966 million   R1 027 million

        The Sasol Slurry Phase DistillateTM (Sasol SPDTM) process—Based on our Technology function's extensive experience in the commercial application of the Fischer-Tropsch (FT) technology, we have successfully commercialized the FT-based Sasol SPDTM process for converting natural gas into high-quality, environment-friendly GTL diesel, GTL kerosene and other liquid hydrocarbons.

        The Sasol SPDTM process intergrates the following three main technologies, each of which is commercially proven. These include:

    the Haldor Topsøe SynCORTM reforming technology, which converts natural gas and oxygen into syngas;

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    our Sasol Low Temperature Fischer-TropschTM (Sasol LTFTTM) technology, which converts syngas into hydrocarbons; and

    the Chevron IsocrackingTM technology, which converts hydrocarbons into particular products, mainly diesel, naphtha and LPG.

        Currently we believe, based on our knowledge of the industry and publicly available information, that globally, we have the most extensive experience in the application of FT technology on a commercial scale. The Sasol SPDTM process converts natural gas into diesel and other liquid hydrocarbons, which are generally more environmentally friendly and of higher quality and performance compared to the equivalent crude oil-derived products. In view of product specifications gradually becoming more stringent, especially with respect to emissions, we believe that this option is environmentally friendly. The Sasol SPDTM process can further be adopted to produce differentiated value-added products, such as GTL base oils. The superior quality of GTL base oils positions these products firmly as premium components in the formulation of top-tier lubricants.

Key contracts

        ORYX GTL, our 49% joint venture in Qatar, purchases natural gas feedstock from Al Khaleej Gas, a joint venture between ExxonMobil Middle East Gas Marketing Limited and Qatar Petroleum, under a gas purchase agreement with a contracted minimum off-take volume. The agreement commenced in November 2005 and is valid for a term of 25 years. The term of the agreement may be extended by the parties on terms and conditions that are mutually agreed.

        Escravos GTL (EGTL), in which we hold a 10% indirect economic interest, purchases 100% of its gas requirements for the EGTL plant from Chevron Nigeria Limited (CNL) and Nigerian National Petroleum Corporation (NNPC), the upstream joint venture partners. The agreement commenced from the date of commissioning and is valid for 25 years after the start of beneficial operation which was during June 2014. The term of the agreement may be extended by the parties on terms and conditions that are mutually agreed.

        Since November 2017, EGTL has been responsible for the marketing of its own products.

        Central Térmica de Ressano Garcia (CTRG), our 49% joint operation in Mozambique, purchases natural gas feedstock produced from our natural gas asset Pande-Temane Petroleum Production Agreement (PPA), which is managed by an unincorporated joint operation comprising of Sasol's subsidiary Sasol Petroleum Temane Limitada (SPT), and partners Companhia Mozambique de Hidrocabonetos (CMH) and the International Financial Corporation (IFC). CTRG also has a gas transport agreement with the Republic of Mozambique Pipeline Investments Company (Pty) Ltd (ROMPCO) and a power purchase agreement with Electricidade de Mozambique (EDM). The term of the agreements commenced on 27 February 2015 and is valid for 20 years.

        ROMPCO is owned by Sasol (50%, the shares are held by Sasol South Africa Limited, the South African Gas Development Company SOC Limited (iGas), a subsidiary of the Government of South African-owned Central Energy Fund (CEF) (25%) and Companhia Moçambicana de Gasoduto SA (CMG), a subsidiary of Government of Mozambique-owned ENH (25%)). It was formed to transport natural gas from the Pande and Temane gas fields in Mozambique to markets in both Mozambique and South Africa via the Mozambique-Secunda gas transmission pipeline (MSP).

        Refer to "Item 4.D—Property, plants and equipment—Exploration and Production International" for detail regarding key contracts in Gabon and Mozambique.

Legal proceedings and other contingencies

        From time to time, Sasol companies are involved in litigation, tax and similar proceedings in the normal course of business. Although the outcome of these claims and disputes cannot be predicted with certainty, a detailed assessment is performed on each matter, and a provision is recognised, or contingent liability disclosed, where appropriate in terms of International Financial Reporting Standards.

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        As previously reported, the South African Revenue Service ("SARS") issued revised assessments for Sasol Oil relating to a dispute around its international crude oil procurement activities for the 2005 to 2012 tax years. Sasol Oil raised a provision in its financial statements of R1,3 billion, including penalties and interest, which covers the 2005 to 2014 tax years in relation to these procurement activities. On 9 November 2018, the Supreme Court of Appeal ("SCA") upheld an appeal filed by Sasol Oil (in respect of the 2005 to 2007 tax years) and set aside an earlier ruling by the Tax Court. On the basis of this judgement, Sasol Oil has reversed the provision of R1,3 billion.

        On 29 November 2018, SARS applied to the Constitutional Court ("Con Court") for leave to appeal against the SCA decision. On 4 February 2019, the Con Court dismissed the SARS application with costs ruling that the matter falls outside the jurisdiction of the Con Court and, in any event, bears no reasonable prospect of success.

        In addition to the above litigation, the potential contingent liability relating to the ongoing dispute with SARS in relation to its revised assessments for the 2013 and 2014 tax years, based on a different primary grounds of assessment regarding Sasol Oil's crude oil procurement activity, amounts to R13,4 billion (including interest and penalties as at 30 June 2019). Sasol Oil disagrees with SARS's assessment for the 2013 and 2014 periods and hence this tax dispute was the subject of an ongoing appeal with the Tax Court lodged by Sasol Oil.

        The impact of the SCA and Con Court judgements on the open years of assessment viz. 1999 to 2004 and 2008 to 2016 (open years), were fully considered by both parties. Consequently SARS and Sasol Oil have come to a mutual agreement resulting in the dispute between the parties being resolved for all the open years of assessment. As a result, Sasol is no longer exposed to the contingent liability of R13,4 billion.

        As reported previously, SARS conducted an audit over a number of years on Sasol Financing International Plc (SFI) which performs an off-shore treasury function for Sasol. The audit culminated in the issuance of revised assessments

in respect of the 2002 to 2012 tax years and the dispute relates to the place of effective management of SFI. SFI has co-operated fully with SARS during the course of the audit relating to these assessments. The potential tax exposure is R2,4 billion (including interest and penalties as at 30 June 2019), which is disclosed as a contingent liability, and was reduced from the R3,2 billion previously reported, due to the reduction of the penalties applied by SARS.

        SFI, in consultation with its tax and legal advisors, does not support the basis of these additional assessments for all the years of assessment. Accordingly, SFI lodged an objection and appeal in the Tax Court against the revised assessments. SFI and SARS have, however, come to a mutual agreement that the appeal and related Tax Court processes will be held in abeyance pending the outcome of the judicial review application noted below.

        In addition, Sasol has also launched a judicial review application against the SARS decision to register SFI as a South African taxpayer. SARS's answering affidavit in this litigation was submitted on 8 February 2019 and SFI responded accordingly. The legal process is ongoing in this regard.

        Sasol is committed to comply with tax laws and any disputes with tax authorities on the interpretation of tax laws and regulations will be addressed in a transparent and constructive manner.

        For a description of the legal review of the NERSA maximum pricing and transmission tariffs refer to "Item 3.D—Risk Factors—Legislation in South Africa on petroleum and energy activities may have an adverse impact on our business, operating results, cash flows and financial condition—Regulation of pipeline gas activities in South Africa—The Gas Act".

        Following a judgement by the South African Constitutional Court in 2011, which confirmed the right of employees in the mining industry who contracted certain occupational diseases to claim damages from their employers, a number of legal cases were instituted in South Africa. Similar cases have also been threatened against participants in the coal sector of the mining

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industry. As a result of the Constitutional Court judgement referred to above, Sasol Mining is currently the defendant in three separate litigation matters. The first matter was instituted by 22 claimants who allege that they have contracted coal dust related lung diseases, including pneumoconiosis, while in Sasol Mining's employment. The plaintiffs allege that they were exposed to harmful quantities of coal dust while working underground for Sasol Mining and that the company failed to comply with various sections of the Mine Health and Safety Act, 1996; failed to comply with various regulations issued in terms thereof; and failed to take effective measures to reduce the exposure of mine workers to coal dust. The plaintiffs allege that all of the above increased the risk for workers to contract coal dust related lung diseases.

        The first lawsuit is not a class action but rather 22 individual cases, each of which will be judged on its own merits. Two plaintiffs have since passed away and their claims have been withdrawn. The remaining 20 plaintiffs seek compensation for damages relating to past and future medical costs and loss of income amounting to R67,7 million in total. Sasol Mining is defending the claims.

        The merits of each single claim are not clear yet. There is also some uncertainty as to whether some of the claims have prescribed. Therefore, it is not possible at this stage to make an estimate of the likelihood that the plaintiffs will succeed with their claim and if successful, what the quantum of damages would be that the court will award. Therefore, no provision has been raised at 30 June 2019.

        In addition to the above, during 2009, certain employees in Sasol Mining were charged with participation in an unprotected sit-in, threatening and forcing others to participate in an unprotected strike and for assaulting or attempting to assault others during an unprotected strike and were subsequently dismissed. These employees are disputing their dismissal. On 19 September 2019, the Labour Court passed a judgement directing inter alia Sasol Mining to re-instate the employees and pay certain past benefits. Sasol Mining filed an application for leave to appeal the judgement on

10 October 2019. Once the latter has been obtained the appeal will be heard by the Labour Appeal Court. This date has not been set. The outcome of the appeal is uncertain and therefore it is not possible at this stage to make an estimate of the likelihood of the outcome. No provision has been raised at 30 June 2019.

        Following certain complaints submitted to the South African Broad Based Black Economic Empowerment Commission (B-BBEE Commission) by direct and indirect shareholders in Tshwarisano Liquid Fuels Investments (Pty) Ltd (Tshwarisano) relating to Tshwarisano's 25% shareholding in Sasol Oil (Pty) Ltd (Sasol Oil), the BBBEE Commission is investigating the compliance by Sasol Oil and other affected stakeholders with the South African B-BBEE Act, 53 of 2003. While certain of these investigations are still ongoing, Sasol Oil has received findings and recommendations from the B-BBEE Commission in relation to a complaint by a particular shareholder who complained about unfavourable terms and conditions of a funding arrangement concluded between the shareholder and its funders in order to fund its acquisition of shares in Tshwarisano. Sasol Oil was not a party to the funding agreement. The shareholders in question alleged that they did not derive any economic benefit from the said funding arrangement. Sasol Oil has fully co-operated with the B -BBEE Commission during all of the ongoing investigations and will continue to do so.

        In terms of the provisions of the B-BBEE Act, 53 of 2003 the final findings of the B-BBEE Commission in this matter cannot be published yet. Sasol Oil has notified the B-BBEE Commission that it does not agree with the findings and that Sasol Oil will institute a legal review application in order for the High Court to overturn the findings made by the B-BBEE Commission. Sasol Oil will pursue the intended legal review process but due to the nature of litigation matters the outcome of the matter cannot be predicted with certainty. In addition the quantum of any ultimate financial liability for Sasol Oil resulting from a possible adverse finding against Sasol Oil in this matter cannot be established at this time, this matter currently represents a general contingent liability for the company.

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        Further, from time to time, communities and non-governmental organisations challenge our environmental licences and related applications because of concerns regarding potential health and environmental impacts associated with Sasol's activities.

        The South African National Environmental Management: Air Quality Act prescribes minimum emission standards, applicable to existing plants which had to be complied with starting on 1 April 2015. Some parts of our operating units in South Africa were not able to comply with the minimum emission standards, and accordingly, applied for postponements. On 24 February 2015, the Department of Environment, Forestry and Fisheries issued the postponement decisions. In those instances where Sasol was granted compliance extensions for less than the five years it initially requested, Sasol received further postponements. Sasol continues to operate under atmospheric emission licences that incorporate these postponement decisions.

        More stringent minimum emission standards, applicable to existing plants are required to be complied with starting on 1 April 2020. Some parts of our operating units in South Africa will not be able to comply with these and therefore in March 2019 Sasol submitted applications for postponements on the timeframe to comply with the more stringent minimum emission standards. It is uncertain whether these further postponement applications will be granted or whether they will be challenged by third parties and if so, whether any decisions granted in respect thereof can always be successfully defended. In the case of a postponement decision being declared invalid, the consequences for Sasol may be material as operating units may be found in non-compliance with the aforementioned Air Quality Act and the associated atmospheric emission licence. Sasol needs to make substantial investment to meet minimum emissions standards requirements.

Competition law compliance

        Sasol continuously evaluates its compliance programmes and controls in general, including its competition law compliance programme and controls. As a consequence of these compliance

programmes and controls, including monitoring and review activities, Sasol has adopted appropriate remedial and/or mitigating steps, where necessary or advisable, lodged leniency applications, and made and will continue to make disclosures on material findings as and when appropriate. These ongoing compliance activities have already revealed, and may still reveal, competition law contraventions or potential contraventions in respect of which we have taken, or will take, appropriate remedial and/or mitigating steps including lodging leniency applications.

