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Johannesburg - South African petrochemicals group Sasol [JSE:SOL] on Wednesday said it would delay its $8.1bn investment in an ethane cracker in Louisiana, in response to low global oil prices.
In a statement, the company also said it would identify other opportunities to cut costs over the next 30 months and that decisive measures have been agreed to and are being implemented.
READ: Oil prices hold near six-year lows
“The focus areas are capital portfolio phasing and reductions, capital restructuring, working capital improvements, margin enhancement and further fixed cost reductions,” the statement said.
“Cash flow improvements actioned in terms of the response plan will be over and above the current target of at least R4bn in sustainable cost savings by 2016.”
In a statement, the company also said it would identify other opportunities to cut costs over the next 30 months and that decisive measures have been agreed to and are being implemented.
READ: Oil prices hold near six-year lows
“The focus areas are capital portfolio phasing and reductions, capital restructuring, working capital improvements, margin enhancement and further fixed cost reductions,” the statement said.
“Cash flow improvements actioned in terms of the response plan will be over and above the current target of at least R4bn in sustainable cost savings by 2016.”
A cracker converts ethane taken from natural gas into ethylene, the basic building block in the manufacture of plastics and chemicals.
The planned cracker will produce 1.5 million tons of ethylene every year for use in plastics and chemicals.
In October the company told Reuters that around 90% of the cracker's ethylene output will be converted into a diverse slate of commodity and high-margin speciality chemicals for markets in which Sasol has a strong position.
ALSO READ: Sasol to build $8.1bn US ethane cracker
