South African petrochemicals firm Sasol has raised the expected cost of its U.S.-based ethane cracker project by around $1 billion. The announcement sent the price of its shares down by 10 percent.
The estimate for the Lake Charles Chemicals Project (LCCP), which will convert natural gas into plastics ingredient ethylene, is now $12.6-12.9 billion, including a contingency of $300 million, Sasol said in a stock exchange announcement.
In February, Sasol said the project would probably cost between $11.6bn and $11.8bn.
Sasol is the world’s biggest maker of motor fuel from coal.
The increase in price of the cracker project will result in higher gearing – net debt to EBITDA – for Sasol for 18 to 24 months, with gearing expected to peak at 2-2.3 times during fiscal 2019.