Environmental orders

        To ensure our ongoing compliance with air quality regulations in South Africa, Sasol applied for certain postponements to manage our short-term challenges relating to the compliance timeframes in adhering to the stricter emission standards. We have received confirmation on our initial postponement applications from the National Air Quality Officer, which are reflected in our atmospheric emission licences ("AEL"). Where shorter postponements were granted initially, applications have subsequently been made by our Secunda Synfuels, Sasolburg and Natref operations and further extensions until 2020 have been received to enable the progression of our committed environmental roadmaps. These extensions and associated conditions, which include stretched targets, are included in the relevant varied AELs under which we now operate. In March 2019, Sasol submitted applications for postponements on the timeframe to comply with certain of the more stringent minimum emission standards which will come into effect on 1 April 2020. These applications are currently with the Department of Environment, Forestry and Fishing for decision making.

        Sasol's commitment remains to re commission the Sasolburg incinerators only if compliance with the applicable various emission limits can be sustained. Both our Sasolburg and Secunda Synfuels operations are engaging with their respective local licensing authorities with regards to the renewal of their AELs. Sasol's environmental obligation accrued at 30 June 2019

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was R18 742 million compared to R14 933 million at 30 June 2018. Included in this balance is an amount accrued of R4 924 million in respect of the costs of remediation of soil and groundwater contamination and similar environmental costs. These costs relate to the following activities: site assessments, soil and groundwater clean-up and remediation, and on-going monitoring. Due to uncertainties regarding future costs, the potential loss in excess of the amount accrued cannot be reasonably determined.

        Although Sasol has provided for known environmental obligations that are probable and reasonably estimable, the amount of additional future costs relating to remediation and rehabilitation may be material to the results of the operations in the period in which they are recognised. We do not expect these environmental obligations to have a material effect on the financial position of the group.

Regulation

        The South African government has, over the past 20 years, introduced a legislative and policy regime with the imperative of redressing historical social and economic inequalities, as stated in the Constitution of the Republic of South Africa, by way of the empowerment of historically disadvantaged South Africans (HDSAs) in the areas of ownership, management and control, employment equity, skills development, procurement, enterprise development and socioeconomic development.

        The majority of our operations are based in South Africa, but we also operate in numerous other countries throughout the world. In South Africa, we operate coal mines and a number of production plants and facilities for the storage, processing and transportation of raw materials, products and wastes related to coal, oil, chemicals and gas. These facilities and the respective operations are subject to various laws and regulations that may become more stringent and may, in some cases, affect our business, operating results, cash flows and financial condition.

        Our business activities in South Africa relating to coal mining, petroleum production, distribution and marketing of fuel products,

electricity and gas are subject to regulation by various government departments and independent regulators. Refer to "Item 3.D—Risk factors" for details on particular aspects of regulations affecting our business activities.

Empowerment of historically disadvantaged South Africans

Black Economic Empowerment policies and legislation

Broad-Based Black Economic Empowerment Act, 53 of 2003 (B-BBEE Act)

        Sasol is well aligned with the economic transformation and sustainable development objectives embodied in the South African legislative and regulatory framework governing Broad-Based Black Economic Empowerment (B-BBEE). The key elements of this framework are the B-BBEE Act and the Codes of Good Practice (the new Codes were gazetted on 11 October 2013 and promulgated on 1 May 2015 and further amended during May 2019) for B-BBEE issued by the Minister of Trade and Industry in terms of the Act (Codes), as well as the Charters (i.e. the Mining Charter and Liquid Fuels Charter) adopted by the various sectors within which Sasol operates businesses and the related scorecards.

        Transformation is an essential part of the group's strategy, and thus our B-BBEE framework and plans have been developed to ensure that measurable progress is made towards sustainable economic transformation. Our approach is intrinsically collaborative and the business works together with all of our stakeholders: customers, partners, suppliers and the public sector, including government. Our approach to transformation is thus much more than just meeting targets and we are committed to constant evaluation of our achievements, as well as tackling challenges and leveraging new opportunities.

        Sasol continues to support the goals of the National Development Plan (NDP) 2030, B-BBEE, Employment Equity and Skills Development Acts. Sasol supports the broader objectives of skills development and has been a significant contributor to skills development and in turn socioeconomic development in South

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Africa over the years. Through various management training programmes, Sasol has notably built a pipeline of black managers who are moving from junior management to senior management positions and have made strides in this area. Furthermore, Sasol provides support to small, medium and micro-sized enterprises (SMMEs) which includes loan funding to majority black-owned suppliers through the Sasol Siyakha Enterprise and Supplier Development Fund and business development and incubation support through our Sasol Business Incubator located in Sasolburg. Sasol further implemented the Economic Transformation strategy with the aim of transforming the supplier base which will contribute to the objectives set by the B-BBEE Codes. For Sasol to effectively deliver economic transformation and maximise impact on the communities surrounding our operations a decision was taken to be more "beneficiary centric", focusing on shared value rather than solely on shareholder value. The aim is to provide tailor-fit support to beneficiaries, sufficiently addressing their needs. This will ensure that beneficiaries are Sasol-ready, successfully transitioning into the Sasol supply chain and operations. The primary support through the Enterprise and Supplier Development function will enable sustainable development of beneficiaries while enabling beneficiaries to mature from the delivery of low complex goods and services to more complex goods and services. Sasol plans to deliver on this by simplifying its processes and accelerating the development of small transformed businesses. This is expected to result in expanded job opportunities; contribution to the reduction of community unrest; skills transfer and ensuring the suppliers are able to operate independently and do not depend only on Sasol for their business survival. Being a credible corporate citizen and member of the communities in which we operate is at the core of our approach to our socioeconomic development contribution. As a result, we have realigned our social investments towards programmes that enable access to quality education; stimulate local economic development and job creation; bolster the pool of technical, vocational and science, technology, engineering and mathematics-related skills; facilitate collaboration to advance the

delivery of municipal services; and promote the protection of the environment.

        Our most recent certification issued in September 2018 puts us at a contributor status of level 4 and represents a key milestone in our transformation efforts, with year-on-year improvements once again being realised across most pillars of the scorecard as we aim to achieve at least a level 3 rating by 2025.

        Sasol continues to entrench transformation within the organisational culture, enhancing its commitment as a corporate citizen.

Sasol Khanyisa transaction

        In 2017, Sasol announced a new B-BBEE ownership transaction (the "Sasol Khanyisa Transaction", or "Sasol Khanyisa"), structured to comply with the revised B-BBEE legislation in South Africa.

        Sasol Khanyisa was approved by the Sasol shareholders in November 2017 and was implemented in phases from March 2018. Sasol Khanyisa is a new and separate transaction and did not remove or modify the rights of the participants under the terms of the Sasol Inzalo transaction. As equity ownership is a critical pillar of the B-BBEE legislation and as Sasol Inzalo was coming to an end, Sasol Khanyisa was implemented to ensure continued compliance with the legislation. By implementing the Sasol Khanyisa transaction, the company sought to ensure on-going and sustainable B-BBEE ownership credentials.

        The participants of the original Sasol Inzalo transaction and qualifying black employees (including those who participated in Sasol Inzalo) were invited to participate in Sasol Khanyisa.

        Sasol Khanyisa has certain elements structured at a subsidiary level, namely Sasol South Africa Limited ("SSA"—which was a wholly-owned subsidiary of Sasol before the effective date of Sasol Khanyisa), which houses the majority of the South African operations of Sasol. If the transaction conditions are fulfilled, ownership by participants in SSA at the end of the transaction will be exchanged for Sasol BEE ordinary shares in Sasol Limited based on the

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relative value of the SSA and Sasol BEE ordinary shares at the time of the exchange.

        The accounting recognition and measurement principles applied to the Sasol Khanyisa transaction are the same as those applied to the Sasol Inzalo transaction, as the substance of both transactions was the same. Based on the underlying assumptions made by Sasol, the total IFRS 2 charge associated with Sasol Khanyisa is R6,5 billion over the life of the transaction, of which R952 million was recognised in 2019 (2018—R3 billion).

        The final element of the Sasol Inzalo transaction reached maturity in September 2018 with the repurchase by Sasol Limited of the entire shareholding of Sasol Inzalo Public (RF) Limited in Sasol Limited, comprising Sasol Preferred Ordinary Shares. The Sasol Inzalo transaction has accordingly been unwound. Refer to "Item 18—Financial Statements—Note 35—Share-based payment reserve" for further information.

        With the implementation of Sasol Khanyisa, approximately 18,4% direct black ownership in SSA now exists, which, together with black ownership at Sasol Group level, translates into at least 25% black ownership credentials at SSA level (for purposes of measuring black ownership credentials under the current B-BBEE legislation).

The Mining Charter

        The Broad-Based Black Economic Empowerment Charter for the South African Mining and Minerals Industry (Mining Charter) requires mining companies to meet various criteria intended to promote meaningful participation in the industry of HDSAs. The various iterations of the Mining Charter have been the subject of much legal disagreement between industry and the government, most particularly on the issue of equity ownership of mining companies.

        The Department of Mineral Resources and Energy argues that holders of mining rights should ensure that their BEE ownership levels are at least 26%, and top them up perpetually should they fall below this level. The industry groups have argued that once a company has secured

mining rights based on its compliance with this requirement, it should not be required to conclude any further transactions to restore its BEE ownership back to 26%.

        The revised 2018 Mining Charter that was published on 26 September 2018 is unlike the first two iterations of the charter as it details the ownership requirements for the mining industry. One of the major changes of the Charter is the requirement to increase black ownership to 30% from 26% when mining leases are renewed and on the transfer of mineral rights.

        The principle of 26% B-BBEE shareholding remains for existing mining right holders. Applications for mining rights that are pending at the effective date of the 2018 Mining Charter will still be subject to the 26% B-BBEE shareholding requirement, but such mining right holders will then have to increase it to 30% within five years.

        Amendments to the Mining Charter as well as the Mining Charter Guidelines were published in the Government Gazette on 19 December 2018. The most significant amendment is that the Mining Charter is effective as of 1 March 2019 and the first report is due on or before 31 March 2020. Stakeholders are required to submit compliance plans by August 2019.

        In recent developments, the Minerals Council of South Africa has filed an application for a judicial review of the gazetted Mining Charter, citing problems with certain clauses and the fact that past deals were not sufficiently recognised.

        We are considering the revised Mining Charter and will make representations to the Department of Mineral Resources and Energy if necessary.

The Mineral and Petroleum Resources Development Amendment Bill

        The South African Minister of Mineral Resources has withdrawn the Mineral and Petroleum Resources Development Amendment Bill (the MPRDA Bill) from Parliament with the intent to separate the oil and gas matters from mining. It is anticipated that the oil and gas matters will be dealt with in a "Petroleum Bill" and will be introduced to the sixth Parliament in June 2019. The legislative process is still ongoing.

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        The MPRDA Bill, now with a mining focus, contains certain provisions that may have a material negative effect on the mining industry. These include elevating the Codes of Good Practice for the South African Minerals Industry, the Housing and Living Conditions Standards for the Mineral Industry and the Amended Broad-Based Socio Economic Empowerment Charter for the South African Mining and Minerals Industry to the status of legislation without such documents having followed the normal route to create legislation. Another potential negative material effect on the mining industry is linked to the obligation for mining companies to sell a certain percentage of their production to local beneficiaries at a so-called "mine gate price" which will most likely be lower than the price at which the producer can sell the minerals in the open market.

The Liquid Fuels Charter

        The Liquid Fuels Charter (the Charter) requires liquid fuels companies, including Sasol Oil, to ensure that HDSAs hold at least 25% equity ownership in the South African entity holding their operating assets by the end of a period of 10 years from the date of the signing of the Charter.

        In order to meet this equity ownership objective, Sasol Limited entered into a BEE transaction with an HDSA-owned company, Tshwarisano LFB Investment (Pty) Ltd (Tshwarisano), in terms of which Sasol disposed of 25% of its shareholding in Sasol Oil to Tshwarisano. With effect from 1 July 2006, Sasol Oil met the 25% BEE ownership target, with Tshwarisano holding 25% of the shares in Sasol Oil in line with the Charter.

        Tshwarisano's shareholding is fully unencumbered after it settled the last of its debt relating to its equity shareholding in February 2016.

        The Charter further provides for the evaluation by the Department of Mineral Resources and Energy, from time to time, of the industry's progress in achieving the objectives of the Charter. The Department of Mineral Resources and Energy in concurrence with the Department of Trade and Industry initiated a

process to establish a Sector Charter (Petroleum and Liquid Fuels Sector Charter) in terms of section 12 of the B-BBEE Act. The outcome or potential effect of this process on Sasol cannot be assessed at this time.

The Restitution of Land Rights Act, 22 of 1994

        Our privately held land could be subject to land restitution claims under the Restitution of Land Rights Act, 22 of 1994. Under this act, any person who was dispossessed of rights to land in South Africa as a result of past racially discriminatory laws or practices is granted certain remedies, including, but not limited to the restoration of the land claimed with or without compensation to the holder.

Mining rights

        Sasol Mining is the holder of mining rights in terms of the Mineral and Petroleum Resources Development Act, 2002, in respect of its operations in the Mpumalanga and Free State provinces in South Africa.

        In respect of the Secunda mining complex in Mpumalanga, Sasol Mining has four mining rights situated within the Bethal, Secunda, Highveld Ridge, Balfour and Standerton magisterial districts. These mining rights are valid for periods between 20 and 30 years.

        Coal mining activities in the Free State province near the town of Sasolburg are conducted by virtue of Sasol Mining holding a mining right which is valid until 2040.

Safety, health and environment

Regions in which Sasol operates and their applicable legislation

South Africa

        The major part of our operations is located in South Africa. We operate a number of plants and facilities for the manufacture, storage, processing and transportation of chemical feedstock, products and wastes. These operations are subject to numerous laws and regulations relating to safety, health and the protection of the environment.

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Environmental regulation

        The Constitution of the Republic of South Africa (the Constitution) contains the underlying right which must be given effect to by environmental legislation in South Africa. The South African National Environmental Management Act, 107 of 1998 is therefore the framework act which primarily aims to give effect to the Constitutional environmental right. It also underpins specific environmental management acts, such as the National Environmental Management: Waste Act, 59 of 2000 (National Environment Management: Waste Act), the National Water Act, 36 of 1998, and the National Environmental Management: Air Quality Act, 39 of 2004 which all, in turn, regulate specific environmental media and the associated regulation of potential impacts thereon. The National Environmental Management: Waste Act also specifically regulates the process for management of contaminated land. These Acts also provide for enforcement mechanisms as well as provisions for the imposition of criminal sanction. These also apply to mining activities.

        Apart from South Africa's international commitments, the country's climate change mitigation regulation is still being developed. Sasol continues to engage with the government on the development of the Climate Change Bill as well as the imposition of mandatory carbon budgets. Sasol's engagement focuses on the need for alignment of mitigation instruments in an effort to create long-term policy certainty. Although not mandatory, Sasol is participating in the first phase of the carbon budget process and has received and agreed to the carbon budget allocated to it, which is in place until 2020. The National GHG Emission Reporting Regulations and the National Pollution Prevention Plan Regulations were promulgated in April and June 2017 respectively. Sasol has accordingly submitted its GHG data and its pollution prevention plans have been approved. The Carbon Tax Act No 15 of 2019 was signed into law in May 2019 and came into effect on 1 June 2019.

        For information regarding our challenges associated with these regulatory requirements refer to "Item 3.D—Risk factors".

Health and safety

        Occupational health and safety is governed by the Occupational Health and Safety Act, 85 of 1993 and the Mine Health and Safety Act, 29 of 1996 for compensation of employees who suffer occupationally related diseases or injuries. Specific requirements for chemicals and hazardous substances are regulated by the Hazardous Substances Act, 15 of 1973.

Germany and Italy

        In Germany and Italy, we operate a number of plants and facilities for the manufacture, storage, processing and transportation of chemical feedstock, products and waste. These operations are subject to numerous laws and ordinances relating to safety, health and the protection of the environment. The objectives and requirements of these legal frameworks are largely consistent with that of the South African framework, although more established and pervasive in some respects.

Hazardous substances

        Provisions for the protection of humans and the environment against the harmful effects of hazardous substances and preparations are provided in the Chemicals Act, and related ordinances on the Prohibition of Certain Chemicals and Hazardous Incidents. All hazardous substances are subject to the requirements of the European Union (EU) Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) Regulation, including requirements for registration and notification obligation before these substances can be brought onto the market. Hazardous substances and mixtures must be classified, labelled and packed in accordance with the EU classification, labelling and packaging regulation. Further regulations prohibiting and limiting manufacture, marketing and use also apply.

United States

        In the US, we operate a number of plants and facilities for the storage and processing of chemical feedstock, products and wastes. Sasol's US operations and growth projects are subject to numerous laws, regulations and ordinances relating to safety, health and the protection of the

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environment. The essential objectives of these legal frameworks are largely consistent with that of the South African framework, although regulatory and permitting requirements are more established and entrenched in some respects.

        Regulation relating to climate change in the US at the federal level is currently uncertain given the US political climate, but climate change policy continues to be developed at the state level, and to some extent, through the judicial system. However, the US political climate and current administration have not materially diminished environmental regulation and enforcement, particularly with respect to air quality. Our operations in the US remain regulated at the federal, state, and local level relating to health, safety, environment, and community impact. In the US, we anticipate continuing to respond in part to the regulatory environment through existing systems and control technology as well as through efficiency and control technology reviews and improvement opportunities where appropriate.

        Hazardous substances are, in particular, regulated by a standard that incorporates the requirements of the Globally Harmonised System for classification and labelling of chemicals into occupational health and safety legislations. Chemical manufacturers and importers are required to evaluate the hazards of the chemicals they produce or import, and prepare labels and safety data sheets to convey the hazard information to their downstream customers.

Canada

        The British Columbia (BC) Petroleum and Natural Gas Act and Environmental Management Act are the primary sources of regulatory controls over our natural oil and gas-producing areas in Canada. The acts and supporting legislation are administered by the BC Oil & Gas Commission to regulate the oil and gas industry and ensure public safety, environmental protection, conservation of petroleum resources and equitable participation in production. Regulations aimed at achieving methane reductions have recently been published.

        In late 2016, the Canadian federal government announced a national carbon price

programme requiring all provinces and territories to have carbon pricing initiatives in effect by 2018 at a minimum of CAD10/tonne of CO2 equivalent emissions, to increase by CAD10/tonne annually until they reach CAD50/tonne in 2022. The introduction of the national carbon price programme is having a relatively minor financial impact on Sasol's Canadian operations.

Mozambique

        A National Environmental Policy (Resolution 5/1995, of 3 August) is the government document outlining the priorities for environmental management and sustainable development in Mozambique, including the required legal framework. The Environmental Law (Law 20/1997, of 1 October as amended by Law 16/2014, of 20 June) provides a legal framework for the use and correct management of the environment and its components and to assure sustainable development in Mozambique. The Regulations on Environmental Impact Assessment (Decree 54/2015, of 31 December) set forth the procedures applicable for the granting of environmental licences.

        The Environmental Regulations for Petroleum Operations (Decree 56/2010, of 31 December) apply to petroleum operations including exploration, development, production, transport, storage and marketing of petroleum products.

        Regulations on Environmental Quality and Emission Standards (Decree 18/2004, of 2 June as amended by Decree 67/2010, of 31 December) aim to establish the standards for environmental quality and for effluents release in order to assure the effective control and maintenance of the admissible standards of concentration of polluting substances on the environmental components. This is supplemented by specific regulations on solid waste and water quality management.

        The Petroleum Act (Law 21/2014, of 18 August) and the Petroleum Operations Regulations (Decree 34/2015, of 31 December) require holders of exploration and production rights to conduct petroleum operations in compliance with environmental and other applicable legislation. The law makes provision for compensation to be paid under general legislation

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by the holder of a right to conduct petroleum operations to persons whose assets are damaged. The law establishes strict liability for the holder of the right who causes environmental damage or pollution.

Gabon

        The primary legislation in Gabon governing oil and gas activities is the Hydrocarbon Law (Law No. 02/2019) which was published in the Gabonese Official Journal on 22 July 2019. This establishes a new regime governing hydrocarbons exploration, exploitation and transportation activities, in compliance with environmental and other applicable legislation. Existing production sharing contracts remain in force until their expiry and will remain governed by the previous law (Law No. 14/1982), with the exception of a limited number of additional obligations such as a natural gas flaring prohibition. At this point in time, any risks and impact on Sasol cannot be finally assessed.

        The Economic and Monetary Community of Central Africa, known as CEMAC and which includes Gabon, has issued Foreign Exchange Regulation No. 02/18-CEMAC-UMAC which is due to come into effect on 1 September 2019. This regulation allows the CEMAC Central Bank (BEAC) to take measures to restore reserves in foreign exchange currency including restrictions on foreign currency bank accounts in and outside CEMAC and limits a company's ability to enter into loans, import / export services and assets and make investments. Fines for breach are extremely severe being up to 50% of the company's assets. We are working with industry to try to lobby the IMF, CEMAC and BEAC to obtain an extension to the 1 September 2019 deadline and to seek an exemption for the oil and gas industry.

Other countries

        In a number of other countries, we are engaged in various activities that are impacted by local and international laws, regulations and treaties. In China and other countries, we operate plants and facilities for the storage, processing and transportation of chemical substances, including feedstock, products and waste. In the United Arab Emirates, Nigeria and other

countries, we are involved, or are in the process of becoming involved, in exploration, extraction, processing or storage and transportation activities in connection with feedstock, products and waste relating to natural oil and gas, petroleum and chemical substances.

        In Qatar, we participate in a joint venture owning and operating a GTL facility involving the production, storage, marketing and transportation of GTL diesel, GTL naphtha and LPG. These operations are subject to numerous laws and ordinances relating to safety, health and the protection of the environment.

        Our operations in the respective jurisdictions are subject to numerous laws and regulations relating to exploration and mining rights and the protection of safety, health and the environment.

4.C Organisational structure

        Sasol Limited is the ultimate parent of the Sasol group of companies.

        SSA, a subsidiary of Sasol and a company incorporated in South Africa, primarily holds our operations located in South Africa. A number of other subsidiaries incorporated in South Africa, including Sasol Oil (Pty) Ltd, Sasol Mining Holdings (Pty) Ltd, Sasol Gas (Pty) Ltd, Sasol Middle East and India (Pty) Ltd and Sasol Africa (Pty) Ltd, also hold our interests in operations in South Africa, other parts of Africa and the Middle East. Sasol Financing Limited, responsible for the management of cash resources and investments, is wholly owned and incorporated in South Africa.

        Our wholly owned subsidiary, Sasol Investment Company (Pty) Ltd, a company incorporated in South Africa, primarily holds our interests in Sasol group companies incorporated outside of South Africa, including Sasol European Holdings Limited (United Kingdom), Sasol Wax International GmbH (Germany), Sasol (USA) Corporation (US), Sasol Financing USA Ltd, Sasol Holdings (Asia Pacific) (Pty) Ltd (South Africa), Sasol Chemical Holdings International (Pty) Ltd (South Africa), Sasol Canada Holdings Limited (Canada) and their respective subsidiaries.

        See Exhibit 8.1 for a list of our significant subsidiaries and significant jointly controlled entities.

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4.D Property, plants and equipment

        Refer to "Item 18—Financial Statements—Note 17 Property, plant and equipment" for further information regarding our property, plant and equipment.

Mining

Coal mining facilities

        Our main coal mining facilities are located at the Secunda Mining Complex, which consists of underground collieries (Bosjesspruit; Brandspruit; Impumelelo; Middelbult; Shondoni shaft; Syferfontein; and Twistdraai Thubelisha) and the Sigma complex consisting of the Mooikraal colliery near Sasolburg.

        For detail regarding the cost of the assets in our coal mining facilities, refer to the segmental information contained in "Item 18—Financial Statements—Note 17 Property, plant and equipment".

        A map showing the location of our coal properties and major manufacturing plants in South Africa is shown on page M-1.

        Mining operates six mines for the supply of coal to the Secunda Synfuels Operations, Sasolburg Operations (utility coal only) and the external market. The annual production of each mine, the primary market to which it supplies coal and the location of each mine are indicated in the table below:

 
   
   
   
  Production
(Mt)(3)
 
 
   
   
  Nominated
capacity
per year (Mt)(2)
 
Colliery
  Location   Market   2019   2018   2017  

Bosjesspruit

  Secunda   Secunda Synfuels Operations     6,3     4,9     5,7     6,1  

Brandspruit(5)

  Secunda   Secunda Synfuels Operations         0,5     2,3     2,8  

Impumelelo(5)

  Secunda   Secunda Synfuels Operations     6,8     4,8     3,2     2,2  

Middelbult, Shondoni shaft

  Secunda   Secunda Synfuels Operations     8,0     7,1     6,9     6,5  

Syferfontein

  Secunda   Secunda Synfuels Operations     11,0     10,1     10,5     10,9  

Twistdraai Thubelisha

  Secunda   Export/Secunda Synfuels Operations(1)     9,7     8,7     8,8     7,9  

Sigma : Mooikraal

  Sasolburg   Sasolburg Operations     1,9     1,4     1,4     1,2  

                  37,5     38,8     37,6  

Production tons per continuous miner (mining production machine) per shift including off-shift production(4) (t/cm/shift)

                  1 191     1 161     1 147  

(1)
The secondary product from the export beneficiation plant is supplied to Secunda Synfuels Operations.

(2)
The nominated capacity of the mines is the expected production of that mine and does not represent the total maximum capacity of the mine.

(3)
Production excludes externally purchased coal.

(4)
Off-shift production is a legally permitted, voluntary shift system allowing mine workers to produce coal on their non-working shifts. This shift system provides the mine with a flexibility option to catch-up on production shortfall. The mine workers are remunerated for this production on a cost per ton basis.

(5)
The transition phase, of replacing Brandspruit Colliery with Impumelelo Colliery, was completed and the last coal was produced from Brandspruit Colliery during 2019.

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Processing operations

        Coal export business—Secunda operations.    We started the coal export business in August 1996. Run of mine coal is sourced from Twistdraai Thubelisha Colliery (nominated capacity 9,7 Million tons (Mt)). The export beneficiation plant has a design throughput total capacity of 10,5 Mt per annum. In 2019, we produced 8,7 Mt from Twistdraai Thubelisha Colliery; of which we beneficiated 8,5 Mt, and 0,2 Mt was bypassed to Sasol Coal Supply.

        The run of mine (ROM) coal is transported via an overland conveyor belt to the export beneficiation plant from the Twistdraai Thubelisha Colliery. The export product is loaded onto trains by means of a rapid load-out system, and then transported to the Richards Bay Coal Terminal (RBCT) in KwaZulu-Natal.

        Mining has a 4,2% shareholding in RBCT, which corresponds to the existing entitlement of 3,6 Mt per year. Actual export volumes for 2019 were 3,2 Mt. For the foreseeable future, we anticipate exports of approximately 3,3 Mt per year.

        Sasol Coal Supply—Secunda Operations.    Sasol Coal Supply operates the coal handling facility between Mining and Secunda Synfuels Operations by stacking and blending coal on six live stockpiles. The overland conveyors from the mining operations to the coal handling facility are, in total, approximately 100 kilometres (km) long and also form part of the Sasol Coal Supply operation.

        The operation has a live stockpile capacity of 720 000 tons, which is turned over around 1,2 times per week. In addition, there is a targeted strategic stockpile capacity of more than 2,0 Mt. The objectives of this facility are:

    to homogenise the coal quality supplied to Secunda Synfuels Operations;

    to keep mine bunkers empty;

    to keep the Secunda Synfuels Operations bunkers full with a product that conforms to customer requirements;

    to maintain a buffer stockpile to ensure even supply; and
    to perform a reconciliation of business with regard to quantity and quality.

        The daily coal supply to Secunda Synfuels Operations is approximately 109 000 tons.

Coal exploration techniques

        Mining's geology department employs several exploration techniques in assessing the geological risks associated with the exploitation of the coal deposits. These techniques are applied in a mutually supportive way to achieve an optimal geological model of the relevant coal seams, targeted for production purposes. The Highveld Basin is considered to be structurally complex when compared to the other coalfields in South Africa where mining activities take place. As a result, Mining bases its geological modelling on sufficient and varied geological information. This approach is utilised in order to achieve a high level of confidence and support to the production environment.

        Core recovery exploration drilling.    This is the primary exploration technique that is applied in all exploration areas, especially during reconnaissance phases. In and around operational mines, the average vertical borehole density varies from 1:10 to 1:15 (boreholes per hectare), while in medium-term mining areas, the average borehole density is in the order of 1:25. Depths of the boreholes drilled vary, depending on the depth to the Pre-Karoo basement, from 160 metres (m) to 380 m. The major application of this technique is to locate the coal horizons, to determine coal quality and to gather structural information about dolerite dykes and sills, and the associated de-volatilisation and displacement of coal reserves. This information is used to compile geological models and forms the basis of geological interpretation.

        Directional drilling.    Directional drilling from surface to in-seam has been successfully applied for several years. A circular area with a radius of approximately 1,4 km of coal deposit can be covered by this method from one drill site. The main objective of this approach is to locate dolerite dykes and transgressive dolerite sills, as well as faults with displacements larger than the coal seam thickness.

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        Horizontal drilling.    This technique is applied to all operational underground mines and supplies short-term (minimum three months) exploration coverage per mining section. No core is usually recovered, although core recovery is possible, if required. The main objective is to locate dolerite dykes and transgressive sills intersecting the coal mining horizon, by drilling horizontal holes in the coal seam from a mined out area. A drilling reach of up to 1 km is possible, although the average length is usually 800 m in undisturbed coal.

        Aeromagnetic surveys.    Many explorations are usually aero-magnetically surveyed before the focused exploration is initiated. The main objective is to locate magnetic dolerite sills and dykes, as well as large-scale fault zones.

        Geophysical wireline surveys of directional boreholes.    Geophysical surveys are routinely conducted in the completed directional drilled boreholes. This results in the availability of detailed information leading to increased confidence of the surface directional drilling results.

Secunda operations

        The coal supplied to Secunda Synfuels Operations is the raw coal mined from the four mines supplying Secunda Synfuels Operations exclusively and the secondary product from the export beneficiation plant.

        We have carried out extensive geological exploration in the coal resource areas, and undertake additional exploration to update and refine the geological models. This allows for accurate forecasting of geological conditions and coal qualities, and also effective planning and utilisation of coal reserves.

Computation and storage of geological information

        We store geological information in the acQuire database. We conduct regular data validation and quality checking through several in-house methods. Data modelling is conducted by manual interpretation and computer-derived geological models, using the Minex 6 edition of

the GEOVIA/ MINEX software. Reserves and composite qualities are computed using established and recognised geo-statistical techniques.

General stratigraphy

        The principal coal horizon, the Number 4 Lower Coal Seam, provides some 91,81% (2018—91,72%) of the total proved and probable reserves. The Number 4 Lower Coal Seam is one of six coal horizons occurring in the Vryheid Formation of the Karoo Supergroup, a permo-carboniferous aged, primarily sedimentary sequence. The coal seams are numbered from the oldest to the youngest.

        The Number 4 Lower Coal Seam is a bituminous hard coal, characterised by the following borehole statistics:

    the depth to the base of the seam ranges from 40 m to 241 m with an average depth of 135 m below the surface topography. All the current mining done on this seam is underground;

    the floor of the seam dips gently from north to south at approximately 0,5 degrees;

    the thickness of the seam varies in a range up to 10 m with a weighted average thickness of 3,7 m. In general, thinner coal is found to the south and thicker coal to the west adjacent to the Pre-Karoo basement highs;

    the inherent ash content (air dried basis) is an average 26,7%, which is in line with the coal qualities supplied during the past 30 years to Secunda Synfuels Operations;

    the volatile matter content is tightly clustered around a mean of 23,0% (air dried); and

    the total sulphur content (air dried), which primarily consists of mineral sulphur in the form of pyrite and minor amounts of organic sulphur, averages 1,01% of the total mass of the coal.

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        The other potential coal seam is:

    the Number 2 Coal Seam at Middelbult colliery and Impumelelo colliery, which has been included in our reserve base.

Reserve estimation (remaining reserves at 31 March 2019)

        We have approximately 4,0 billion tons (Bt) (2018—4,2 Bt) of gross in situ proved and probable coal reserves in the Secunda Deposit and approximately 1,3 Bt (2018—1,4 Bt) of recoverable reserves. The coal reserve estimations are set out in table 1 that follows. Reported

reserves will be converted into synthetic oil reserves, except for reserves which will be used for utilities in Secunda Synfuels Operations and the majority of the Twistdraai Thubelisha reserves which will be exported. The reserve disclosure in this section includes Mining's total coal resources and reserves available for mining operations in Secunda. These reserves have not been adjusted for the synthetic oil reserves reported in the supplemental oil and gas information. The different reserve areas are depicted on the map on page M-1, as well as whether a specific reserve area has been assigned to a specific mine.

Table 1.

Coal reserve estimations(1) as at 31 March 2019, in the Secunda area where we have converted mining rights (signed on 29 March 2010) in terms of the Mineral and Petroleum Resources Development Act, Act 28 of 2002.

Reserve area
  Gross in
situ coal
resource(2)
(Mt)(5)
  Geological
discount
(Mt)(5)
  Mine
layout
losses
(Mt)(5)
  Extraction
rate
(%)
  Recoverable
reserves(3)
(Mt)(5)
  Beneficiated
yield(4)
(%)
  Proved/
probable

Middelbult mine, number 4 seam

    619     84     148     48     201     100   Proved

Middelbult mine, number 2 seam

    61     12     6     41     19     100   Probable

Bosjesspruit mine

    186     7     81     45     64     100   Proved

Bosjesspruit mine

    71     3     25     45     33     100   Probable

Syferfontein mine

    866     152     138     48     265     100   Proved

Syferfontein mine

                    16     100   Probable

Twistdraai Thubelisha mine

    629     117     64     56     260     P34,S37   Proved

Impumelelo, Block 2, number 4 seam

    621     81     125     51     211     100   Proved

Impumelelo, Block 2, number 2 seam

    356     53     164     41     45     100   Probable

Block 2 South, number 4 seam

    363     98     48     54     123     100   Probable

Block 2 South, number 2 seam

    133     36     18     54     45     100   Probable

Block 3 South

    141     38     19     58     52     100   Probable

Total Secunda area

    4 046                       1 334          

(1)
The coal reserve estimations in this table were compiled under supervision of Mr. Viren Deonarain who is considered a competent person. The "South African Code for Reporting of Minerals Resources and Minerals Reserves (The SAMREC Code 2007 edition)" dealing with competence and responsibility, paragraph 7, state Documentation detailing Exploration Results, Mineral Resources and Mineral reserves from which a Public Report is prepared, must be prepared by, or under the direction of, and signed by a Competent Person. Paragraph 9 states: A 'Competent Person' is a person who is registered with SACNASP, ECSA or PLATO, or is a Member or Fellow of the SAIMM, the GSS or a Recognised Overseas Professional organisation (ROPO). The Competent Person must comply with the provisions of the relevant promulgated Acts. Ms. L Jeffrey and Mr. N McGeorge, on behalf of SRK Consulting performed a comprehensive and independent audit of the coal resource/reserve estimations in February 2019 and the estimates

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    were certified as correct. The estimation of the proved reserves is compliant with the definition and guidelines as stated in SEC Industry Guideline 7.

(2)
The gross in situ coal resource is an estimate of the coal tonnage, contained in the full coal seam above the minimum thickness cut off and relevant coal quality cut off parameters. No loss factors are applied and seam height does not include external dilution or contamination material.

(3)
The recoverable coal reserve is an estimate of the expected recovery of the mines in these areas and is determined by the subtraction of losses due to geological and mining factors and the addition of dilatants such as moisture and contamination.

(4)
The P% of P34 refers to the export product yield from the recoverable coal reserve and the S% of S37 refers to secondary product yield, which will be supplied to the Sasol Synfuels Operations. The balance of this is discard material.

(5)
Mt refers to 1 million tons. Reference is made of tons, each of which equals 1 000 kilograms, approximately 2 205 pounds or 1 102 short tons.

Table 2.

Coal qualities, on an air dry basis, in respective coal reserve areas, where Mining has converted mining rights in respect of the Secunda mining complex in terms of the Mineral and Petroleum Resources Development Act, Act 28 of 2002.

Reserve area
  Wet/dry
tons
  Average
Inherent
Moisture
Content
(%)
  Average
Superficial
Moisture
Content
(%)
  Assigned/
unassigned
  Steam/
metallurgical
coal
  Heat
Value
(air dry)
basis
MJ/kg
  Sulphur
(air dry
basis)
 

Middelbult mine

  Wet     4,3   n/a   Assigned   Steam     21,0     0,9  

Bosjesspruit mine

  Wet     3,9   n/a   Assigned   Steam     19,9     0,8  

Syferfontein mine

  Wet     5,2   n/a   Assigned   Steam     21,8     0,8  

Twistdraai Thubelisha mine

  Wet     4,5   n/a   Assigned   Steam     21,1     1,1  

Impumelelo, Block 2, number 4 seam. 

  Wet     3,9   n/a   Assigned   Steam     20,6     1,3  

Impumelelo, Block 2, number 2 seam

  Wet     3,8   n/a   Assigned   Steam     20,4     0,7  

Block 2 South, number 4 seam

  Wet     4,1   n/a   Unassigned   Steam     18,2     1,2  

Block 2 South, number 2 seam

  Wet     3,6   n/a   Unassigned   Steam     17,4     0,7  

Block 3 South

  Wet     3,6   n/a   Unassigned   Steam     21,9     0,7  

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Table 3.

Coal qualities, on an as received basis, in respective coal reserve areas, where Mining has converted mining rights in the Secunda mining complex in terms of the Mineral and Petroleum Resources Development Act, Act 28 of 2002.

Reserve area
  Wet/dry
tons
  Average
Inherent
Moisture
Content
(%)
  Average
Superficial
Moisture
Content
(%)
  Assigned/
unassigned
  Steam/
metallurgical
coal
  Heat
Value
(as received)
basis
MJ/kg
  Sulphur
(as received
basis)
 

Middelbult mine

  Wet     4,2     4,5   Assigned   Steam     19,5     0,9  

Bosjesspruit mine

  Wet     3,8     4,0   Assigned   Steam     18,0     0,8  

Syferfontein mine

  Wet     5,2     4,1   Assigned   Steam     20,8     0,8  

Twistdraai Thubelisha mine

  Wet     4,4     4,3   Assigned   Steam     19,5     1,0  

Impumelelo, Block 2, number 4 seam

  Wet     3,9     3,6   Assigned   Steam     19,4     1,3  

Impumelelo, Block 2, number 2 seam

  Wet     3,7     3,5   Assigned   Steam     19,2     0,7  

Block 2 South, number 4 seam

  Wet     4,1     3,1   Unassigned   Steam     18,0     1,1  

Block 2 South, number 2 seam

  Wet     3,6     2,7   Unassigned   Steam     17,2     0,7  

Block 3 South

  Wet     3,4     3,6   Unassigned   Steam     21,8     0,7  


Criteria for proved and probable

        Over and above the definitions for coal reserves, probable coal reserves and proved coal reserves, set forth in Industry Guide 7, promulgated by the US Securities and Exchange Commission, we consider the following criteria to be pertinent to the classification of the reserves:

        Probable reserves are those reserve areas where the drill hole spacing is sufficiently close in the context of the deposit under consideration, where conceptual mine design can be applied, and for which all the legal and environmental aspects have been considered. Probable reserves can be estimated with a lower level of confidence than proved coal reserves. Currently this classification results in variable drill spacing depending on the complexity of the area being considered and is generally less than 500 m, although in some areas it may extend to 800 m. The influence of increased drilling in these areas should not materially change the underlying geostatistics of the area on the critical parameters such as seam floor, seam thickness, ash and volatile content.

        Proved reserves are those reserves for which the drill hole spacing is generally less than 350 m, for which a complete mine design has been applied which includes layouts and schedules resulting in a full financial estimation of the

reserve. This classification has been applied to areas in the production stage or for which a detailed feasibility study has been completed.

Legal rights on coalfields

        Sasol Mining (Pty) Ltd is the holder of various prospecting and mining rights for coal in Mpumalanga and the Free State. These prospecting and mining rights are granted by the State acting as custodian of South Africa's mineral and petroleum resources in accordance with the provisions of the Mineral and Petroleum Resources Development Act, 28 of 2002, as amended.

        In respect of the Secunda mining complex in Mpumalanga, Sasol Mining has four mining rights situated within the Bethal, Secunda, Highveld Ridge, Balfour and Standerton magisterial districts. These mining rights are valid for periods of between 20 and 30 years, which allows Sasol Mining to provide a continuous and steady coal supply to Sasol South Africa Limited, which beneficiates the coal into higher value and in most cases, end-line products. Please refer to page M1 for a map of the Secunda mining complex layout.

        Coal mining activities in the Free State province near the town of Sasolburg are conducted by virtue of Sasol Mining holding a

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mining right which is valid for 30 years. The coal is mainly used for electricity and steam generation at our Sasolburg operations. Steam is a major component which is required in the production of Sasol's chemical products as well as the refining of oil.

        The validity period of Sasol's mining rights may, on application to the Department of Mineral Resources and Energy, be extended for further periods not exceeding 30 years each.

Exploration and Production International (E&PI)

Natural oil and gas operations

        Our natural oil and gas operations are managed by our Exploration and Production International (E&PI) business unit. E&PI's principal activities are the exploration, appraisal, development and production of hydrocarbon resources. Currently we hold equity in three producing assets with proved reserves in Mozambique, Gabon and Canada and one non-producing asset in Mozambique. We also have equity in exploration licences in Mozambique, South Africa and Gabon.

        In the narrative sections below, unless stated otherwise, all quantitative statements refer to gross figures. The tabular information which follows the narrative provides:

    total gross and net developed and undeveloped acreage of our natural oil and gas assets and exploration licences by geographic area, at 30 June 2019;

    the number of net natural oil and gas wells completed in each of the last three years and the number of wells being drilled, at 30 June 2019;

    capitalised natural oil and gas exploratory well costs at the end of the last three years and information about the continued capitalisation of natural oil and gas exploratory well costs, at 30 June 2019;

    details about the production capacity of our natural oil and gas production facilities and the number of productive natural oil and gas wells, at 30 June 2019; and
    average sales prices and production costs, of natural oil and gas, for the last three years.

        The financial information in these sections has been prepared in accordance with International Financial Reporting Standards in order to ensure consistency between this document and the Annual Financial Statements.

        Refer to the "Supplemental Oil and Gas Information" on pages G-1 to G-7 for:

    costs incurred in natural oil and gas property acquisition, exploration and development activities, for the last three years;

    capitalised costs relating to natural oil and gas activities, for the last three years;

    the results of operations for natural oil and gas producing activities, for the last three years;

    natural oil and gas proved reserves and production quantity information, for the last three years;

    standardised measures of discounted future net cash flows relating to natural oil and gas proved reserves, for the last three years; and

    changes in the standardised measures of discounted future net cash flows relating to natural oil and gas proved reserves, for the last three years.

        The maps on page M-2 show E&PI's global footprint and the location of our assets and exploration licences.

Mozambique

Licence terms

    Development and production

        In Mozambique, we have interests in two onshore assets, one of which is producing with proved reserves. The other asset consists of two areas under development and other reservoirs that are being assessed for commerciality.

        The producing asset is the Pande-Temane Petroleum Production Agreement (PPA) licence

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(302,2 thousand developed net acres). Our subsidiary Sasol Petroleum Temane Limitada (SPT), the operator, holds a 70% working interest in the PPA. The PPA expires in 2034, and carries two possible five-year extensions. There is no requirement to relinquish any acreage until the expiry of the PPA.

        The other asset is the Pande-Temane Production Sharing Agreement (PSA) licence (442,8 thousand undeveloped net acres). Our subsidiary Sasol Petroleum Mozambique Limitada (SPM), the operator, holds a 100% working interest. Under the terms of the current PSA licence, Empresa Nacional de Hidrocarbonetos EP (ENH) as the licence holder is entitled to a profit share of production.

        The two PSA development areas covered by development and production periods until 2041 for the oil development (125,9 thousand undeveloped net acres) and 2046 for the gas development (157,3 thousand undeveloped net acres), are being developed in accordance with the Phase 1 field development plan approved by the Mozambican authorities in January 2016. The remaining PSA Pande area (159,6 thousand undeveloped net acres) is covered by a commercial assessment period (CAP) enduring for an initial period of five years with an option for up to two renewals of three years each. The initial period expired in February 2018 and an extension has been agreed for an additional three years.

    Exploration

        We have interests in two offshore exploration licences, shallow water Blocks 16 & 19 (operated) and Angoche A5-A (non-operated). We also have one operated onshore licence PT5-C.

        The offshore shallow water Blocks 16 & 19 which cover 622,7 thousand undeveloped net acres are operated by Sasol through its subsidiary Sasol Petroleum Mozambique Exploration Limitada (SPMEL) with 85% working interest and ENH carried through the exploration period for 15% until field development. Petroleum operations in the licence have been suspended since 2008, pending the outcome of the strategic environmental assessment (SEA), commissioned by the Mozambique government.

        In October 2015, the authorities announced the results of the Fifth Mozambique Licensing Round in which our subsidiary SPMEL and our partners were successful. The negotiations for the exploration and production concession contracts (EPCC) were completed and signed in October 2018 with the effective date of 1 January 2019. SPMEL holds a 70% working interest, as operator, in the onshore Pande-Temane Area PT5-C (521,0 thousand undeveloped net acres). It also holds a 25,5% working interest (324,2 thousand undeveloped net acres) in the offshore Angoche Area A5-A, which is operated by Eni Mozambico S.p.A.

Activities

        Present activities in the Pande-Temane PPA asset include projects for infill drilling and additional compression that will lower the inlet pressure at the CPF. The first infill well in the Pande field was drilled in April 2018, tested in June 2018 and was brought into operation in December 2018.

        Follow-up development projects include additional infill wells and phase three compression at the CPF, necessary to maintain production as the reservoirs deplete and are in accordance with the approved field development plan. This compression project was brought into operation in October 2020.

        In the PSA development areas in Inhassoro and Temane (Phase 1 of the PSA Development), nine wells were drilled and completed in 2017 and 2018, in accordance with the drilling programme in the approved field development plan. Recoverable volumes of light oil are now forecast to be around the low end of the range presented in the field development plan, which has required a review of the development programme. Sasol has spent over US$400 million in the current development execution phase and is planning to submit a revision to the field development plan encompassing an integrated oil, gas and LPG development for the whole licence area in 2020.

        In the PSA CAP area, two wells were drilled in 2018. One well confirmed gas while the other one did not encounter a hydrocarbon-bearing interval. The development of the PSA CAP area, as well as the small accumulations discovered as

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part of the development, will be incorporated in the revised field development plan.

Capitalised exploratory well costs

        At 30 June 2019, there were no exploratory wells costs capitalised in the Pande-Temane PPA asset or in the A5-A, PT5-C and Blocks 16 & 19 licences.

        In the PSA CAP area, exploratory well costs continue to be capitalised for a period greater than one year after the completion of drilling, amounting to US$27,0 million net to Sasol; these costs relate to the exploration drilling activities conducted and completed in 2008, and the follow up activities which continued in 2017, 2018 and 2019.

Facilities and productive wells

        Natural gas and condensate is produced from the Pande-Temane PPA asset facilities, at the CPF on a site of approximately 400 000 square metres, located some 700 kilometres north of Maputo, the capital of Mozambique. Production from the Temane and Pande fields, which are managed as a single operational field, is routed from production wells via in-field flowlines and pipelines to the CPF. The design capacity of the CPF is 491 million standard cubic feet per day sales gas together with small amounts of associated condensate.

        At 30 June 2019, there were 17 productive wells, down from 21 producing wells in the prior year. Well integrity risks were identified and some wells were shut-in with remediation plans in place for 2020.

Delivery commitments

        Gas produced from the Pande-Temane PPA asset, other than royalty gas provided to the Mozambican government, is supplied in accordance with long-term gas sales agreements (GSAs). The gas produced in accordance with GSA1, signed on 27 December 2002 (25 years contract term from 1 April 2004), and GSA2, signed on 10 December 2008 (20 years contract term from 1 January 2010), is sold internally for use as part of the feedstock for our chemical and

synthetic fuel operations and to the external market in South Africa, with a maximum daily quantity equivalent to 132 PJ/a (119,75 bscf/a) and 27 PJ/a (24,49 bscf/a) for GSA1 and GSA2 respectively. There are four GSA3 20-year contracts that supply gas to the Mozambique market. These satisfy a licence condition that a portion of gas produced is utilised in-country. The contracts are with Matola Gas Company S.A from 1 July 2014 for 8 PJ/a (7,26 bscf/a), ENH-Kogas from 1 March 2013 for 6 PJ/a (5,44 bscf/a), Central Termica de Ressano Garcia S.A. from end-February 2015 for 11 PJ/a (9,98 bscf/a) and ENH effective from 1 June 2015 for 2PJ/a (1,81 bscf/a).

        Infill drilling and compression projects which will convert proved undeveloped reserves into proved developed reserves in order to meet near-term delivery commitments are under way. During 2018 it was determined that production will nevertheless begin to decline during 2023 and we will no longer be able to supply at currently contracted rates. Technical and commercial options are under consideration to address the matter.

        PPA condensate is currently sold to Petróleos de Moçambique, S.A. (Petromoc), which transports the condensate by truck from the CPF for export. The contract expired at the end of June 2019 and after a competitive tendering process, Petromoc was selected as the preferred bidder. The commercial agreements were finalised effective 1 July 2019 for a two year period.

Proved reserves (all quantities are net to Sasol)

        Our Mozambique proved reserves are contained in the Pande-Temane PPA asset. These represent the net economic interest volumes that are attributable to Sasol after the deduction of petroleum production tax. The primary sales product for the PPA is natural gas, with minor amounts of associated liquid hydrocarbons.

Changes to proved reserves

        There was a reduction of 63,7 billion cubic feet in proved gas reserves due to production offset by revisions of previous estimates.

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Changes to proved developed reserves

        Proved developed gas reserves decreased by 71,1 billion cubic feet to 750,0 billion cubic feet. The decrease was due to production of 113,9 billion cubic feet partially offset by an upward revision of 42,8 billion cubic feet.

Proved undeveloped reserves converted to proved developed reserves

        No reserves were converted from undeveloped to developed during 2019.

Changes to proved undeveloped reserves

        Proved undeveloped gas reserves were revised upwards by 7,4 billion cubic feet.

Proved undeveloped reserves remaining undeveloped

        Proved undeveloped gas reserves, presently estimated to be 196,0 billion cubic feet, have remained undeveloped in the Pande-Temane PPA asset for the last thirteen years. The total proved volume (developed plus undeveloped) represents gas that will be recovered as part of the approved field development plan and which is required to satisfy existing gas sales agreements. In order to optimise the timing of the capital expenditure required to convert undeveloped reserves to developed reserves, E&PI regularly studies production performance and reviews its plan for installation of additional compression and wells. The first infill in the Pande field was brought into operation in December 2018. This will be followed by additional infill wells and phase three compression.

Rest of Africa (outside Mozambique)

Licence terms

Gabon

    Development and production

        In Gabon, our subsidiary Sasol Gabon S.A. holds a 27,75% working interest in the Etame Marin Permit (EMP) asset, which is a producing asset with proved reserves. VAALCO Gabon S.A. is the operator of the asset, under the terms of the EMP exploration and production sharing

contract. The EMP contract area comprises three exclusive exploration areas (EEAs) namely Etame EEA, Avouma EEA and Ebouri EEA.

        The EMP contract terms were renegotiated in September 2018 to align and extend the three EEAs in time. All EEAs were renewed from September 2018 with a duration of 10 years and include two five-year optional extensions. The EEAs were also extended in area as follows:

    Ebouri EEA: 1,0 thousand developed net acres;

    Etame EEA: 6,5 thousand developed net acres; and

    Avouma EEA: 5,3 thousand developed net acres.

    Exploration

        Our subsidiary Sasol Gabon S.A. entered into a farm-in agreement with Perenco Oil & Gas Gabon S.A. for a 40% working interest in the DE 8 permit offshore Gabon (245,7 thousand undeveloped net acres). The farm-in was approved in principle by the government in July 2017 and the corresponding PSC amendment submitted to the authorities was approved in August 2018. In July 2018, the Government granted its approval for the joint venture to enter the third exploration period of the licence, which expires in June 2021 and includes one commitment well.

South Africa

        In South Africa, we have an interest in one exploration licence.

        Our subsidiary Sasol Africa (Pty) Ltd holds a 60% working interest in the ER236 licence, offshore in the Durban Basin, which is operated by Eni South Africa BV (9 740,3 thousand undeveloped net acres). In April 2019, the operator submitted an application for the second renewal exploration period, which has a mandatory relinquishment of 15% (1 457,2 thousand undeveloped net acres affected). The application submitted to the Petroleum Agency SA (PASA) is pending approval.

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Activities

Gabon

    Development and production

        Following the signature of the license amendment in September 2018, current activities include preparing for a drilling programme in 2020 and early stage studies for further development of the field.

    Exploration

        Geological and geophysical studies focused on reviewing the current inventory of leads and prospects to assess and polarise its associated geological risk in order to rank and identify the best prospect to be drilled by 2021.

South Africa

    Exploration

        A second 3D seismic survey within the ER236 licence was acquired during April 2018 and data processed in November 2018. An environmental impact assessment for future potential drilling activities in the block was submitted to PASA for approval in 2019, with final authorisation pending.

Capitalised exploratory well costs

        There were no exploratory well costs capitalised in Africa outside Mozambique.

Facilities and productive wells

        In Gabon, oil is produced from the EMP asset facilities which comprise of four wellhead platforms, subsea flowlines and a floating production, storage and off-loading vessel (FPSO) located some 35 kilometres offshore southern Gabon. Oil from the Etame, Avouma and Ebouri EEA's, managed as a single operational field, is produced by means of a combination of subsea and platform wells, which are connected by pipelines to the FPSO. The FPSO is contracted from and operated by Tinworth Pte. Limited. The processed oil is stored in tanks on the FPSO prior to export by shipping tanker.

        At 30 June 2019, there were 12 productive wells from the EMP.

Delivery commitments

        The oil produced from the Gabon EMP asset is marketed internationally on the open market and sold under a short-term crude oil sale and purchase agreement (COSPA) that is renewed periodically. The COSPA was re-tendered at the end of 2018 (for the contract period commencing January 2019) and Mercuria Energy Trading SA was the successful buyer. The current COSPA expires on 31 January 2020 and is expected to be further extended or re-contracted as required on terms not dissimilar to the current contract.

Proved reserves (all quantities are net to Sasol)

        Our rest of Africa proved reserves are contained in the EMP asset, Gabon. These represent the net economic interest volumes attributable to Sasol after application of the licence terms, including the deduction of royalty. The primary sales product is oil, all gas produced is consumed in operations or flared.

Changes to proved reserves

        There was an increase of 0,2 million barrels in proved oil reserves.

Changes to proved developed reserves

        Proved developed reserves remained unchanged at 1,8 million barrels. The production of 1,2 million barrels were offset by a 1,2 million barrel revision due primarily to better-than-expected well performance amounting to 0,9 million barrels and also as a result of the licence extension amounting to 0,3 million barrels.

Proved undeveloped reserves converted to proved developed reserves

        No reserves were converted from undeveloped to developed during 2019.

Changes to proved undeveloped reserves

        There was an increase of 0,2 million barrels to proved undeveloped reserves following approval of the 2020 drilling programme.

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Proved undeveloped reserves remaining undeveloped

        There were 0,2 million barrels proved undeveloped reserves at 30 June 2019.

North America

Licence terms

Canada

        In Canada, our subsidiary Sasol Canada Exploration and Production Limited Partnership (SCEP LP), holds a 50% working interest in the Farrell Creek and Cypress A asset located in British Columbia, which is a producing asset with proved reserves. The asset is operated by Petronas Energy Canada Ltd (PECL).

        As at 30 June 2019 Farrell Creek comprised 29 licences and leases and Cypress A comprised 21 licences and leases. The Farrell Creek and Cypress A asset covers an area of 18,2 thousand developed net acres and 35,8 thousand undeveloped net acres. Acreage retention and the conversion of licences to leases is enabled by drilling commitments, the provincial government's prescribed lease selection and validation process and licence extension applications.

Activities

Canada

        The drilling programme planned for 2019 included the drilling of four wells. As of 30 June 2019 drilling on three wells had finished and one well was suspended. The completion of the three drilled wells is scheduled to be completed in 2020.

Capitalised exploratory well costs

Canada

        At 30 June 2019, there were no exploratory well costs capitalised in Canada.

Facilities and productive wells

        Natural gas and liquids are produced from the Farrell Creek and Cypress A asset by means of production wells, flowlines, gathering lines and processing facilities. Gas from Farrell Creek wells and Cypress A southern wells is processed through facilities owned by SCEP LP and PECL,

covering a site of approximately 160 000 square metres. Gas from Cypress A northern wells is currently processed and sold through third party production facilities.

        At 30 June 2019, there were 157 productive wells.

Delivery commitments

        We currently do not have any delivery commitments with customers in Canada. The marketing and sale of natural gas, and the small amount of petroleum liquids, from the Farrell Creek and Cypress A assets is managed on a short-term basis as part of operations.

        Natural gas from the Farrell Creek and Cypress A asset is sold into the Western Canada market at two sales hubs. Pricing at each hub is based on the daily realised spot market prices less transportation and marketing fees. Natural gas is delivered to the sales hubs through long-term transportation contracts expiring between 2019 and 2033.

Proved reserves (all quantities are net to Sasol)

        Our North America proved reserves are contained in the Canada Farrell Creek and Cypress A asset. These represent the net economic interest volumes that are attributable to Sasol before the deduction of royalties. The primary sales product is natural gas, with minor amounts of associated liquid hydrocarbons.

        Full development of the asset will require around 2 200 wells, of which only some 9% have been drilled and completed to date. Reserves are limited to those volumes of gas and associated liquid hydrocarbons attributable to Sasol that are forecast to be produced from productive wells together with wells to be drilled and/or completed in the approved work programme.

Changes to proved reserves

        There was a reduction of 21,8 billion cubic feet in proved gas reserves.

Changes to proved developed reserves

        Proved developed gas reserves decreased by 25,0 billion cubic feet to 38,2 billion cubic feet.

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        The reduction was due to the combined effects of the production of 16,3 billion cubic feet and a downward revision of 8,7 billion cubic feet largely due to further reduction in natural gas prices and a reassessment of future operating expenditures.

Proved undeveloped reserves converted to proved developed reserves

        No reserves were converted from undeveloped to developed during 2019.

Changes to proved undeveloped reserves

        Proved undeveloped gas reserves increased by 3,2 billion cubic feet as a result of the approval of the 2019/2020 drilling and completion programme.

Proved undeveloped reserves remaining undeveloped

        There were 3,2 billion cubic feet proved undeveloped reserves at 30 June 2019.

Australasia

Licence terms

        As of 30 June 2019 we no longer have interests in the Australasian region.

Tabular natural oil and gas information

Developed and undeveloped acreage

        The table below provides total gross and net developed and undeveloped acreage for our natural oil and gas assets by geographic area at 30 June 2019.

Natural oil and gas
acreage
concentrations at
30 June 2019(3)
  Mozambique(1)   Rest of
Africa(2)
  North
America(1)(2)
  Total  
 
  thousand acres
 

Developed acreage

                         

Gross

    431,7     46,1     36,4     514,2  

Net

    302,2     12,8     18,2     333,2  

Undeveloped acreage

                         

Gross

    3 191,1     16 848,1     71,6     20 110,8  

Net

    1 910,7     9 986,0     35,8     11 932,5  

(1)
Certain licences in Mozambique and North America overlap as they relate to specific stratigraphic horizons.

(2)
Rest of Africa comprises Gabon and South Africa, North America comprises Canada.

(3)
The table does not include acreage information (neither net nor gross) pertaining to: licences from which Sasol is in a formal process of withdrawing; licence areas proposed for relinquishment owing to local regulations; or new blocks Sasol is in a process of acquiring. See the map on page M-2 for a representation of the affected areas.

Drilling activities

        The table below provides the number of net wells completed in each of the last three years and the number of wells being drilled or temporarily suspended at 30 June 2019.

Number of wells(2) drilled for the
year ended 30 June
  Mozambique   Rest of
Africa(1)
  North
America(1)
  Australasia(1)   Total  

2017

                               

Net development wells—productive(2)

    (6)       5,0         5,0  

Net extension wells(5)—productive(2)

    6,0 (6)               6,0  

Net stratigraphic test wells—exploratory type(3)

    0,5             0,4     0,9  

2018

                               

Net extension wells(5)—productive(2)

    3,0 (6)               3,0  

Net development wells—productive(2)

    0,7 (6)       0,5         1,2  

Net stratigraphic test wells—exploratory type(3)

        0,4             0,4  

Net stratigraphic test wells—development type(3)

    2,0                 2,0  

2019

                               

Net exploratory wells—dry(2)

                     

Net exploratory wells—productive(2)

                     

Net extension wells(5)—productive(2)

                     

Net extension wells(5)—dry

                     

Net development wells—productive(2)

                     

Net development wells—dry(2)

            0,5         0,5  

Net stratigraphic test wells—exploratory type(3)

                     

Net stratigraphic test wells—development type(3)

                     

As at 30 June 2019

                               

Wells being drilled—gross(4)

            3,0         3,0  

Wells being drilled—net(4)

            1,5         1,5  

(1)
Rest of Africa comprises Gabon and South Africa, North America comprises Canada, Australasia comprises Australia.

(2)
A productive well is an exploratory, extension or development well that is not a dry well. A dry well is an exploratory, extension or development well that proves to be incapable of producing either oil or natural gas in sufficient quantities to justify completion.

(3)
A stratigraphic test well is drilled to obtain information pertaining to a specific geological condition and is customarily drilled without the intent of being completed. Stratigraphic test wells are 'exploratory type' if not drilled in a known area or 'development type' if drilled in a known area.

(4)
The number of wells being drilled includes wells that have been drilled, but have not yet been mechanically completed to enable production. Wells which are awaiting only surface connection to a production facility are considered to be completed.

(5)
An extension well is a well drilled to extend the limits of a known reservoir.

(6)
The 6 wells drilled in the PSA DPAs were classified as development wells in 2017 and are restated as extension wells in 2018.

Capitalised exploratory well costs

        The table below provides details about natural oil and gas capitalised exploratory well costs at the end of the last three years, showing

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additions, costs charged to expense and costs reclassified.

 
  2019   2018(1)   2017  
 
  (Rand in millions)
 

Capitalised Exploratory Well Costs

                   

Balance at beginning of year

    354,9     290,3     279,8  

Additions for the year

    54,5     443,3     197,7  

Costs incurred

    31,8     574,0     209,6  

Asset retirement obligation adjustments

    22,7     (130,7 )   (11,9 )

Charged to expense for the year

    (34,1 )   (346,3 )   (189,0 )

Farm down proceeds

             

Exiting of licences

             

Costs reclassified to Capital Work in Progress

             

Translation of foreign entities

    0,1     (32,4 )   1,8  

Balance at end of year

    375,4     354,9     290,3  

 

Capitalised Exploratory Well costs
Ageing at 30 June 2019
  Mozambique   Total  
 
  (Rand in millions)
 

1 to 5 years

    300,0     300,0  

over 5 years

    58,2     58,2  

Number of projects

    1 (2)   1  

(1)
Certain capitalised exploratory well costs were revised for 2018 compared to amounts shown in Sasol's Form 20-F for the year ended 30 June 2018.

(2)
Project activities for the Pande-Temane PSA CAP area are described above, under Mozambique—Activities.

Oil and gas production facilities and productive wells

        We operate production facilities in Mozambique and have non-operated interests in producing assets in Canada and Gabon.

        The table below provides the production capacity at 30 June 2019.

Plant Description
  Location   Design Capacity

Central Processing Facility

  Pande-Temane PPA, Mozambique   491 MMscf/day gas

Floating, Production, Storage and Offloading facility

 

Etame Marin Permit, Gabon

 

25 000 bpd oil

Processing Facilities

 

Farrell Creek, Canada

 

320 MMscf/day gas

        The table below provides the number of productive oil and gas wells at 30 June 2019. A productive well is a producing well or a well that is mechanically capable of production.

Number of productive
wells 30 June 2019
  Mozambique   Rest of
Africa(1)
  North
America(1)
  Total  

Productive oil wells

                         

Gross

        12,0         12,0  

Net

        3,3         3,3  

Productive gas wells

                         

Gross

    17,0         157,0     174,0  

Net

    11,9         78,5     90,4  

(1)
Rest of Africa comprises Gabon, North America comprises Canada.

Sales prices and production costs

        The table below summarises the average sales prices for natural gas and petroleum liquids produced and the average production cost, not including ad valorem and severance taxes, per unit of production for each of the last three years.

Average sale prices and
production costs for
the year ended
30 June
  Mozambique   Rest of
Africa(2)
  North
America(2)
 
 
  (Rand per unit)
 

2017

                   

Average sales prices

                   

Natural gas, per thousand standard cubic feet

    23,0         24,3  

Natural liquids, per barrel

    166,1     653,2     338,7  

Average production cost(1)

                   

Natural gas, per thousand standard cubic feet

    3,2         2,4  

Natural liquids, per barrel

        389,0      

2018

   
 
   
 
   
 
 

Average sales prices

                   

Natural gas, per thousand standard cubic feet

    24,8         12,8  

Natural liquids, per barrel

    337,9     822,8     492,6  

Average production cost(1)

                   

Natural gas, per thousand standard cubic feet

    5,0         9,8  

Natural liquids, per barrel

        486,4      

2019

   
 
   
 
   
 
 

Average sales prices

                   

Natural gas, per thousand standard cubic feet

    32,6         13,0  

Natural liquids, per barrel

    514,6     977,7     517,4  

Average production cost(1)

                   

Natural gas, per thousand standard cubic feet

    6,3         11,1  

Natural liquids, per barrel

        458,6      

(1)
Average production costs per unit of production are calculated according to the primary sales product.

(2)
Rest of Africa comprises Gabon, North America comprises Canada.

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Energy—Plants and facilities

Our facilities in South Africa

        Our main manufacturing facilities are located at Secunda Synfuels Operations. Additionally the Natref refinery, based in Sasolburg, is approximately 2,0 km2.

Our interests in facilities in Qatar

        ORYX GTL is a gas-to-liquids plant, located at Ras Laffan Industrial City, situated along the northeast coast of Qatar.

Our interests in facilities in Nigeria

        EGTL is a gas-to-liquids plant, located at Escravos in the Delta state, part of the Niger Delta region, situated on the South East of Nigeria.

Our interests in facilities in Mozambique

        CTRG is a power generation facility, located at Ressano Garcia.

Transportation capacity

        The table below provides details of the transportation capacity and location available to the Energy business.

Plant description
  Location   Design
capacity(1)

Gauteng transmission
network

  Gauteng   128 bscf/a

Rompco Pipeline

  From Central Processing Facility (Mozambique) to Pressure Protection Station (Secunda) (865km)—From Mozambique to Secunda and Sasolburg   191 bscf/a

Secunda, Witbank and Middelburg pipeline

  South Africa   11 bscf/a

Transnet Pipeline
transmission pipeline

  South Africa   23 bscf/a

(1)
Nameplate capacity represents the total saleable production capacity. Due to the integrated nature of these facilities, the requirement for regular statutory maintenance shutdowns and market conditions, actual saleable volumes will be less than the nameplate.

        The following table provides details of the production capacity and location of the main

jointly held plants where the Energy business has an interest.

Plant description
  Location   Design capacity(1)

ORYX GTL

  Ras Laffan Industrial City in Qatar   32 400 bpd (nominal)

EGTL

  Escravos, Nigeria   33 200 bpd (nominal)

Natref

  Sasolburg, South Africa   108 000 bpd (nominal)

CTRG

  Ressano Garcia, Mozambique   175MW

(1)
Nameplate capacity represents the total saleable production capacity. Due to the integrated nature of these facilities, the requirement for regular statutory maintenance shutdowns and market conditions, actual saleable volumes will be less than the nameplate.

Secunda Synfuels Operations

Synthetic oil

        Refer to "Item 4.D—Property, plants and equipment—Mining" for details on our mining properties and coal exploration techniques used during the estimation of synthetic oil reserves.

        The size of this total property is approximately 83 square kilometres (km2) with operating plants accounting for 9 km2. This forms the base for the main manufacturing facilities for Energy, Base and Performance Chemicals.

        The following table sets forth a summary of the synthetic oil equivalent average sales price and related production costs for the year shown.

 
  2019   2018   2017  

Average sales price per barrel (rand per unit)

    966,64     800,07     683,46  

Average production cost per barrel (rand per unit)

    579,90     484,53     448,67  

Production (millions of barrels)

    41,2     42,7     41,3  

Supplemental oil and gas information

        Supplemental oil and gas information: See "Item 18—Financial Statements—Supplemental Oil and Gas Information" for supplemental information relating to synthetic oil producing activities.

Base Chemicals

Our facilities in South Africa

        Our main manufacturing facilities are located in Secunda and Sasolburg. The size of Sasol's total Secunda property is approximately 83 square kilometres (km2) with operating plants accounting for 9 km2. The size of the Sasolburg property is approximately 51 km2.

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Our facilities in the United States

        Base Chemicals' share of the LCCP is located at Lake Charles, Louisiana (size of full site approximately 6 km2; Base Chemicals' plant size 1,7 km2). The legacy business in Lake Charles consists of the ethylene cracker. As part of the LCCP the linear low density polyethylene (LLDPE) unit reached beneficial operation in February 2019 (capacity of 470 ktpa). The plant is ramping up to our expectation. The low density polyethylene (LDPE) unit is expected to reach beneficial operation in 2020.

        Production at our HDPE joint venture with Ineos in North America achieved beneficial operation in November 2017 (our share of capacity: 235 ktpa). The plant is producing at expectation.

        Refer to "Item 3.D—Risk factors" and "Item 5.B—Liquidity and capital resources" for further detail on the construction of the LCCP.

        The following table summarises the main production capacities of the Regional Operating Hubs in Secunda, Sasolburg and North America, as well as our international joint venture partnership in North America, that produce polymer and monomer products marketed by Base Chemicals.

Production capacity at 30 June 2019

Product
  South
Africa(2)
  North
America(1)(2)
  Total  
 
  (ktpa)
 

Ethylene(3)

    615     455     1 070  

Propylene(3)

    950         950  

LDPE

    220         220  

LLDPE

    150     470     620  

HDPE

        235     235  

Polypropylene

    625         625  

Ethylene dichloride

    160         160  

Vinyl chloride

    205         205  

PVC

    190         190  

Chlorine

    145         145  

Caustic soda

    167         167  

Cyanide

    40         40  

Hydrochloric acid

    90         90  

Calcium chloride

    10         10  

(1)
Includes our 50% share of the production capacity of our Sasol Ineos joint venture.
(2)
Nameplate capacity represents the total saleable production capacity. Due to the integrated nature of these facilities, the requirement for regular statutory maintenance shutdowns and market conditions, actual saleable volumes will be less than the nameplate capacity.

(3)
Due to the integrated nature of these facilities, a portion of these products are used in further downstream facilities.

        The following table summarises the main production capacities of the Regional Operating Hubs in Secunda and Sasolburg that produce solvent products marketed by Base Chemicals.

Production capacity as at 30 June 2019

Product
  South
Africa
  Germany   Total(1)  
 
  (ktpa)
 

Ketones

    328         328  

Acetone

    200         200  

MEK

    70         70  

MiBK

    58         58  

Glycol ethers

        80     80  

Butyl glycol ether

        80     80  

Acetates

    60         60  

Ethyl acetate

    60         60  

Mixed alcohols

    215         215  

Pure alcohols

    499         499  

Methanol (C1)

    140         140  

Ethanol (C2)

    114         114  

n-Propanol (C3)

    80         80  

n-Butanol (C4)

    150         150  

iso-Butanol (C4)

    15         15  

Acrylates

    125         125  

Ethyl acrylate

    35         35  

Butyl acrylate

    80         80  

Glacial acrylic acid

    10         10  

Maleic anhydride(2)

        53     53  

Other

    19         19  

(1)
Consolidated nameplate capacities excluding internal consumption and including our attributable share of the production capacity of our Sasol Huntsman joint venture.

    Nameplate capacity represents the total saleable production capacity. Due to the integrated nature of these facilities, the requirement for regular statutory maintenance shutdowns and market conditions, actual saleable volumes will be less than the nameplate capacity.

(2)
Our 50% share of the production capacity of our Sasol Huntsman joint venture. This investment has been classified as held for sale as at 30 June 2019. On 26 July 2019 Sasol and Huntsman Corporation signed a definitive agreement for Sasol to dispose of our 50% equity interest in the Sasol-Huntsman maleic anhydride joint venture. The transaction closed on 30 September

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    2019 with a preliminary equity purchase price of EUR90,3 million received by Sasol. The final purchase price will be confirmed on verification of the closing accounts by the independent auditors.

        Approximately 90% of our production capacity is located at sites in South Africa and 10% in Germany.

Performance Chemicals

    Our facilities in South Africa

        Our facilities at Secunda and Sasolburg are the base for a number of our chemical industries operations.

    Our facilities in Germany

        Performance Chemicals operations are based at three locations in Germany, namely Brunsbüttel (site size approximately 2 million m2; plant size 500 000 m2), Marl (site size approximately 160 000 m2; plant size 75 000 m2) and the wax facility based in Hamburg (site size approximately 160 000 m2; plant size 100 000 m2).

    Our facilities in Italy

        The operations of Performance Chemicals are based at three locations in Italy. The primary facilities are at Augusta (site size approximately 1,36 million m2; plant size 510 000 m2) and Terranova (site size approximately 330 000 m2; plant size 160 000 m2).

    Our facilities in the United States

        Performance Chemicals operations in the US are based in Lake Charles, Louisiana and Tucson, Arizona. The most significant of these facilities is located at Lake Charles, Louisiana (size of full site approximately 6 km2; Performance Chemicals' plant size 1,9 km2 including share of the LCCP located at Lake Charles). As part of the LCCP, beneficial operation was declared in May 2019 on the ethylene oxide/ethylene glycol (EO/EG) plant in Lake Charles.

        A small specialty alumina facility is located in Tucson.

    Our facility in China

        The operations of Performance Chemicals are based at two locations in Nanjing (Fangshui site

size approximately 90 000 m2; plant size 4 000 m2; Zhaoqiaohe site size approximately 136 000 m2; plant size 3600 m2).

        The following table provides details of the production capacity and location of the plants where the Performance Chemicals business has an interest.

Production capacity at 30 June 2019

Product
Facilities location Total(1)
 
 
(ktpa)

Surfactants

United States, Europe, Far East 1 100

EO/EG

United States 300

C6+ alcohol

United States, Europe, South Africa, Far East 630

Inorganics

United States, Europe, South Africa 87

Paraffins and olefins

United States, Europe 750

LAB

United States, Europe 435

C5-C8 alpha olefins

United States, South Africa 456

Paraffin wax and wax emulsions

Europe 460

FT-based wax and related products

South Africa 280

Paraffin wax

South Africa 30

(1)
Nameplate capacity represents the total saleable production capacity. Due to the integrated nature of these facilities, the requirement for regular statutory maintenance shutdowns and market conditions, actual saleable volumes will be less than the nameplate capacity. Performance Chemicals also operates an EO unit in Europe which is integrated into surfactants and marginally exposed to merchant markets.

        Refer to "Item 3.D—Risk factors" and "Item 5.B—Liquidity and capital resources" for further detail on the construction of the LCCP.

ITEM 4A.    UNRESOLVED STAFF COMMENTS

        There are no unresolved written comments from the SEC staff regarding our periodic reports under the Securities Exchange Act of 1934 received not less than 180 days before 30 June 2019, that are considered material.

ITEM 5.    OPERATING AND FINANCIAL REVIEW AND PROSPECTS

        This section should be read in conjunction with our consolidated financial statements included in "Item 18—Financial Statements" as at 30 June 2019 and 2018, and for the years ended 30 June 2019, 2018 and 2017, including the accompanying notes, that are included in this annual report on Form 20-F. The following discussion of operating results and the financial review and prospects as well as our consolidated financial statements have been prepared in accordance with IFRS as issued by the IASB.

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        For information regarding our financial overview and external factors impacting on our business, refer to the "Chief Financial Officer's Finance Overview—Key drivers impacting our results" as contained in Exhibit 99.3. This includes an analysis of the impact of macro-economic factors on Sasol's performance and an overview of the current economic environment, crude oil prices, exchange rates, gas prices and chemical prices. Movements in our cost base are also analysed, including the impact of cost-reduction measures and inflation.

        The discussion on the 2017 financial results have not been included as this can be found under Item 5 of our Form 20-F for the year ended 30 June 2018.

        Certain information contained in the discussion and analysis set forth below and elsewhere in this annual report includes forward-looking statements that involve risks and uncertainties. See "Forward-Looking Statements" and see "Item 3.D—Risk factors" for a discussion of significant factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in this annual report.

5.A Operating results

Results of operations

 
  2019   2018   Change
2019/2018
  2017   Change
2018/2017
 
 
  (Rand
in millions)

  (%)
  

  (Rand
in millions)

  (%)
  

 

Turnover

    203 576     181 461     12     172 407     5  

Operating costs and expenses

    (176 308 )   (152 390 )   16     (140 157 )   9  

Remeasurement items

    (18 645 )   (9 901 )   88     (1 616 )   513  

Equity accounted profits, net of tax

    1 074     1 443     (26 )   1 071     35  

Sasol Khanyisa share-based payment

        (2 866 )                

Earnings before interest and tax

    9 697     17 747     (45 )   31 705     (44 )

Net finance costs

    (466 )   (2 043 )   (77 )   (1 697 )   20  

Earnings before tax

    9 231     15 704     (41 )   30 008     (48 )

Taxation

    (3 157 )   (5 558 )   (43 )   (8 495 )   (35 )

Earnings

    6 074     10 146     (40 )   21 513     (53 )

Financial review 2019

    For information regarding our financial condition, and an overview of our results refer "Chief Financial Officer's Finance Overview—Overview of financial performance" as contained in Exhibit 99.3.
    For information on changes in our financial condition, and overall financial performance refer "Chief Financial Officer's Finance Overview—Key drivers impacting our results" and "Overview of financial performance" as contained in Exhibit 99.3.

Turnover

        Turnover consists of the following categories.

 
2019 2018 Change
2019/2018
2017 Change
2018/2017
 
(Rand
in millions)

(%)
  

(Rand
in millions)

(%)
  

Sale of products

200 097 178 463 12 169 115 6

Services rendered

1 735 1 612 8 1 549 4

Other trading income

1 744 1 386 26 1 743 (20 )

Turnover

203 576 181 461 12 172 407 5

        The primary factors contributing to the increases in turnover were.

 
Change
2019/2018
Change
2018/2017
 
(Rand in millions)
(%)
  

(Rand in millions)
(%)
  

Turnover, 2018 and 2017

181 461   172 407  

Exchange rate effects

15 213 8 (5 890 ) (3 )

Product prices

3 575 2 16 112 9

—crude oil

6 526 4 16 401 9

—other products

(2 951 ) (2 ) (289 )

Net volume changes

3 359 2 (1 394) (1) (1 )

Other effects

(32 ) 226

Turnover

203 576 12 181 461 5

(1)
Other effects in 2017 arose mainly from the offset of feedstock credits against turnover, relating to kerosene return-stream swap agreements entered into.

Operating costs and expenses

        Operating costs and expense consists of the following categories.

 
2019 2018 Change
2019/2018
2017 Change
2018/2017
 
(Rand
in millions)

(%)
  

(Rand
in millions)

(%)
  

Materials, energy and consumables used

(90 589 ) (76 606 ) 18 (71 436 ) 7

Selling and distribution costs

(7 836 ) (7 060 ) 11 (6 405 ) 10

Maintenance expenditure

(10 227 ) (9 163 ) 12 (8 654 ) 6

Employee-related expenditure

(29 928 ) (27 468 ) 9 (24 417 ) 12

Exploration expenditure and feasibility costs

(663 ) (352 ) 88 (491 ) (28 )

Depreciation and amortisation

(17 968 ) (16 425 ) 9 (16 204 ) 1

Translation gains/(losses)

604 (11 ) (5 591 ) (1 201 ) (99 )

Other operating expenses

(21 064 ) (16 715 ) 26 (13 037 ) 28

Other operating income

1 363 1 410 (3 ) 1 688 (16 )

Operating costs and expenses

(176 308 ) (152 390 ) 16 (140 157 ) 9

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        Materials, energy and consumables used.    Materials, energy and consumables used in 2019 amounted to R90 589 million, an increase of R13 983 million, or 18%, compared with R76 606 million in 2018, which increased by 7% from R71 436 million in 2017. The increase in these costs between 2019 and 2018 was due to the higher processed volumes of oil, higher costs (higher Brent crude prices) and a weaker rand/US dollar exchange rate.

        Selling and distribution costs.    These costs comprise of marketing and distribution of products, freight and customs and excise duty after the point of sale. Selling and distribution costs in 2019 amounted to R7 836 million, which represents an increase of R776 million, or 11%, compared with R7 060 million in 2018, which increased by R655 million, or 10%, compared with R6 405 million in 2017. The variation in these costs was mainly attributable to increased freight, rail car and terminal expenditure due to higher quantities of products sold during 2019, in conjunction with higher freight rates which is exchange rate related. Selling and distribution costs represented 4% of sales in 2019, 4% of sales in 2018, and 4% of sales in 2017.

        Maintenance expenditure.    Maintenance expenditure in 2019 amounted to R10 227 million, which represents an increase of R1 064 million, or 12%, compared with R9 163 million in 2018, which increased by R509 million, or 6%, compared with R8 654 million in 2017. Maintenance expenditure increased in 2019 compared to 2018 mainly due to inflation and schedule changes.

        Employee-related expenditure.    Employee-related expenditure amounted to R29 928 million, which represents an increase of R2 460 million, or 9%, compared with R27 468 million in 2018, which increased by R3 051 million, or 12%, from 2017.

        This amount includes labour costs of R28 709 million (2018—R25 903 million and 2017—R24 191 million) and a share-based payment charge to the income statement of R1 219 million (debit), (2018—R1 565 million (debit) and 2017—R226 million (debit)).

        Excluding the effect of the share-based payment expenses, our employee costs increased by R2 806 million, or 11%, in 2019. This was primarily due to normal annual salary increases, a weaker rand/US dollar exchange rate and an increase in headcount relating to business growth due to LCCP, particularly in our US operations. Overall headcount increased from 31 270 in 2018 to 31 429 employees in 2019, an increase of 0,5%.

        Exploration expenditure and feasibility costs.    Exploration expenditure and feasibility costs in 2019 amounted to R663 million, which represents an increase of R311 million, or 88%, compared with R352 million in 2018, which decreased by R139 million compared with R491 million in 2017. The increase in 2019 as compared to 2018 was largely attributable to the additional costs relating to the two new licences obtained in Mozambique.

        Depreciation and amortisation.    Depreciation and amortisation in 2019 amounted to R17 968 million, which represents an increase of R1 543 million, compared with R16 425 million in 2018, which increased by R221 million compared with R16 204 million in 2017. The increase in depreciation of R1 543 million mainly relates to the increase of fixed assets due to the capitalisation of some of the LCCP units.

        Translation gains/(losses).    Translation gains arising primarily from the translation of monetary assets and liabilities, amounted to R604 million in 2019, as compared to a R11 million loss in 2018 and a R1 201 million loss in 2017. The rand weakened against the US dollar throughout 2019, with the closing exchange rate having weakened by 2,5% to R14,08 at 30 June 2019 compared to R13,73 at 30 June 2018. This had a negative impact on our gearing and the valuation of our derivatives and South African export debtors and loans. However, a translation gain was recognised as a result of the realised gain of R633 million on the settlement of US$ 600 million of the Revolving Credit Facility which offset the translation losses experienced by the Group.

        Other operating expenses.    Other operating expenses in 2019 amounted to R21 064 million, an increase of R4 349 million, compared to R16 715 million in 2018, which increased by R3 678 million from R13 037 million in 2017.

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        This amount includes:

    rental expenses of R1 845 million (2018—R1 497 million and 2017—R1 367 million);

    insurance costs of R514 million (2018—R432 million and 2017—R511 million);

    computer costs of R2 155 million (2018—R2 042 million and 2017—R 1 991 million);

    hired labour of R786 million (2018—R838 million and 2017—R878 million);

    audit remuneration of R97 million (2018—R88 million and 2017—R89 million);

    professional fees of R2 226 million (2018—R1 971 million and 2017—R1 383 million);

    losses on derivative instruments (including crude oil futures, zero cost collars, interest rate swaps and foreign exchange contracts) of R2 465 million mainly due to losses of R1 475 million recognised on the interest rate swaps, partially offset by the weakening in the closing rand/US$ exchange rate, 2018—R3 927 million loss and 2017—R635 million gain. The interest rate swap was novated in June 2019 when the underlying LCCP bank term loan was refinanced. This ended the hedge relationship with hedge accounting discontinued. A loss of R1 400 million was recognised in other comprehensive income on the revaluation of the cash flow hedge that was offset by a gain of R1 115 million on the reclassification of the swap to profit and loss on termination of the hedge relationship;

    increase in rehabilitation provisions of R1 096 million (2018—decrease of R804 million and 2017—increase of R472 million); and

    other expenses of R9 880 million (2018—R6 724 million and 2017—R6 981 million) an increase of R3 156 million. This is mainly due to the LCCP progressing through the sequential beneficial operation schedule and the operational costs associated with these units being expensed.

        Other operating income.    Other operating income in 2019 amounted to R1 363 million,

which represents a decrease of R47 million, or 3%, compared with R1 410 million in 2018. In 2017, other operating income amounted to R1 688 million. Other operating income includes profit made by pooling the foreign exchange requirements of the group and rental income.

Share of profits from equity accounted investments

 
2019 2018 Change
2019/2018
2017 Change
2018/2017
 
 
 
(%)
  

(Rand
in millions)

(%)
  

Profit before tax

1 737 2 223 (22 ) 1 338 66

Tax

(663 ) (780 ) (15 ) (267 ) 192

Share of profits of equity accounted investments, net of tax

1 074 1 443 (26 ) 1 071 35

Remeasurement items, net of tax

15 11 36 14 (21 )

        The share of profits of equity accounted investments (net of tax) amounted to R1 074 million in 2019 as compared to R1 443 million in 2018 and R1 071 million in 2017. R230 million of the decrease in equity accounted earnings for 2019 was due to the sale of our investment in Petronas Chemicals LDPE Sdn Bhd and Petronas Chemicals Olefins Sdn Bhd in 2018.

        In Nigeria, the EGTL plant production was restricted to single train operation during the first six months of the financial year due to repairs on the main air compressor. As a result, the losses increased to R216 million in 2019 compared to losses of R207 million in 2018.

Remeasurement items

        For information regarding the remeasurement items recognised, refer to "Item 18—Financial Statements—Note 9 Remeasurement items affecting operating profit".

Finance costs and finance income

        For information regarding finance costs incurred and finance income earned, refer to "Item 18—Financial Statements—Note 7 Net finance costs".

        The decrease in finance costs is mainly due to the adoption of the amendment to IAS 23 Borrowing Costs, where any specific borrowings

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that remain outstanding after the related asset is ready for its intended use or sale, becomes part of the general borrowings of the entity when calculating the capitalisation rate.

Tax

        The effective tax rate decreased to 34,2% in 2019 compared to 35,4% in 2018. The decrease is mainly due to the increase in Section 12L incentive allowances. For further information regarding the tax charge, refer to "Item 18—Financial Statements—Note 12 Taxation".

Non-controlling interests

        For information regarding our non-controlling interests, and their share of profit, refer "Item 18—Financial Statements—Note 22 Interest in significant operating subsidiaries".

        Earnings attributable to non-controlling interests in subsidiaries of R1 776 million increased by R359 million, or 25%, from R1 417 million in 2018, which was an increase of R278 million or 24% from R1 139 million in 2017.

        The increase in earnings attributable to non-controlling interests in 2019, as compared to the increase in 2018 is largely attributable to an increase in the profits attributable to the non-controlling interests in Sasol Oil due to a reversal of a provision for litigation.

Financial review 2018

Group results

        Earnings before interest and tax of R17,7 billion decreased by 44% compared to the prior year largely driven by a stronger exchange rate, with the rand/US dollar averaging R12,85 compared to R13,61 in the prior year, and the negative impact of remeasurement items. Global markets remained challenging and highly volatile. The increase in the oil price had a significant positive impact on our results, which was offset by the stronger average rand/US dollar exchange rate. During 2018, the average Brent crude oil prices moved higher by 28% compared to the prior year (average dated Brent was US$64/bbl for the year ended 30 June 2018 compared with US$50/bbl in the prior year). Largely as a result of the stronger rand the present value of future

cash flows of our South African chlor vinyls cash generating unit have been adversely impacted, resulting in a R5,2 billion impairment. To mitigate the impact of financial risks on our business, we have entered into various hedging contracts to protect the group against volatility in commodity prices, currencies and interest rates.

Items which materially impacted earnings before interest and tax

        During 2018, earnings were impacted by the following significant items:

    a net remeasurement items expense of R9,9 billion compared to a R1,6 billion expense in the prior year. Included in remeasurement items is a full impairment of the South African chlor vinyls business of R5,2 billion due to a stronger long-term rand exchange rate and a partial impairment of the Mozambique Production Sharing Agreement of R1,1 billion or US$94 million, mostly as a result of lower than expected oil volumes;

    a R2,9 billion share-based payment charge related to the Sasol Khanyisa share scheme; and

    losses of R3,9 billion on derivative instruments, mainly as a result of crude oil put option charges paid to protect the balance sheet at oil prices below approximately US$53 per barrel.

Segment review—results of operations

        Reporting segments are identified in the way in which the Joint Presidents and Chief Executive Officers organise segments within our group for making operating decisions and assessing performance. The segment overview included below is based on our segment results. Inter-segment turnover was entered into under terms and conditions substantially similar to terms and conditions which would have been negotiated with an independent third party. Refer to Business segment information of "Item 18—Financial Statements—Segment information" for further detail regarding turnover and operating profit per segment.

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        Refer also to "How we structure ourselves to create value" as contained in Exhibit 99.4.

Operating Business Units

Mining

 
2019 2018 Change
2019/2018
2017 Change
2018/2017
 
(Rand in millions)
(%)
(Rand in millions)
(%)

External turnover

3 222 3 446 (7 ) 2 946 17

Inter-segment turnover

17 654 16 351 8 16 016 2

Total turnover

20 876 19 797 5 18 962 4

Operating costs and expenses(1)

(16 175 ) (14 553 ) 11 (15 237 ) (4 )

Earnings before interest and tax

4 701 5 244 (10 ) 3 725 41

EBIT margin %

23 26   20  

(1)
Operating costs and expenses net of other income.

Results of operations 2019 compared to 2018

        Total turnover increased by 5% from R19 797 million to R20 876 million. Earnings before interest and tax of R4 701 million represents a decrease of 10% when compared to the prior year, mainly as a result of lower sales volumes in line with our customer demand, higher rehabilitation provisions and increased royalty taxes associated with our capital expenditure.

        Stock pile levels have reduced as part of our working capital optimisation efforts and external coal purchases decreased by 22% from the prior period. Lower overall production levels, combined with above-inflation cost increases resulted in our normalised cost of production increasing by 4% above inflation to R313/ton compared to the prior year.

        Above-inflation cost increases relate to higher-than-inflation increases in labour, operating and maintenance expenditure. The above inflation operating and maintenance expenditure is attributable to geological complexity and challenges driving up stonework metres and costs, and equipment reliability issues arising from Proximity Detection System implementation on our diesel fleet following our previous fatality.

        Our productivity increased by 3%, as we continue to focus on improving our operational efficiency while striving to achieve zero harm.

        For further analysis of our results refer "Integrated Report—Operational and strategic overviews" as contained in Exhibit 99.7.

Exploration and Production International

 
2019 2018 Change
2019/2018
2017 Change
2018/2017
 
(Rand in millions)
(%)
(Rand in millions)
(%)

External turnover

1 815 1 610 13 1 750 (8 )

Inter-segment turnover

3 369 2 588 30 2 334 11

Total turnover

5 184 4 198 23 4 084 3

Operating costs and expenses(1)

(6 073 ) (7 881 ) (23 ) (3 499 ) 125

(Loss)/earnings before interest and tax

(889 ) (3 683 ) (76 ) 585 (730 )